0001538263us-gaap:EstimateOfFairValueFairValueDisclosureMemberhtbi:AccruedInterestPayableMember2022-06-30

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended ~~September 30,~~December 31, 2022

☐ 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)						(I.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 class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value ~~$0.01~~$.01 per share	HTBI	The 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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☒ 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 ☐

Accelerated filer ☒

Non-accelerated filer ☐

Smaller reporting company ☐

Emerging growth company ☐


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 ☒

There were ~~15,628,048~~15,882,640 shares of common stock, par value of ~~$0.01~~$.01 per share, issued and outstanding as of ~~November 2, 2022.~~February 3, 2023.

HOMETRUST BANCSHARES, INC. AND SUBSIDIARIES

10-Q

TABLE OF CONTENTS


			Page Number
PART I FINANCIAL INFORMATION

Item 1.	Financial Statements

		Consolidated Balance Sheets (Unaudited) at ~~September~~Dec ember 3 01 , 2022 and June 30, 20 2 22022	3

		Consolidated Statements of Income (Unaudited) for the Three and Six Months Ended ~~September~~Dece mb er 3 01 , 2022 and 2021	4

		Consolidated Statements of Comprehensive Income (Unaudited) for the Three and Six Months Ended SeDec ~~ptember~~ember 3 01 , 2022 and 2021	5

		Consolidated Statements of Changes in Stockholders' Equity (Unaudited) for the Three and Six Months Ended ~~September~~Dec ember 3 01 , 2022 and 2021	6

		Consolidated Statements of Cash Flows (Unaudited) for the ~~Three~~S ix Months Ended ~~September~~Dec ember 3 01 , 2022 and 2021	78

		Notes to Consolidated Financial Statements	910

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations		3133

Item 3.	Quantitative and Qualitative Disclosures about Market Risk		4246

Item 4.	Controls and Procedures		4346

PART II OTHER INFORMATION

Item 1.	Legal Proceedings		4346

Item 1A.	Risk Factors		4346

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		4346

Item 3.	Defaults Upon Senior Securities		4346

Item 4.	Mine Safety Disclosures		4346

Item 5	Other Information		4346

Item 6.	Exhibits		4447

SIGNATURES			4649

Glossary of Defined Terms

The following ~~items~~terms 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.


Term						Definition
ACL						Allowance for Credit Losses
AFS						Available-For-Sale
ASC						Accounting Standards Codification
ASU						Accounting Standards Update

BOLI						Bank Owned Life Insurance
CARES Act						Coronavirus Aid, Relief, and Economic Security Act of 2020
CD						Certificate of Deposit
CDA						Collateral Dependent Asset
CECL						Current Expected Credit Losses
CET1						Common Equity Tier 1
COVID-19						Coronavirus Disease 2019
CPI						Consumer Price Index
DCF						Discounted Cash Flow
EPS						Earnings Per Share
ESOP						Employee Stock Ownership Plan
FASB						Financial Accounting Standards Board
FDIC						Federal Deposit Insurance Corporation
FHLB or FHLB of Atlanta						Federal Home Loan Bank
FRB						Federal Reserve Bank of Richmond
GSE						Government-Sponsored Enterprises
HELOC						Home Equity Line of Credit
IRLC						Interest Rate Lock Commitments
LIBOR						London Interbank Offered Rate
MBS						Mortgage-Backed Securities
NCCOB						North Carolina Office of the Commissioner of Banks
PCD						Purchased Financial Assets with Credit Deterioration
PPP						Paycheck Protection Program
REO						Real Estate Owned
ROA						Return on Assets
ROE						Return on Equity
ROU						Right of Use
RSU						Restricted Stock Unit
SBA						U.S. Small Business Administration
SBIC						Small Business Investment Companies
SEC						Securities and Exchange Commission
TBA						To-be-announced
TDR						Troubled Debt Restructuring
US GAAP						Generally Accepted Accounting Principles in the United States

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

HOMETRUST BANCSHARES, INC. AND SUBSIDIARY

Consolidated Balance Sheets

(Dollars in thousands, except per share data)


		(Unaudited)					(Unaudited)
		September 30, 2022		June 30, 2022			December 31, 2022		June 30, 2022
Assets	Assets					Assets
Cash	Cash	$	18,026	$	20,910	Cash	$	15,825	$	20,910
Interest-bearing deposits	Interest-bearing deposits	76,133		84,209		Interest-bearing deposits	149,209		84,209
Cash and cash equivalents	Cash and cash equivalents	94,159		105,119		Cash and cash equivalents	165,034		105,119
Commercial paper, net	Commercial paper, net	85,296		194,427		Commercial paper, net	—		194,427
Certificates of deposit in other banks	Certificates of deposit in other banks	27,535		23,551		Certificates of deposit in other banks	29,371		23,551
Debt securities available for sale, at fair value (amortized cost of $167,000 and $130,099 at September 30, 2022 and June 30, 2022, respectively)		161,741		126,978
Debt securities available for sale, at fair value (amortized cost of $152,790 and $130,099 at December 31, 2022 and June 30, 2022, respectively)						Debt securities available for sale, at fair value (amortized cost of $152,790 and $130,099 at December 31, 2022 and June 30, 2022, respectively)	147,942		126,978
FHLB and FRB stock	FHLB and FRB stock	9,404		9,326		FHLB and FRB stock	13,661		9,326
SBIC investments, at cost	SBIC investments, at cost	12,235		12,758		SBIC investments, at cost	12,414		12,758
Loans held for sale		76,252		79,307
Loans held for sale, at fair value						Loans held for sale, at fair value	518		—
Loans held for sale, at the lower of cost or fair value						Loans held for sale, at the lower of cost or fair value	72,777		79,307
Total loans, net of deferred loan fees and costs	Total loans, net of deferred loan fees and costs	2,867,783		2,769,295		Total loans, net of deferred loan fees and costs	2,985,623		2,769,295
Allowance for credit losses – loans	Allowance for credit losses – loans	(38,301)		(34,690)		Allowance for credit losses – loans	(38,859)		(34,690)
Loans, net	Loans, net	2,829,482		2,734,605		Loans, net	2,946,764		2,734,605
Premises and equipment, net	Premises and equipment, net	68,705		69,094		Premises and equipment, net	65,216		69,094
Accrued interest receivable	Accrued interest receivable	9,667		8,573		Accrued interest receivable	11,076		8,573

Deferred income taxes, net	Deferred income taxes, net	11,838		11,487		Deferred income taxes, net	11,319		11,487
BOLI	BOLI	95,837		95,281		BOLI	96,335		95,281
Goodwill	Goodwill	25,638		25,638		Goodwill	25,638		25,638
Core deposit intangibles, net	Core deposit intangibles, net	58		93		Core deposit intangibles, net	32		93
Other assets	Other assets	47,339		52,967		Other assets	48,918		52,967
Total assets	Total assets	$	3,555,186	$	3,549,204	Total assets	$	3,647,015	$	3,549,204
Liabilities and stockholders' equity	Liabilities and stockholders' equity					Liabilities and stockholders' equity
Liabilities	Liabilities					Liabilities
Deposits	Deposits	$	3,102,668	$	3,099,761	Deposits	$	3,048,020	$	3,099,761
Borrowings	Borrowings	—		—		Borrowings	130,000		—

Other liabilities	Other liabilities	56,296		60,598		Other liabilities	58,840		60,598
Total liabilities	Total liabilities	3,158,964		3,160,359		Total liabilities	3,236,860		3,160,359
Commitments and contingencies – See Note 9	Commitments and contingencies – See Note 9					Commitments and contingencies – See Note 9
Stockholders' equity	Stockholders' equity					Stockholders' equity
Preferred stock, $0.01 par value, 10,000,000 shares authorized, none issued or outstanding	Preferred stock, $0.01 par value, 10,000,000 shares authorized, none issued or outstanding	—		—		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, 15,632,348 shares issued and outstanding at September 30, 2022; 15,591,466 at June 30, 2022		156		156
Common stock, $0.01 par value, 60,000,000 shares authorized, 15,673,595 shares issued and outstanding at December 31, 2022; 15,591,466 at June 30, 2022						Common stock, $0.01 par value, 60,000,000 shares authorized, 15,673,595 shares issued and outstanding at December 31, 2022; 15,591,466 at June 30, 2022	157		156
Additional paid in capital	Additional paid in capital	127,153		126,106		Additional paid in capital	128,486		126,106
Retained earnings	Retained earnings	278,120		270,276		Retained earnings	290,271		270,276
Unearned ESOP shares	Unearned ESOP shares	(5,158)		(5,290)		Unearned ESOP shares	(5,026)		(5,290)
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(4,049)		(2,403)		Accumulated other comprehensive loss	(3,733)		(2,403)
Total stockholders' equity	Total stockholders' equity	396,222		388,845		Total stockholders' equity	410,155		388,845
Total liabilities and stockholders' equity	Total liabilities and stockholders' equity	$	3,555,186	$	3,549,204	Total liabilities and stockholders' equity	$	3,647,015	$	3,549,204

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

HOMETRUST BANCSHARES, INC. AND SUBSIDIARY

Consolidated Statements of Income

(Dollars in thousands, except per share data)


		(Unaudited)				(Unaudited)
		Three Months Ended					Three Months Ended				Six Months Ended
		September 30,					December 31,				December 31,
		2022		2021					2022		2021		2022		2021
Interest and dividend income	Interest and dividend income							Interest and dividend income
Loans	Loans	$	33,245	$	27,895			Loans	$	38,995	$	26,929	$	72,240	$	54,824
Commercial paper	Commercial paper	1,116		155				Commercial paper	184		303		1,300		458
Debt securities available for sale	Debt securities available for sale	678		524				Debt securities available for sale	1,151		411		1,829		935
Other investments and interest-bearing deposits	Other investments and interest-bearing deposits	888		731				Other investments and interest-bearing deposits	1,072		845		1,960		1,576
Total interest and dividend income	Total interest and dividend income	35,927		29,305				Total interest and dividend income	41,402		28,488		77,329		57,793
Interest expense	Interest expense							Interest expense
Deposits	Deposits	1,395		1,572				Deposits	3,603		1,305		4,998		2,877
Borrowings	Borrowings	12		26				Borrowings	254		15		266		41
Total interest expense	Total interest expense	1,407		1,598				Total interest expense	3,857		1,320		5,264		2,918
Net interest income	Net interest income	34,520		27,707				Net interest income	37,545		27,168		72,065		54,875
Provision (benefit) for credit losses	Provision (benefit) for credit losses	3,987		(1,460)				Provision (benefit) for credit losses	2,240		(2,500)		6,227		(3,960)
Net interest income after provision (benefit) for credit losses	Net interest income after provision (benefit) for credit losses	30,533		29,167				Net interest income after provision (benefit) for credit losses	35,305		29,668		65,838		58,835
Noninterest income	Noninterest income							Noninterest income
Service charges and fees on deposit accounts	Service charges and fees on deposit accounts	2,338		2,372				Service charges and fees on deposit accounts	2,523		2,513		4,861		4,885
Loan income and fees	Loan income and fees	570		979				Loan income and fees	647		805		1,217		1,784
Gain on sale of loans held for sale	Gain on sale of loans held for sale	1,586		4,057				Gain on sale of loans held for sale	1,102		3,901		2,688		7,958
BOLI income	BOLI income	527		518				BOLI income	494		490		1,021		1,008

Operating lease income	Operating lease income	1,585		1,540				Operating lease income	1,156		1,718		2,741		3,258
Gain (loss) on sale of premises and equipment								Gain (loss) on sale of premises and equipment	1,127		(87)		1,115		(87)
Other	Other	804		886				Other	1,405		753		2,209		1,639
Total noninterest income	Total noninterest income	7,410		10,352				Total noninterest income	8,454		10,093		15,852		20,445
Noninterest expense	Noninterest expense							Noninterest expense
Salaries and employee benefits	Salaries and employee benefits	14,815		15,280				Salaries and employee benefits	14,484		14,872		29,299		30,152
Occupancy expense, net	Occupancy expense, net	2,408		2,317				Occupancy expense, net	2,428		2,401		4,824		4,718
Computer services	Computer services	2,763		2,521				Computer services	2,796		2,609		5,559		5,130
Telephone, postage, and supplies	Telephone, postage, and supplies	603		650				Telephone, postage, and supplies	575		672		1,178		1,322
Marketing and advertising	Marketing and advertising	590		705				Marketing and advertising	481		832		1,071		1,537
Deposit insurance premiums	Deposit insurance premiums	542		566				Deposit insurance premiums	546		302		1,088		868

Core deposit intangible amortization	Core deposit intangible amortization	34		93				Core deposit intangible amortization	26		65		60		158
Merger-related expenses	Merger-related expenses	474		—				Merger-related expenses	250		—		724		—

Other	Other	3,872		3,884				Other	4,490		4,069		8,362		7,953
Total noninterest expense	Total noninterest expense	26,101		26,016				Total noninterest expense	26,076		25,822		52,165		51,838
Net income before income taxes	Net income before income taxes	11,842		13,503				Net income before income taxes	17,683		13,939		29,525		27,442
Income tax expense	Income tax expense	2,643		2,976				Income tax expense	4,025		2,861		6,668		5,837
Net income	Net income	$	9,199	$	10,527			Net income	$	13,658	$	11,078	$	22,857	$	21,605
Per share data	Per share data							Per share data
Net income per common share	Net income per common share							Net income per common share
Basic	Basic	$	0.61	$	0.66			Basic	$	0.90	$	0.70	$	1.51	$	1.36
Diluted	Diluted	$	0.60	$	0.65			Diluted	$	0.90	$	0.68	$	1.50	$	1.33

Average shares outstanding	Average shares outstanding							Average shares outstanding
Basic	Basic	14,988,006		15,761,247				Basic	15,028,179		15,632,283		15,008,092		15,696,765
Diluted	Diluted	15,130,762		16,146,611				Diluted	15,161,153		15,989,606		15,145,701		16,057,607

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

HOMETRUST BANCSHARES, INC. AND SUBSIDIARY

Consolidated Statements of Comprehensive Income

(Dollars in thousands)

(Unaudited)
Three Months Ended
September 30,
2022 2021
Net income $ 9,199 $ 10,527
Other comprehensive loss
Unrealized holding losses on debt securities available for sale
Losses arising during the period (2,138) (305)
Deferred income tax benefit 492 70
Total other comprehensive loss (1,646) (235)
Comprehensive income $ 7,553 $ 10,292


	(Unaudited)
	Three Months Ended				Six Months Ended
	December 31,				December 31,
	2022		2021		2022		2021
Net income	$	13,658	$	11,078	$	22,857	$	21,605
Other comprehensive income (loss)
Unrealized holding gains (losses) on debt securities available for sale
Gains (losses) arising during the period	411		(882)		(1,727)		(1,187)
Deferred income tax benefit (expense)	(95)		203		397		273


Total other comprehensive income (loss)	316		(679)		(1,330)		(914)
Comprehensive income	$	13,974	$	10,399	$	21,527	$	20,691

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

HOMETRUST BANCSHARES, INC. AND SUBSIDIARY

Consolidated Statements of Changes in Stockholders' Equity

(Dollars in thousands)


		(Unaudited)																			(Unaudited)
		Three Months Ended September 30, 2022																			Three Months Ended December 31, 2022
		Common Stock				Additional Paid In Capital			Retained Earnings			Unearned ESOP Shares			Accumulated Other Comprehensive Loss			Total Stockholders' Equity			Common Stock			Additional Paid In Capital		Retained Earnings		Unearned ESOP Shares		Accumulated Other Comprehensive Loss		Total Stockholders' Equity
		Shares		Amount																	Shares	Amount
Balance at June 30, 2022		15,591,466		$	156	$	126,106		$	270,276		$	(5,290)		$	(2,403)		$	388,845
Balance at September 30, 2022																				Balance at September 30, 2022	15,632,348	$	156	$	127,153	$	278,120	$	(5,158)	$	(4,049)	$	396,222
Net income	Net income	—		—		—			9,199			—			—			9,199		Net income	—	—		—		13,658		—		—		13,658

Cash dividends declared on common stock, $0.09/ common share		—		—		—			(1,355)			—			—			(1,355)
Cash dividends declared on common stock, $0.10/ common share																				Cash dividends declared on common stock, $0.10/ common share	—	—		—		(1,507)		—		—		(1,507)

Forfeited restricted stock	Forfeited restricted stock	(400)		—		—			—			—			—			—		Forfeited restricted stock	(5,800)	—		—		—		—		—		—
Retired stock		(4,079)		—		(95)			—			—			—			(95)

Granted restricted stock		4,500		—		—			—			—			—			—
Stock issued for RSUs		13,861		—		—			—			—			—			—

Exercised stock options	Exercised stock options	27,000		—		388			—			—			—			388		Exercised stock options	47,047	1		676		—		—		—		677
Share-based compensation expense	Share-based compensation expense	—		—		567			—			—			—			567		Share-based compensation expense	—	—		464		—		—		—		464
ESOP compensation expense	ESOP compensation expense	—		—		187			—			132			—			319		ESOP compensation expense	—	—		193		—		132		—		325
Other comprehensive loss		—		—		—			—			—			(1,646)			(1,646)
Balance at September 30, 2022		15,632,348		$	156	$	127,153		$	278,120		$	(5,158)		$	(4,049)		$	396,222
Other comprehensive income																				Other comprehensive income	—	—		—		—		—		316		316
Balance at December 31, 2022																				Balance at December 31, 2022	15,673,595	$	157	$	128,486	$	290,271	$	(5,026)	$	(3,733)	$	410,155

																					(Unaudited)
			Three Months Ended December 31, 2021
			Common Stock					Additional Paid In Capital			Retained Earnings			Unearned ESOP Shares			Accumulated Other Comprehensive Income				Total Stockholders' Equity
																						Additional Paid In Capital		Retained Earnings		Unearned ESOP Shares		Accumulated Other Comprehensive Income		Total Stockholders' Equity
Balance at September 30, 2021																				Balance at September 30, 2021	16,307,658											$	396,511
Net income																				Net income	—	—		—		11,078		—		—		11,078

Cash dividends declared on common stock, $0.09/common share																				Cash dividends declared on common stock, $0.09/common share	—	—		—		(1,423)		—		—		(1,423)
Common stock repurchased																				Common stock repurchased	(299,397)	(3)		(8,967)		—		—		—		(8,970)
Forfeited restricted stock																				Forfeited restricted stock	(6,400)	—		—		—		—		—		—

Exercised stock options																				Exercised stock options	301,600	3		4,339		—		—		—		4,342
Share-based compensation expense																				Share-based compensation expense	—	—		485		—		—		—		485
ESOP compensation expense																				ESOP compensation expense	—	—		270		—		132		—		402
Other comprehensive loss																				Other comprehensive loss	—	—		—		—		—		(679)		(679)
Balance at December 31, 2021																				Balance at December 31, 2021	16,303,461	$	163	$	147,552	$	258,986	$	(5,555)	$	600	$	401,746

(Unaudited)
Three Months Ended September 30, 2021
Common Stock Additional
Paid In
Capital Retained
Earnings Unearned
ESOP
Shares Accumulated
Other
Comprehensive
Income Total
Stockholders'
Equity
Shares Amount
Balance at June 30, 2021 16,636,483 $ 167 $ 160,582 $ 240,075 $ (5,819) $ 1,514 $ 396,519
Net income — — — 10,527 — — 10,527
Cash dividends declared on common stock, $0.08/common share — — — (1,271) — — (1,271)
Common stock repurchased (376,435) (4) (10,429) — — — (10,433)
Forfeited restricted stock (3,000) — — — — — —
Retired stock (2,708) — (75) — — — (75)
Stock issued for RSUs 7,118 — — — — — —
Exercised stock options 46,200 — 700 — — — 700
Share-based compensation expense — — 415 — — — 415
ESOP compensation expense — — 232 — 132 — 364
Other comprehensive loss — — — — — (235) (235)
Balance at September 30, 2021 16,307,658 $ 163 $ 151,425 $ 249,331 $ (5,687) $ 1,279 $ 396,511

HOMETRUST BANCSHARES, INC. AND SUBSIDIARY

Consolidated Statements of Changes in Stockholders' Equity (Continued)

(Dollars in thousands)


	(Unaudited)
	Six Months Ended December 31, 2022
	Common Stock			Additional Paid In Capital		Retained Earnings		Unearned ESOP Shares		Accumulated Other Comprehensive Income		Total Stockholders' Equity
	Shares	Amount
Balance at June 30, 2022	15,591,466	$	156	$	126,106	$	270,276	$	(5,290)	$	(2,403)	$	388,845
Net income	—	—		—		22,857		—		—		22,857

Cash dividends declared on common stock, $0.19/common share	—	—		—		(2,862)		—		—		(2,862)

Forfeited restricted stock	(6,200)	—		—		—		—		—		—
Retired stock	(4,079)	—		(95)		—		—		—		(95)
Granted restricted stock	4,500	—		—		—		—		—		—
Stock issued for RSUs	13,861	—		—		—		—		—		—
Exercised stock options	74,047	1		1,064		—		—		—		1,065
Share-based compensation expense	—	—		1,031		—		—		—		1,031
ESOP compensation expense	—	—		380		—		264		—		644
Other comprehensive loss	—	—		—		—		—		(1,330)		(1,330)
Balance at December 31, 2022	15,673,595	$	157	$	128,486	$	290,271	$	(5,026)	$	(3,733)	$	410,155

	(Unaudited)
	Six Months Ended December 31, 2021
	Common Stock			Additional Paid In Capital		Retained Earnings		Unearned ESOP Shares		Accumulated Other Comprehensive Income		Total Stockholders' Equity
	Shares	Amount
Balance at June 30, 2021	16,636,483	$	167	$	160,582	$	240,075	$	(5,819)	$	1,514	$	396,519
Net income	—	—		—		21,605		—		—		21,605

Cash dividends declared on common stock, $0.17/common share	—	—		—		(2,694)		—		—		(2,694)
Common stock repurchased	(675,832)	(7)		(19,396)		—		—		—		(19,403)
Forfeited restricted stock	(9,400)	—		—		—		—		—		—
Retired stock	(2,708)	—		(75)		—		—		—		(75)
Granted restricted stock	—	—		—		—		—		—		—
Stock issued for RSUs	7,118	—		—		—		—		—		—
Exercised stock options	347,800	3		5,039		—		—		—		5,042
Share-based compensation expense	—	—		900		—		—		—		900
ESOP compensation expense	—	—		502		—		264		—		766
Other comprehensive loss	—	—		—		—		—		(914)		(914)
Balance at December 31, 2021	16,303,461	$	163	$	147,552	$	258,986	$	(5,555)	$	600	$	401,746

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

HOMETRUST BANCSHARES, INC. AND SUBSIDIARY

Consolidated Statements of Cash Flows

(Dollars in thousands)


		(Unaudited)					(Unaudited)
		Three Months Ended September 30,					Six Months Ended December 31,
		2022		2021			2022		2021
Operating activities	Operating activities					Operating activities
Net income	Net income	$	9,199	$	10,527	Net income	$	22,857	$	21,605
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:					Adjustments to reconcile net income to net cash provided by operating activities:
Provision (benefit) for credit losses	Provision (benefit) for credit losses	3,987		(1,460)		Provision (benefit) for credit losses	6,227		(3,960)
Depreciation and amortization of premises and equipment and equipment for operating leases	Depreciation and amortization of premises and equipment and equipment for operating leases	2,169		2,279		Depreciation and amortization of premises and equipment and equipment for operating leases	4,360		4,782
Deferred income tax expense (benefit)		141		1,249
Deferred income tax expense						Deferred income tax expense	565		5,154
Net accretion of purchase accounting adjustments on loans	Net accretion of purchase accounting adjustments on loans	(178)		(428)		Net accretion of purchase accounting adjustments on loans	(373)		(784)
Net amortization and accretion	Net amortization and accretion	(105)		1,442		Net amortization and accretion	1,467		1,586

Loss from sale of premises and equipment		12		—
Loss (gain) from sale of premises and equipment						Loss (gain) from sale of premises and equipment	(1,115)		87

Gain on sale of REO	Gain on sale of REO	—		(3)		Gain on sale of REO	—		(3)
Loss incurred at the end of operating leases						Loss incurred at the end of operating leases	189		92
BOLI income	BOLI income	(527)		(518)		BOLI income	(1,021)		(1,008)
Gain on sale of loans held for sale	Gain on sale of loans held for sale	(1,586)		(4,057)		Gain on sale of loans held for sale	(2,688)		(7,958)
Origination of loans held for sale	Origination of loans held for sale	(58,035)		(140,626)		Origination of loans held for sale	(116,402)		(301,898)
Proceeds from sale of loans held for sale	Proceeds from sale of loans held for sale	57,570		129,679		Proceeds from sale of loans held for sale	115,754		303,911
New deferred loan origination fees, net	New deferred loan origination fees, net	(1,856)		(971)		New deferred loan origination fees, net	(2,855)		(273)
Decrease in accrued interest receivable and other assets	Decrease in accrued interest receivable and other assets	1,143		198		Decrease in accrued interest receivable and other assets	(6,220)		(2,255)

ESOP compensation expense	ESOP compensation expense	319		364		ESOP compensation expense	644		766
Share-based compensation expense	Share-based compensation expense	567		415		Share-based compensation expense	1,031		900
Increase (decrease) in other liabilities		(4,697)		27
Net cash provided by (used in) operating activities		8,123		(1,883)
Decrease in other liabilities						Decrease in other liabilities	(1,989)		(3,391)
Net cash provided by operating activities						Net cash provided by operating activities	20,431		17,353
Investing activities	Investing activities					Investing activities
Purchases of debt securities available for sale	Purchases of debt securities available for sale	(48,014)		(5,261)		Purchases of debt securities available for sale	(59,056)		(7,011)
Proceeds from maturities, calls and paydowns of debt securities available for sale	Proceeds from maturities, calls and paydowns of debt securities available for sale	11,045		36,225		Proceeds from maturities, calls and paydowns of debt securities available for sale	36,389		40,042
Purchases of commercial paper	Purchases of commercial paper	(210,292)		(133,901)		Purchases of commercial paper	(210,292)		(291,652)
Proceeds from maturities and calls of commercial paper	Proceeds from maturities and calls of commercial paper	320,689		127,000		Proceeds from maturities and calls of commercial paper	406,269		227,499
Purchases of CDs in other banks	Purchases of CDs in other banks	(4,980)		(996)		Purchases of CDs in other banks	(9,455)		(996)
Proceeds from maturities of CDs in other banks	Proceeds from maturities of CDs in other banks	996		5,623		Proceeds from maturities of CDs in other banks	3,635		7,116
Net (purchases) redemptions of FHLB and FRB stock	Net (purchases) redemptions of FHLB and FRB stock	(78)		3,179		Net (purchases) redemptions of FHLB and FRB stock	(4,335)		3,170
Net (purchases) redemptions of SBIC investments, at cost	Net (purchases) redemptions of SBIC investments, at cost	523		(360)		Net (purchases) redemptions of SBIC investments, at cost	344		(1,577)

Net (increase) decrease in loans	Net (increase) decrease in loans	(92,109)		17,696		Net (increase) decrease in loans	(208,031)		34,131
Purchase of BOLI	Purchase of BOLI	(29)		(53)		Purchase of BOLI	(33)		(93)

Purchase of equipment for operating leases	Purchase of equipment for operating leases	(577)		(879)		Purchase of equipment for operating leases	(4,918)		(1,677)
Payoff of equipment for operating leases		1,239		1,165
Sale of equipment for operating leases						Sale of equipment for operating leases	4,120		1,558
Purchase of premises and equipment	Purchase of premises and equipment	(616)		(2,416)		Purchase of premises and equipment	(1,157)		(4,886)
Proceeds from sale of assets held for sale		1,275		634
Proceeds from sale of premises and equipment and assets held for sale						Proceeds from sale of premises and equipment and assets held for sale	9,634		1,693

Proceeds from sale of REO	Proceeds from sale of REO	—		146		Proceeds from sale of REO	3		146

Net cash provided by (used in) investing activities	Net cash provided by (used in) investing activities	(20,928)		47,802		Net cash provided by (used in) investing activities	(36,883)		7,463
Financing activities	Financing activities					Financing activities
Net increase in deposits		2,907		31,743
Net decrease in short-term borrowings		—		(75,000)

Net increase (decrease) in deposits						Net increase (decrease) in deposits	(51,741)		43,150
Net increase (decrease) in short-term borrowings						Net increase (decrease) in short-term borrowings	130,000		(97,000)
Proceeds from long-term borrowings						Proceeds from long-term borrowings	—		30,000

Common stock repurchased	Common stock repurchased	—		(10,433)		Common stock repurchased	—		(19,403)
Cash dividends paid	Cash dividends paid	(1,355)		(1,271)		Cash dividends paid	(2,862)		(2,694)
Retired stock	Retired stock	(95)		(75)		Retired stock	(95)		(75)
Exercised stock options	Exercised stock options	388		700		Exercised stock options	1,065		5,042
Net cash provided by (used in) financing activities	Net cash provided by (used in) financing activities	1,845		(54,336)		Net cash provided by (used in) financing activities	76,367		(40,980)
Net decrease in cash and cash equivalents		(10,960)		(8,417)
Net increase (decrease) in cash and cash equivalents						Net increase (decrease) in cash and cash equivalents	59,915		(16,164)
Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period	105,119		50,990		Cash and cash equivalents at beginning of period	105,119		50,990
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	94,159	$	42,573	Cash and cash equivalents at end of period	$	165,034	$	34,826

HOMETRUST BANCSHARES, INC. AND SUBSIDIARY

Consolidated Statements of Cash Flows ~~(continued)~~(Continued)

(Dollars in thousands)


		(Unaudited)					(Unaudited)
		Three Months Ended September 30,					Six Months Ended December 31,
		2022		2021			2022		2021
Supplemental disclosures
Supplemental disclosures:						Supplemental disclosures:
Cash paid during the period for:	Cash paid during the period for:					Cash paid during the period for:
Interest	Interest	$	1,296	$	1,599	Interest	$	4,988	$	2,929
Income taxes	Income taxes	127		39		Income taxes	1,156		192
Noncash transactions:	Noncash transactions:					Noncash transactions:
Unrealized loss in value of debt securities available for sale, net of income taxes	Unrealized loss in value of debt securities available for sale, net of income taxes	(1,646)		(235)		Unrealized loss in value of debt securities available for sale, net of income taxes	(1,330)		(914)

Transfer of loans held for sale to loans held for investment	Transfer of loans held for sale to loans held for investment	5,219		4,094		Transfer of loans held for sale to loans held for investment	8,753		11,629

Transfer of loans held for investment to loans held for sale						Transfer of loans held for investment to loans held for sale	—		12,827

ROU asset and lease liabilities for operating lease accounting	ROU asset and lease liabilities for operating lease accounting	—		959		ROU asset and lease liabilities for operating lease accounting	2,108		946

Transfer of premises and equipment to assets held for sale (included in other assets)	Transfer of premises and equipment to assets held for sale (included in other assets)	—		3,229		Transfer of premises and equipment to assets held for sale (included in other assets)	—		3,229

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

HOMETRUST BANCSHARES, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share data)

1. Summary of Significant Accounting Policies

The consolidated financial statements presented in this report include the accounts of HomeTrust Bancshares, Inc., a Maryland corporation ("HomeTrust"), and its wholly-owned subsidiary, HomeTrust Bank (the "Bank"). As used throughout this report, the term the "Company" refers to HomeTrust and the Bank, its consolidated subsidiary, unless the context otherwise requires.

The accompanying unaudited consolidated financial statements have been prepared in accordance with US 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 SEC. Accordingly, they do not include all the information and footnotes required by US 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, 2022 ("2022 Form 10-K") filed with the SEC on September 12, 2022. The results of operations for the ~~three~~six months ended ~~September 30,~~December 31, 2022 are not necessarily indicative of results that may be expected for the entire fiscal year ending June 30, 2023.

The preparation of financial statements in conformity with US 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 the determination of the provision and the ACL on loans as an accounting policy that, due to the judgments, estimates and assumptions inherent in this policy, is critical to an understanding of the Company's financial statements. This policy and the related judgments, estimates and assumptions is described in greater detail in the notes to the Consolidated Financial Statements and Management's Discussion and Analysis of Financial Condition and Results of Operations (Critical Accounting Policies) in the 2022 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 this critical accounting policy, 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 this estimate and the Company's financial condition and operating results in future periods.

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 stockholders’ equity as previously reported.

Loans Held for Sale

Residential mortgages originated and intended for sale in the secondary market through mandatory delivery contracts are recorded at fair value (fair value option elected). The fair value includes the servicing value of the loans as well as any accrued interest, with changes in value recorded through the gain on sale of loans held for sale. Conversely, residential mortgages originated and intended for sale in the secondary market on a best efforts basis are sold with servicing released and carried at the lower of cost or fair value as determined by outstanding commitments from investors. Net unrealized losses, if any, are recorded as a valuation allowance and charged to earnings.

The Company originates loans guaranteed by the SBA for the purchase of businesses, business startups, business expansion, equipment, and working capital. All SBA loans are underwritten and documented as prescribed by the SBA. SBA loans are generally fully amortizing and have maturity dates and amortizations of up to 25 years. SBA loans are classified as held for sale and are carried at the lower of cost or fair value. The guaranteed portion of the loan is sold and the servicing rights are retained. A gain is recorded for any premium received in excess of the carrying value of the net assets transferred in the sale and is included in the gain on sale of loans held for sale. The portion of SBA loans that are retained are adjusted to fair value and reclassified to total loans, net of deferred costs (loans held for investment). The net value of the retained loans is included in the appropriate loan classification for disclosure purposes.

HELOCs held for sale are originated through a third party in various states outside the Company's geographic footprint, but are underwritten to the Company's underwriting guidelines. The loans are generally held for sale by the Company over a 90 to 180 day period and are serviced by the third party. The loans are marketed by the third party to investors in pools and once sold the Company recognizes a gain or loss on the sale which is recorded through the gain on sale of loans held for sale.

Derivative Instruments and Hedging

The Company holds and issues derivative financial instruments such as IRLCs and other forward sale commitments. IRLCs are subject to pricing risk primarily related to fluctuations in market interest rates. To hedge the interest rate risk on certain IRLCs, the Company uses forward sale commitments such as TBAs or mandatory delivery commitments with investors. Management expects these forward sale commitments to experience changes in fair value opposite to the changes in fair value of the IRLCs, thereby reducing earnings volatility. Forward sale commitments are also used to hedge the interest rate risk on mortgage loans held for sale that are not committed to investors and still subject to price risk. If the mandatory delivery commitments are not fulfilled, the Company pays a pair-off fee. Best effort forward sale commitments are also executed with investors, whereby certain loans are locked with a borrower and simultaneously committed to an investor at a fixed price. If the best effort IRLC does not fund, there is no obligation to fulfill the investor commitment.

The Company considers various factors and strategies in determining what portion of the IRLCs and uncommitted mortgage loans held for sale to economically hedge. All derivative instruments are recognized as other assets or other liabilities on the consolidated statements of financial condition at their fair value. Changes in the fair value of the derivative instruments and gains and losses resulting from the pairing-

HOMETRUST BANCSHARES, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share data)

out of forward sale commitments are recognized in the gain on sale of loans held for sale on the consolidated statements of income in the period in which they occur. The Company accounts for all derivative instruments as free-standing derivative instruments and does not designate any for hedge accounting.

2. Recent Accounting Pronouncements

~~Adoption of New Accounting Standards~~

~~ASU 2021-05, "Leases (Topic 842): Lessors—Certain Leases with Variable Lease Payments."~~ This ASU amended the lease classification requirements for lessors to classify as an operating lease any lease that would otherwise be classified as a sales-type or direct financing lease that would result in the recognition of a day-one loss at lease commencement, provided that the lease includes variable lease payments that do not depend on an index or rate. When a lease is classified as operating, the lessor does not recognize a net investment in the lease, does not derecognize the underlying asset and therefore, does not recognize a selling profit or loss. The amendments in this ASU are effective for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years. The adoption of this standard on July 1, 2022, did not have a material impact on the Company's consolidated financial statements.

Newly Issued but Not Yet Effective Accounting Standards

ASU 2022-02, "Financial Instruments—Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures." This ASU eliminates the TDR recognition and measurement guidance and requires that an entity evaluate whether the modification represents a new loan or a continuation of an existing loan. The amendment also adjusts the disclosures related to modifications and requires entities to disclose current-period gross write-offs by year of origination within the existing vintage disclosures. The amendments in this ASU are effective for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years and early adoption is permitted. The Company is currently evaluating the impact of adopting the new guidance on the consolidated financial statements.

~~HOMETRUST BANCSHARES, INC. AND SUBSIDIARY~~

~~Notes to Consolidated Financial Statements~~

~~(Dollars in thousands, except per share data)~~

3. Debt Securities

Debt securities available for sale consist of the following at the dates indicated:


		September 30, 2022									December 31, 2022
		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value			Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
U.S. government agencies	U.S. government agencies	$	17,997	$	—	$	(681)	$	17,316	U.S. government agencies	$	15,998	$	—	$	(599)	$	15,399
MBS, residential	MBS, residential	94,178		—		(2,671)		91,507		MBS, residential	87,007		9		(2,569)		84,447
Municipal bonds	Municipal bonds	5,533		1		(114)		5,420		Municipal bonds	4,522		1		(114)		4,409
Corporate bonds	Corporate bonds	49,292		—		(1,794)		47,498		Corporate bonds	45,263		—		(1,576)		43,687

Total	Total	$	167,000	$	1	$	(5,260)	$	161,741	Total	$	152,790	$	10	$	(4,858)	$	147,942


	June 30, 2022
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
U.S. government agencies	$	18,993	$	5	$	(539)	$	18,459
MBS, residential	48,377		3		(1,147)		47,233
Municipal bonds	5,545		31		(18)		5,558
Corporate bonds	57,184		1		(1,457)		55,728

Total	$	130,099	$	40	$	(3,161)	$	126,978

Debt securities available for sale by contractual maturity at ~~September 30,~~December 31, 2022 and June 30, 2022 are shown below. MBS are not included in the maturity categories because the borrowers in the underlying pools may prepay without penalty; therefore, it is unlikely that the securities will pay at their stated maturity schedule.


		September 30, 2022					December 31, 2022
		Amortized Cost		Estimated Fair Value			Amortized Cost		Estimated Fair Value
Due within one year	Due within one year	$	34,292	$	33,933	Due within one year	$	42,262	$	41,448
Due after one year through five years	Due after one year through five years	33,012		31,271		Due after one year through five years	18,006		17,060
Due after five years through ten years	Due after five years through ten years	5,518		5,030		Due after five years through ten years	5,515		4,987
Due after ten years	Due after ten years	—		—		Due after ten years	—		—
MBS, residential	MBS, residential	94,178		91,507		MBS, residential	87,007		84,447
Total	Total	$	167,000	$	161,741	Total	$	152,790	$	147,942



	June 30, 2022
	Amortized Cost		Estimated Fair Value
Due within one year	$	35,350	$	34,956
Due after one year through five years	40,325		39,018
Due after five years through ten years	6,047		5,771
Due after ten years	—		—
MBS, residential	48,377		47,233
Total	$	130,099	$	126,978

The Company had no sales of debt securities available for sale and no gross realized gains or losses were recognized during the ~~three~~six months ended ~~September 30,~~December 31, 2022 and 2021.

Debt securities available for sale with amortized costs totaling $67,877 and $43,187 and market values of $65,439 and $41,876 at September 30, 2022 and June 30, 2022, respectively, were pledged as collateral to secure various public deposits and other borrowings.

1011

HOMETRUST BANCSHARES, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share data)

Debt securities available for sale with amortized costs totaling $83,849 and $43,187 and market values of $80,818 and $41,876 at December 31, 2022 and June 30, 2022, respectively, were pledged as collateral to secure various public deposits and other borrowings.

The gross unrealized losses and the fair value for debt securities available for sale aggregated by the length of time that individual securities have been in a continuous unrealized loss position as of ~~September 30,~~December 31, 2022 and June 30, 2022 were as follows:


		September 30, 2022													December 31, 2022
		Less than 12 Months				12 Months or More				Total					Less than 12 Months				12 Months or More				Total
		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses			Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
U.S. government agencies	U.S. government agencies	$	12,544	$	(446)	$	4,765	$	(235)	$	17,309	$	(681)	U.S. government agencies	$	991	$	(8)	$	14,408	$	(591)	$	15,399	$	(599)
MBS, residential	MBS, residential	84,197		(2,015)		7,281		(656)		91,478		(2,671)		MBS, residential	73,958		(1,796)		8,571		(773)		82,529		(2,569)
Municipal bonds	Municipal bonds	4,419		(114)		—		—		4,419		(114)		Municipal bonds	3,408		(114)		—		—		3,408		(114)
Corporate bonds	Corporate bonds	31,983		(809)		14,015		(985)		45,998		(1,794)		Corporate bonds	21,807		(547)		19,980		(1,029)		41,787		(1,576)
Total	Total	$	133,143	$	(3,384)	$	26,061	$	(1,876)	$	159,204	$	(5,260)	Total	$	100,164	$	(2,465)	$	42,959	$	(2,393)	$	143,123	$	(4,858)


	June 30, 2022
	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	$	14,461	$	(539)	$	—	$	—	$	14,461	$	(539)
MBS, residential	41,658		(994)		5,269		(153)		46,927		(1,147)
Municipal bonds	1,970		(18)		—		—		1,970		(18)
Corporate bonds	39,454		(730)		14,273		(727)		53,727		(1,457)
Total	$	97,543	$	(2,281)	$	19,542	$	(880)	$	117,085	$	(3,161)

The total number of securities with unrealized losses at ~~September 30,~~December 31, 2022 and June 30, 2022 were ~~208~~195 and 177, respectively.

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 ~~September 30,~~December 31, 2022 continue to perform as scheduled and management does not believe that there is a credit loss or that a provision for credit losses is 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 within the portfolio and it is not more-likely-than-not that securities will be required to be sold. See "Note 1 – Summary of Significant Accounting Policies" in our 2022 Form 10-K 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.

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 ACL on accrued interest receivable. As of ~~September 30,~~December 31, 2022, the accrued interest receivable for debt securities available for sale was ~~$600.~~$552.

4. Loans Held For Sale

Loans held for sale, at the lower of cost or fair value, consist of the following as of the dates ~~indicated consist~~indicated:


	December 31, 2022		June 30, 2022
One-to-four family	$	26	$	4,176
SBA	37,375		14,774
HELOCs	35,376		60,357

Total loans held for sale, at the lower of cost or fair value	$	72,777	$	79,307

The carrying balance of loans held for sale, at fair value, was $518 and $0 at December 31, 2022 and June 30, 2022, respectively, while the ~~following:~~

September 30, 2022 June 30, 2022
One-to-four family $ 1,585 $ 4,176
SBA 17,834 14,774
HELOCs 56,833 60,357
Total $ 76,252 $ 79,307
amortized cost of these loans was $506 and $0 at the same dates.

1112

HOMETRUST BANCSHARES, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share data)

5. Loans and Allowance for Credit Losses on Loans

Loans consist of the following at the dates indicated(1):


		September 30, 2022		June 30, 2022			December 31, 2022		June 30, 2022
Commercial real estate loans	Commercial real estate loans					Commercial real estate loans
Construction and land development	Construction and land development	$	310,985	$	291,202	Construction and land development	$	328,253	$	291,202
Commercial real estate - owner occupied	Commercial real estate - owner occupied	336,456		335,658		Commercial real estate - owner occupied	340,824		335,658
Commercial real estate - non-owner occupied	Commercial real estate - non-owner occupied	661,644		662,159		Commercial real estate - non-owner occupied	690,241		662,159
Multifamily	Multifamily	79,082		81,086		Multifamily	69,156		81,086
Total commercial real estate loans	Total commercial real estate loans	1,388,167		1,370,105		Total commercial real estate loans	1,428,474		1,370,105
Commercial loans	Commercial loans					Commercial loans
Commercial and industrial	Commercial and industrial	205,606		192,652		Commercial and industrial	194,465		192,652
Equipment finance	Equipment finance	411,012		394,541		Equipment finance	426,507		394,541
Municipal leases	Municipal leases	130,777		129,766		Municipal leases	135,922		129,766
PPP loans	PPP loans	238		661		PPP loans	214		661
Total commercial loans	Total commercial loans	747,633		717,620		Total commercial loans	757,108		717,620
Residential real estate loans	Residential real estate loans					Residential real estate loans
Construction and land development	Construction and land development	91,488		81,847		Construction and land development	100,002		81,847
One-to-four family	One-to-four family	374,849		354,203		One-to-four family	400,595		354,203
HELOCs	HELOCs	164,701		160,137		HELOCs	194,296		160,137
Total residential real estate loans	Total residential real estate loans	631,038		596,187		Total residential real estate loans	694,893		596,187
Consumer loans	Consumer loans	100,945		85,383		Consumer loans	105,148		85,383
Total loans, net of deferred loan fees and costs	Total loans, net of deferred loan fees and costs	2,867,783		2,769,295		Total loans, net of deferred loan fees and costs	2,985,623		2,769,295
ACL on loans	ACL on loans	(38,301)		(34,690)		ACL on loans	(38,859)		(34,690)
Loans, net	Loans, net	$	2,829,482	$	2,734,605	Loans, net	$	2,946,764	$	2,734,605

(1) At ~~September 30,~~December 31, 2022 and June 30, 2022 accrued interest receivable of ~~$8,890~~$10,434 and $7,969 was accounted for separately from the amortized cost basis.

All qualifying one-to-four family first mortgage loans, HELOCs, commercial real estate loans, indirect auto, municipal leases and FHLB of Atlanta stock are pledged as collateral by a blanket pledge to secure any outstanding FHLB and FRB 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 indicators 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 do not warrant adverse classification.

Substandard—A substandard asset is inadequately protected by the current net worth and paying capacity of the 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.

1213

HOMETRUST BANCSHARES, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share data)

The following table presents the credit risk profile by risk grade for commercial real estate, commercial, residential real estate, and consumer loans by origination year as of ~~September 30,~~December 31, 2022:

Term Loans By Origination Fiscal Year
September 30, 2022 2023 2022 2021 2020 2019 Prior Revolving Total
Construction and land development
Risk rating
Pass $ 8,397 $ 22,819 $ 6,132 $ 618 $ 1,655 $ 6,601 $ 258,421 $ 304,643
Special mention — — — — — — 5,418 5,418
Substandard — 871 — — — 53 — 924
Doubtful — — — — — — — —
Loss — — — — — — — —
Total construction and land development 8,397 23,690 6,132 618 1,655 6,654 263,839 310,985
Commercial real estate - owner occupied
Risk rating
Pass 9,648 57,832 66,926 44,130 42,557 91,104 17,864 330,061
Special mention — 131 — 391 405 2,366 — 3,293
Substandard — — — — — 2,704 398 3,102
Doubtful — — — — — — — —
Loss — — — — — — — —
Total commercial real estate - owner occupied 9,648 57,963 66,926 44,521 42,962 96,174 18,262 336,456
Commercial real estate - non-owner occupied
Risk rating
Pass 25,335 94,508 120,166 91,303 57,136 250,560 8,483 647,491
Special mention — — — — — 14,149 — 14,149
Substandard — — — — — 4 — 4
Doubtful — — — — — — — —
Loss — — — — — — — —
Total commercial real estate - non-owner occupied 25,335 94,508 120,166 91,303 57,136 264,713 8,483 661,644
Multifamily
Risk rating
Pass 800 11,580 19,788 15,740 4,421 25,244 1,078 78,651
Special mention — — — — 29 63 — 92
Substandard — — — — — 339 — 339
Doubtful — — — — — — — —
Loss — — — — — — — —
Total multifamily 800 11,580 19,788 15,740 4,450 25,646 1,078 79,082
Total commercial real estate
Risk rating
Pass $ 44,180 $ 186,739 — $ 213,012 $ 151,791 $ 105,769 $ 373,509 $ 285,846 $ 1,360,846
Special mention — 131 — 391 434 16,578 5,418 22,952
Substandard — 871 — — — 3,100 398 4,369
Doubtful — — — — — — — —
Loss — — — — — — — —
Total commercial real estate $ 44,180 $ 187,741 $ 213,012 $ 152,182 $ 106,203 $ 393,187 $ 291,662 $ 1,388,167

~~HOMETRUST BANCSHARES, INC. AND SUBSIDIARY~~

~~Notes to Consolidated Financial Statements~~

~~(Dollars in thousands, except per share data)~~

Term Loans By Origination Fiscal Year
September 30, 2022 2023 2022 2021 2020 2019 Prior Revolving Total
Commercial and industrial
Risk rating
Pass $ 20,453 $ 66,197 $ 19,969 $ 14,786 $ 8,270 $ 24,509 $ 43,554 $ 197,738
Special mention — 148 344 261 362 — 241 1,356
Substandard — — 669 341 1,438 47 4,003 6,498
Doubtful — — 14 — — — — 14
Loss — — — — — — — —
Total commercial and industrial 20,453 66,345 20,996 15,388 10,070 24,556 47,798 205,606
Equipment finance
Risk rating
Pass 52,522 173,430 102,095 57,234 21,945 1,391 — 408,617
Special mention — 247 153 932 487 — — 1,819
Substandard — — 126 33 141 — — 300
Doubtful — 31 245 — — — — 276
Loss — — — — — — — —
Total equipment finance 52,522 173,708 102,619 58,199 22,573 1,391 — 411,012
Municipal leases
Risk rating
Pass 4,865 19,425 23,953 8,763 10,730 49,916 13,125 130,777
Special mention — — — — — — — —
Substandard — — — — — — — —
Doubtful — — — — — — — —
Loss — — — — — — — —
Total municipal leases 4,865 19,425 23,953 8,763 10,730 49,916 13,125 130,777
PPP loans
Risk rating
Pass — — 13 225 — — — 238
Special mention — — — — — — — —
Substandard — — — — — — — —
Doubtful — — — — — — — —
Loss — — — — — — — —
Total PPP loans — — 13 225 — — — 238
Total commercial
Risk rating
Pass $ 77,840 $ 259,052 $ 146,030 $ 81,008 $ 40,945 $ 75,816 $ 56,679 $ 737,370
Special mention — 395 497 1,193 849 — 241 3,175
Substandard — — 795 374 1,579 47 4,003 6,798
Doubtful — 31 259 — — — — 290
Loss — — — — — — — —
Total commercial $ 77,840 $ 259,478 $ 147,581 $ 82,575 $ 43,373 $ 75,863 $ 60,923 $ 747,633


	Term Loans By Origination Fiscal Year
December 31, 2022	2023		2022			2021		2020		2019		Prior		Revolving		Total
Construction and land development
Risk rating
Pass	$	18,267	$	26,694		$	5,195	$	609	$	1,582	$	7,090	$	267,895	$	327,332
Special mention	—		—			—		—		—		—		—		—
Substandard	—		871			—		—		—		50		—		921
Doubtful	—		—			—		—		—		—		—		—
Loss	—		—			—		—		—		—		—		—
Total construction and land development	18,267		27,565			5,195		609		1,582		7,140		267,895		328,253
Commercial real estate - owner occupied
Risk rating
Pass	22,024		57,836			68,838		46,495		39,665		86,119		14,006		334,983
Special mention	—		132			—		386		391		2,319		—		3,228
Substandard	—		—			—		—		—		2,613		—		2,613
Doubtful	—		—			—		—		—		—		—		—
Loss	—		—			—		—		—		—		—		—
Total commercial real estate - owner occupied	22,024		57,968			68,838		46,881		40,056		91,051		14,006		340,824
Commercial real estate - non-owner occupied
Risk rating
Pass	51,653		96,511			117,902		90,348		56,597		239,453		18,357		670,821
Special mention	—		—			—		—		—		14,040		5,379		19,419
Substandard	—		—			—		—		—		1		—		1
Doubtful	—		—			—		—		—		—		—		—
Loss	—		—			—		—		—		—		—		—
Total commercial real estate - non-owner occupied	51,653		96,511			117,902		90,348		56,597		253,494		23,736		690,241
Multifamily
Risk rating
Pass	1,962		11,755			18,964		10,402		3,381		21,808		483		68,755
Special mention	—		—			—		—		29		62		—		91
Substandard	—		—			—		—		—		310		—		310
Doubtful	—		—			—		—		—		—		—		—
Loss	—		—			—		—		—		—		—		—
Total multifamily	1,962		11,755			18,964		10,402		3,410		22,180		483		69,156
Total commercial real estate
Risk rating
Pass	$	93,906	$	192,796	—	$	210,899	$	147,854	$	101,225	$	354,470	$	300,741	$	1,401,891
Special mention	—		132			—		386		420		16,421		5,379		22,738
Substandard	—		871			—		—		—		2,974		—		3,845
Doubtful	—		—			—		—		—		—		—		—
Loss	—		—			—		—		—		—		—		—
Total commercial real estate	$	93,906	$	193,799		$	210,899	$	148,240	$	101,645	$	373,865	$	306,120	$	1,428,474

HOMETRUST BANCSHARES, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share data)


		Term Loans By Origination Fiscal Year																	Term Loans By Origination Fiscal Year
September 30, 2022		2023		2022		2021		2020		2019		Prior		Revolving		Total
Construction and land development
December 31, 2022																		December 31, 2022	2023		2022		2021		2020		2019		Prior		Revolving		Total
Commercial and industrial																		Commercial and industrial
Risk rating	Risk rating																	Risk rating
Pass	Pass	$	—	$	863	$	—	$	51	$	—	$	1,631	$	88,589	$	91,134	Pass	$	21,697	$	65,130	$	17,789	$	14,061	$	7,515	$	22,897	$	39,085	$	188,174
Special mention	Special mention	—		—		—		—		—		—		—		—		Special mention	—		147		349		—		219		—		200		915
Substandard	Substandard	—		—		—		—		—		354		—		354		Substandard	—		—		26		600		884		46		3,656		5,212
Doubtful	Doubtful	—		—		—		—		—		—		—		—		Doubtful	—		—		—		—		—		—		164		164
Loss	Loss	—		—		—		—		—		—		—		—		Loss	—		—		—		—		—		—		—		—
Total construction and land development		—		863		—		51		—		1,985		88,589		91,488
One-to-four family
Total commercial and industrial																		Total commercial and industrial	21,697		65,277		18,164		14,661		8,618		22,943		43,105		194,465
Equipment finance																		Equipment finance
Risk rating	Risk rating																	Risk rating
Pass	Pass	14,710		61,909		82,573		46,675		28,317		130,596		4,069		368,849		Pass	101,278		161,067		93,081		49,654		17,966		1,061		—		424,107
Special mention	Special mention	—		—		—		—		—		634		—		634		Special mention	—		275		12		973		381		—		—		1,641
Substandard	Substandard	—		127		—		57		540		4,601		—		5,325		Substandard	—		—		121		27		149		—		—		297
Doubtful	Doubtful	—		—		—		—		—		41		—		41		Doubtful	—		229		233		—		—		—		—		462
Loss	Loss	—		—		—		—		—		—		—		—		Loss	—		—		—		—		—		—		—		—
Total one-to-four family		14,710		62,036		82,573		46,732		28,857		135,872		4,069		374,849
HELOCs
Total equipment finance																		Total equipment finance	101,278		161,571		93,447		50,654		18,496		1,061		—		426,507
Municipal leases																		Municipal leases
Risk rating	Risk rating																	Risk rating
Pass	Pass	2,513		1,431		675		428		1,007		7,656		150,257		163,967		Pass	13,145		19,881		23,588		8,443		10,309		47,465		13,091		135,922
Special mention	Special mention	—		—		—		—		—		—		—		—		Special mention	—		—		—		—		—		—		—		—
Substandard	Substandard	—		—		—		—		—		658		48		706		Substandard	—		—		—		—		—		—		—		—
Doubtful	Doubtful	—		—		—		—		—		28		—		28		Doubtful	—		—		—		—		—		—		—		—
Loss	Loss	—		—		—		—		—		—		—		—		Loss	—		—		—		—		—		—		—		—
Total HELOCs		2,513		1,431		675		428		1,007		8,342		150,305		164,701
Total residential real estate
Total municipal leases																		Total municipal leases	13,145		19,881		23,588		8,443		10,309		47,465		13,091		135,922
PPP loans																		PPP loans
Risk rating	Risk rating																	Risk rating
Pass	Pass	$	17,223	$	64,203	$	83,248	$	47,154	$	29,324	$	139,883	$	242,915	$	623,950	Pass	—		—		13		201		—		—		—		214
Special mention	Special mention	—		—		—		—		—		634		—		634		Special mention	—		—		—		—		—		—		—		—
Substandard	Substandard	—		127		—		57		540		5,613		48		6,385		Substandard	—		—		—		—		—		—		—		—
Doubtful	Doubtful	—		—		—		—		—		69		—		69		Doubtful	—		—		—		—		—		—		—		—
Loss	Loss	—		—		—		—		—		—		—		—		Loss	—		—		—		—		—		—		—		—
Total residential real estate		$	17,223	$	64,330	$	83,248	$	47,211	$	29,864	$	146,199	$	242,963	$	631,038
Total PPP loans																		Total PPP loans	—		—		13		201		—		—		—		214
Total commercial																		Total commercial
Risk rating																		Risk rating
Pass																		Pass	$	136,120	$	246,078	$	134,471	$	72,359	$	35,790	$	71,423	$	52,176	$	748,417
Special mention																		Special mention	—		422		361		973		600		—		200		2,556
Substandard																		Substandard	—		—		147		627		1,033		46		3,656		5,509
Doubtful																		Doubtful	—		229		233		—		—		—		164		626
Loss																		Loss	—		—		—		—		—		—		—		—
Total commercial																		Total commercial	$	136,120	$	246,729	$	135,212	$	73,959	$	37,423	$	71,469	$	56,196	$	757,108

Term Loans By Origination Fiscal Year
September 30, 2022 2023 2022 2021 2020 2019 Prior Revolving Total
Total consumer
Risk rating
Pass $ 25,818 $ 23,836 $ 18,648 $ 13,795 $ 9,662 $ 8,062 $ 229 $ 100,050
Special mention — — — — — — — —
Substandard — 114 134 280 105 253 8 894
Doubtful — — — — — — — —
Loss — — — — 1 — — 1
Total consumer $ 25,818 $ 23,950 $ 18,782 $ 14,075 $ 9,768 $ 8,315 $ 237 $ 100,945

HOMETRUST BANCSHARES, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share data)


	Term Loans By Origination Fiscal Year
December 31, 2022	2023		2022		2021		2020		2019		Prior		Revolving		Total
Construction and land development
Risk rating
Pass	$	568	$	861	$	—	$	50	$	—	$	1,487	$	96,693	$	99,659
Special mention	—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		343		—		343
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total construction and land development	568		861		—		50		—		1,830		96,693		100,002
One-to-four family
Risk rating
Pass	24,334		70,877		89,996		46,166		27,833		124,754		11,086		395,046
Special mention	—		—		—		—		—		625		—		625
Substandard	—		126		—		57		—		4,703		—		4,886
Doubtful	—		—		—		—		—		38		—		38
Loss	—		—		—		—		—		—		—		—
Total one-to-four family	24,334		71,003		89,996		46,223		27,833		130,120		11,086		400,595
HELOCs
Risk rating
Pass	3,226		1,107		638		517		976		7,057		180,006		193,527
Special mention	—		—		—		—		—		—		—		—
Substandard	—		—		—		—		46		646		48		740
Doubtful	—		—		—		—		—		29		—		29
Loss	—		—		—		—		—		—		—		—
Total HELOCs	3,226		1,107		638		517		1,022		7,732		180,054		194,296
Total residential real estate
Risk rating
Pass	$	28,128	$	72,845	$	90,634	$	46,733	$	28,809	$	133,298	$	287,785	$	688,232
Special mention	—		—		—		—		—		625		—		625
Substandard	—		126		—		57		46		5,692		48		5,969
Doubtful	—		—		—		—		—		67		—		67
Loss	—		—		—		—		—		—		—		—
Total residential real estate	$	28,128	$	72,971	$	90,634	$	46,790	$	28,855	$	139,682	$	287,833	$	694,893


	Term Loans By Origination Fiscal Year
December 31, 2022	2023		2022		2021		2020		2019		Prior		Revolving		Total
Total consumer
Risk rating
Pass	$	40,368	$	21,422	$	16,557	$	11,767	$	7,954	$	5,902	$	256	$	104,226
Special mention	—		—		—		—		—		—		—		—
Substandard	44		106		166		279		77		235		7		914
Doubtful	—		—		7		—		—		—		—		7
Loss	—		—		—		—		1		—		—		1
Total consumer	$	40,412	$	21,528	$	16,730	$	12,046	$	8,032	$	6,137	$	263	$	105,148

1516

HOMETRUST BANCSHARES, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share data)

The following table presents the credit risk profile by risk grade for commercial real estate, commercial, residential real estate, and consumer loans by origination year as of June 30, 2022:


	Term Loans By Origination Fiscal Year
June 30, 2022	2022		2021			2020		2019		2018		Prior		Revolving		Total
Construction and land development
Risk rating
Pass	$	21,988	$	5,686		$	627	$	2,089	$	1,092	$	5,819	$	248,189	$	285,490
Special mention	—		—			—		—		—		97		4,677		4,774
Substandard	871		—			—		—		—		67		—		938
Doubtful	—		—			—		—		—		—		—		—
Loss	—		—			—		—		—		—		—		—
Total construction and land development	22,859		5,686			627		2,089		1,092		5,983		252,866		291,202
Commercial real estate - owner occupied
Risk rating
Pass	55,167		71,429			45,665		43,786		21,720		74,602		16,857		329,226
Special mention	—		—			396		418		—		2,416		—		3,230
Substandard	—		—			—		—		577		2,227		398		3,202
Doubtful	—		—			—		—		—		—		—		—
Loss	—		—			—		—		—		—		—		—
Total commercial real estate - owner occupied	55,167		71,429			46,061		44,204		22,297		79,245		17,255		335,658
Commercial real estate - non-owner occupied
Risk rating
Pass	97,885		122,975			95,268		56,846		81,037		182,664		7,214		643,889
Special mention	—		—			—		—		13,844		4,421		—		18,265
Substandard	—		—			—		—		—		5		—		5
Doubtful	—		—			—		—		—		—		—		—
Loss	—		—			—		—		—		—		—		—
Total commercial real estate - non-owner occupied	97,885		122,975			95,268		56,846		94,881		187,090		7,214		662,159
Multifamily
Risk rating
Pass	10,135		19,985			15,881		8,614		2,796		20,587		2,495		80,493
Special mention	—		—			—		29		—		217		—		246
Substandard	—		—			—		—		—		347		—		347
Doubtful	—		—			—		—		—		—		—		—
Loss	—		—			—		—		—		—		—		—
Total multifamily	10,135		19,985			15,881		8,643		2,796		21,151		2,495		81,086
Total commercial real estate
Risk rating
Pass	$	185,175	$	220,075	—	$	157,441	$	111,335	$	106,645	$	283,672	$	274,755	$	1,339,098
Special mention	—		—			396		447		13,844		7,151		4,677		26,515
Substandard	871		—			—		—		577		2,646		398		4,492
Doubtful	—		—			—		—		—		—		—		—
Loss	—		—			—		—		—		—		—		—
Total commercial real estate	$	186,046	$	220,075		$	157,837	$	111,782	$	121,066	$	293,469	$	279,830	$	1,370,105

1617

HOMETRUST BANCSHARES, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share data)


	Term Loans By Origination Fiscal Year
June 30, 2022	2022		2021		2020		2019		2018		Prior		Revolving		Total
Commercial and industrial
Risk rating
Pass	$	70,863	$	21,059	$	11,361	$	9,377	$	6,338	$	20,856	$	43,119	$	182,973
Special mention	—		346		260		364		—		—		1,957		2,927
Substandard	—		770		343		1,152		—		52		4,337		6,654
Doubtful	—		98		—		—		—		—		—		98
Loss	—		—		—		—		—		—		—		—
Total commercial and industrial	70,863		22,273		11,964		10,893		6,338		20,908		49,413		192,652
Equipment finance
Risk rating
Pass	186,139		113,363		64,400		26,467		1,755		—		—		392,124
Special mention	200		331		1,002		547		—		—		—		2,080
Substandard	—		123		18		159		—		—		—		300
Doubtful	32		—		—		5		—		—		—		37
Loss	—		—		—		—		—		—		—		—
Total equipment finance	186,371		113,817		65,420		27,178		1,755		—		—		394,541
Municipal leases
Risk rating
Pass	19,425		24,480		8,962		11,034		13,584		39,529		12,715		129,729
Special mention	—		37		—		—		—		—		—		37
Substandard	—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total municipal leases	19,425		24,517		8,962		11,034		13,584		39,529		12,715		129,766
PPP loans
Risk rating
Pass	—		375		286		—		—		—		—		661
Special mention	—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total PPP loans	—		375		286		—		—		—		—		661
Total commercial
Risk rating
Pass	$	276,427	$	159,277	$	85,009	$	46,878	$	21,677	$	60,385	$	55,834	$	705,487
Special mention	200		714		1,262		911		—		—		1,957		5,044
Substandard	—		893		361		1,311		—		52		4,337		6,954
Doubtful	32		98		—		5		—		—		—		135
Loss	—		—		—		—		—		—		—		—
Total commercial	$	276,659	$	160,982	$	86,632	$	49,105	$	21,677	$	60,437	$	62,128	$	717,620

1718

HOMETRUST BANCSHARES, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share data)


	Term Loans By Origination Fiscal Year
June 30, 2022	2022		2021		2020		2019		2018		Prior		Revolving		Total
Construction and land development
Risk rating
Pass	$	864	$	—	$	53	$	—	$	—	$	1,783	$	78,775	$	81,475
Special mention	—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		372		—		372
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total construction and land development	864		—		53		—		—		2,155		78,775		81,847
One-to-four family
Risk rating
Pass	55,415		74,035		47,364		29,075		23,250		113,307		4,077		346,523
Special mention	—		—		—		—		—		835		—		835
Substandard	128		—		1,002		540		430		4,590		—		6,690
Doubtful	—		—		—		—		—		155		—		155
Loss	—		—		—		—		—		—		—		—
Total one-to-four family	55,543		74,035		48,366		29,615		23,680		118,887		4,077		354,203
HELOCs
Risk rating
Pass	1,466		458		282		901		107		7,441		148,526		159,181
Special mention	—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		879		49		928
Doubtful	—		—		—		—		—		28		—		28
Loss	—		—		—		—		—		—		—		—
Total HELOCs	1,466		458		282		901		107		8,348		148,575		160,137
Total residential real estate
Risk rating
Pass	$	57,745	$	74,493	$	47,699	$	29,976	$	23,357	$	122,531	$	231,378	$	587,179
Special mention	—		—		—		—		—		835		—		835
Substandard	128		—		1,002		540		430		5,841		49		7,990
Doubtful	—		—		—		—		—		183		—		183
Loss	—		—		—		—		—		—		—		—
Total residential real estate	$	57,873	$	74,493	$	48,701	$	30,516	$	23,787	$	129,390	$	231,427	$	596,187


	Term Loans By Origination Fiscal Year
June 30, 2022	2022		2021		2020		2019		2018		Prior		Revolving		Total
Total consumer
Risk rating
Pass	$	25,935	$	20,443	$	15,849	$	11,329	$	8,235	$	2,398	$	277	$	84,466
Special mention	—		—		—		—		—		—		—		—
Substandard	72		169		274		85		182		100		33		915
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		2		—		—		—		2
Total consumer	$	26,007	$	20,612	$	16,123	$	11,416	$	8,417	$	2,498	$	310	$	85,383

1819

HOMETRUST BANCSHARES, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share data)

The following tables present aging analyses of past due loans (including nonaccrual loans) by segment and class for the periods indicated below:


		Past Due								Total			Past Due								Total
		30-89 Days		90 Days+		Total		Current		Loans			30-89 Days		90 Days+		Total		Current		Loans
September 30, 2022
December 31, 2022												December 31, 2022
Commercial real estate	Commercial real estate											Commercial real estate
Construction and land development	Construction and land development	$	—	$	—	$	—	$	310,985	$	310,985	Construction and land development	$	—	$	—	$	—	$	328,253	$	328,253
Commercial real estate - owner occupied	Commercial real estate - owner occupied	—		—		—		336,456		336,456		Commercial real estate - owner occupied	503		—		503		340,321		340,824
Commercial real estate - non-owner occupied	Commercial real estate - non-owner occupied	—		—		—		661,644		661,644		Commercial real estate - non-owner occupied	—		—		—		690,241		690,241
Multifamily	Multifamily	851		—		851		78,231		79,082		Multifamily	—		—		—		69,156		69,156
Total commercial real estate	Total commercial real estate	851		—		851		1,387,316		1,388,167		Total commercial real estate	503		—		503		1,427,971		1,428,474
Commercial	Commercial											Commercial
Commercial and industrial	Commercial and industrial	671		1		672		204,934		205,606		Commercial and industrial	87		549		636		193,829		194,465
Equipment finance	Equipment finance	624		179		803		410,209		411,012		Equipment finance	392		497		889		425,618		426,507
Municipal leases	Municipal leases	328		—		328		130,449		130,777		Municipal leases	83		—		83		135,839		135,922
PPP loans	PPP loans	—		—		—		238		238		PPP loans	—		—		—		214		214
Total commercial	Total commercial	1,623		180		1,803		745,830		747,633		Total commercial	562		1,046		1,608		755,500		757,108
Residential real estate	Residential real estate											Residential real estate
Construction and land development	Construction and land development	2		135		137		91,351		91,488		Construction and land development	—		133		133		99,869		100,002
One-to-four family	One-to-four family	1,405		1,200		2,605		372,244		374,849		One-to-four family	533		1,554		2,087		398,508		400,595
HELOCs	HELOCs	1,076		114		1,190		163,511		164,701		HELOCs	1,226		979		2,205		192,091		194,296
Total residential real estate	Total residential real estate	2,483		1,449		3,932		627,106		631,038		Total residential real estate	1,759		2,666		4,425		690,468		694,893
Consumer	Consumer	189		144		333		100,612		100,945		Consumer	456		173		629		104,519		105,148
Total loans	Total loans	$	5,146	$	1,773	$	6,919	$	2,860,864	$	2,867,783	Total loans	$	3,280	$	3,885	$	7,165	$	2,978,458	$	2,985,623


	Past Due								Total
	30-89 Days		90 Days+		Total		Current		Loans
June 30, 2022
Commercial real estate
Construction and land development	$	—	$	—	$	—	$	291,202	$	291,202
Commercial real estate - owner occupied	—		52		52		335,606		335,658
Commercial real estate - non-owner occupied	—		—		—		662,159		662,159
Multifamily	—		—		—		81,086		81,086
Total commercial real estate	—		52		52		1,370,053		1,370,105
Commercial
Commercial and industrial	255		—		255		192,397		192,652
Equipment finance	186		56		242		394,299		394,541
Municipal leases	—		—		—		129,766		129,766
PPP loans	—		—		—		661		661
Total commercial	441		56		497		717,123		717,620
Residential real estate
Construction and land development	115		22		137		81,710		81,847
One-to-four family	910		1,394		2,304		351,899		354,203
HELOCs	283		122		405		159,732		160,137
Total residential real estate	1,308		1,538		2,846		593,341		596,187
Consumer	330		177		507		84,876		85,383
Total loans	$	2,079	$	1,823	$	3,902	$	2,765,393	$	2,769,295

1920

HOMETRUST BANCSHARES, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share data)

The following table presents recorded investment in loans on nonaccrual status, by segment and class, including restructured loans. It also includes interest income recognized on nonaccrual loans for the ~~three~~six months ended ~~September 30,~~December 31, 2022.


		September 30, 2022		June 30, 2022		90 Days+ & Still Accruing as of September 30, 2022		Nonaccrual With No Allowance as of September 30, 2022		Interest Income Recognized			December 31, 2022		June 30, 2022		90 Days+ & Still Accruing as of December 31, 2022		Nonaccrual With No Allowance as of December 31, 2022		Interest Income Recognized
Commercial real estate	Commercial real estate											Commercial real estate
Construction and land development	Construction and land development	$	53	$	67	$	—	$	—	$	—	Construction and land development	$	50	$	67	$	—	$	—	$	1
Commercial real estate - owner occupied	Commercial real estate - owner occupied	638		706		—		—		—		Commercial real estate - owner occupied	621		706		—		—		12
Commercial real estate - non-owner occupied	Commercial real estate - non-owner occupied	4		5		—		—		6		Commercial real estate - non-owner occupied	2		5		—		—		—
Multifamily	Multifamily	99		103		—		—		2		Multifamily	94		103		—		—		4
Total commercial real estate	Total commercial real estate	794		881		—		—		8		Total commercial real estate	767		881		—		—		17
Commercial	Commercial											Commercial
Commercial and industrial	Commercial and industrial	2,500		1,951		—		1		42		Commercial and industrial	970		1,951		—		151		58
Equipment finance	Equipment finance	523		270		—		—		21		Equipment finance	840		270		—		—		64

Municipal leases												Municipal leases	—		—		—		—		5

Total commercial	Total commercial	3,023		2,221		—		1		63		Total commercial	1,810		2,221		—		151		127
Residential real estate	Residential real estate											Residential real estate
Construction and land development	Construction and land development	135		137		—		—		1		Construction and land development	133		137		—		—		2
One-to-four family	One-to-four family	1,847		1,773		—		540		15		One-to-four family	2,021		1,773		—		—		33
HELOCs	HELOCs	694		724		—		—		5		HELOCs	1,130		724		—		—		42
Total residential real estate	Total residential real estate	2,676		2,634		—		540		21		Total residential real estate	3,284		2,634		—		—		77
Consumer	Consumer	333		384		—		—		4		Consumer	313		384		—		—		8
Total loans	Total loans	$	6,826	$	6,120	$	—	$	541	$	96	Total loans	$	6,174	$	6,120	$	—	$	151	$	229

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, and/or a longer term to maturity. The above table excludes ~~$9,929~~$9,327 and $9,818 of TDRs that were performing under their restructured payment terms as of ~~September 30,~~December 31, 2022 and June 30, 2022, respectively.

The following tables present analyses of the ACL on loans by segment for the ~~period~~periods indicated below. In addition to the provision (benefit) for credit losses on loans presented below, provisions (benefits) of ~~$443~~$(85) and ~~$(125)~~$358 for off-balance sheet credit exposures and ~~$(150)~~$(100) and $0$(250) for commercial paper were recorded ~~during~~for the three and six months ended ~~September 30,~~December 31, 2022, respectively. Provisions (benefits) of $(110) and ~~2021, respectively.~~

Three Months Ended September 30, 2022
Commercial Real Estate Commercial Residential Real Estate Consumer Total
Balance at beginning of period $ 13,414 $ 12,036 $ 7,611 $ 1,629 $ 34,690
Provision (benefit) for credit losses 1,264 1,064 674 692 3,694
Charge-offs — (274) (72) (101) (447)
Recoveries 2 152 170 40 364
Net (charge-offs) recoveries $ 2 $ (122) $ 98 $ (61) $ (83)
Balance at end of period $ 14,680 $ 12,978 $ 8,383 $ 2,260 $ 38,301

Three Months Ended September 30, 2021
Commercial Real Estate Commercial Residential Real Estate Consumer Total
Balance at beginning of period $ 15,084 $ 9,663 $ 8,185 $ 2,536 $ 35,468
Provision (benefit) for credit losses (1,336) 713 (789) 77 (1,335)
Charge-offs (438) (181) (27) (63) (709)
Recoveries 684 16 232 50 982
Net (charge-offs) recoveries 246 (165) 205 (13) 273
Balance at end of period $ 13,994 $ 10,211 $ 7,601 $ 2,600 $ 34,406

~~HOMETRUST BANCSHARES, INC. AND SUBSIDIARY~~

~~Notes to Consolidated Financial Statements~~

~~(Dollars in thousands, except per share data)~~

~~The following tables present ending balances of loans~~$(235) for off-balance sheet credit exposures and ~~the related ACL, by segment~~$50 and ~~class~~$50 for commercial paper were recorded for the ~~periods indicated below:~~three and six months ended December 31, 2021.

Allowance for Credit Losses Total Loans Receivable
Loans
Individually
Evaluated Loans
Collectively
Evaluated Total Loans
Individually
Evaluated Loans
Collectively
Evaluated Total
September 30, 2022
Commercial real estate
Construction and land development $ — $ 5,374 $ 5,374 $ — $ 310,985 $ 310,985
Commercial real estate - owner occupied — 3,134 3,134 — 336,456 336,456
Commercial real estate - non-owner occupied — 5,764 5,764 — 661,644 661,644
Multifamily — 408 408 — 79,082 79,082
Total commercial real estate — 14,680 14,680 — 1,388,167 1,388,167
Commercial
Commercial and industrial 2,146 3,862 6,008 3,167 202,439 205,606
Equipment finance — 6,672 6,672 — 411,012 411,012
Municipal leases — 298 298 — 130,777 130,777
PPP loans — — — — 238 238
Total commercial 2,146 10,832 12,978 3,167 744,466 747,633
Residential real estate
Construction and land development — 1,346 1,346 — 91,488 91,488
One-to-four family — 5,080 5,080 2,479 372,370 374,849
HELOCs — 1,957 1,957 — 164,701 164,701
Total residential real estate — 8,383 8,383 2,479 628,559 631,038
Consumer — 2,260 2,260 — 100,945 100,945
Total $ 2,146 $ 36,155 $ 38,301 $ 5,646 $ 2,862,137 $ 2,867,783


	Three Months Ended December 31, 2022
	Commercial Real Estate		Commercial		Residential Real Estate		Consumer		Total
Balance at beginning of period	$	14,680	$	12,978	$	8,383	$	2,260	$	38,301

Provision (benefit) for credit losses	378		1,232		693		122		2,425
Charge-offs	—		(1,859)		(51)		(69)		(1,979)
Recoveries	1		31		23		57		112
Net (charge-offs) recoveries	1		(1,828)		(28)		(12)		(1,867)
Balance at end of period	$	15,059	$	12,382	$	9,048	$	2,370	$	38,859

Allowance for Loan Losses Total Loans Receivable
Loans
Individually
Evaluated Loans
Collectively
Evaluated Total Loans
Individually
Evaluated Loans
Collectively
Evaluated Total
June 30, 2022
Commercial real estate
Construction and land development $ — $ 4,402 $ 4,402 $ — $ 291,202 $ 291,202
Commercial real estate - owner occupied — 3,038 3,038 — 335,658 335,658
Commercial real estate - non-owner occupied — 5,589 5,589 — 662,159 662,159
Multifamily — 385 385 — 81,086 81,086
Total commercial real estate — 13,414 13,414 — 1,370,105 1,370,105
Commercial
Commercial and industrial 2,191 2,892 5,083 2,854 189,798 192,652
Equipment finance — 6,651 6,651 — 394,541 394,541
Municipal leases — 302 302 — 129,766 129,766
PPP loans — — — — 661 661
Total commercial 2,191 9,845 12,036 2,854 714,766 717,620
Residential real estate
Construction and land development — 1,052 1,052 — 81,847 81,847
One-to-four family — 4,673 4,673 2,486 351,717 354,203
HELOCs — 1,886 1,886 — 160,137 160,137
Total residential real estate — 7,611 7,611 2,486 593,701 596,187
Consumer — 1,629 1,629 — 85,383 85,383
Total $ 2,191 $ 32,499 $ 34,690 $ 5,340 $ 2,763,955 $ 2,769,295


	Six Months Ended December 31, 2022
	Commercial Real Estate		Commercial		Residential Real Estate		Consumer		Total
Balance at beginning of period	$	13,414	$	12,036	$	7,611	$	1,629	$	34,690

Provision (benefit) for credit losses	1,642		2,296		1,367		814		6,119
Charge-offs	—		(2,133)		(123)		(170)		(2,426)
Recoveries	3		183		193		97		476
Net (charge-offs) recoveries	3		(1,950)		70		(73)		(1,950)
Balance at end of period	$	15,059	$	12,382	$	9,048	$	2,370	$	38,859

HOMETRUST BANCSHARES, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share data)


	Three Months Ended December 31, 2021
	Commercial Real Estate		Commercial		Residential Real Estate		Consumer		Total
Balance at beginning of period	$	13,994	$	10,211	$	7,601	$	2,600	$	34,406
Provision (benefit) for credit losses	(1,253)		1,113		(1,737)		(563)		(2,440)
Charge-offs	(1)		(1,130)		—		(16)		(1,147)
Recoveries	10		25		53		26		114
Net (charge-offs) recoveries	9		(1,105)		53		10		(1,033)
Balance at end of period	$	12,750	$	10,219	$	5,917	$	2,047	$	30,933


	Six Months Ended December 31, 2021
	Commercial Real Estate		Commercial		Residential Real Estate		Consumer		Total
Balance at beginning of period	$	15,084	$	9,663	$	8,185	$	2,536	$	35,468
Provision (benefit) for credit losses	(2,589)		1,826		(2,526)		(486)		(3,775)
Charge-offs	(439)		(1,311)		(27)		(79)		(1,856)
Recoveries	694		41		285		76		1,096
Net (charge-offs) recoveries	255		(1,270)		258		(3)		(760)
Balance at end of period	$	12,750	$	10,219	$	5,917	$	2,047	$	30,933

The following tables present ending balances of loans and the related ACL, by segment and class for the periods indicated below:


	Allowance for Credit Losses						Total Loans Receivable
	Loans Individually Evaluated		Loans Collectively Evaluated		Total		Loans Individually Evaluated		Loans Collectively Evaluated		Total
December 31, 2022
Commercial real estate
Construction and land development	$	—	$	5,893	$	5,893	$	—	$	328,253	$	328,253
Commercial real estate - owner occupied	—		3,042		3,042		—		340,824		340,824
Commercial real estate - non-owner occupied	—		5,803		5,803		—		690,241		690,241
Multifamily	—		321		321		—		69,156		69,156
Total commercial real estate	—		15,059		15,059		—		1,428,474		1,428,474
Commercial
Commercial and industrial	646		3,755		4,401		1,505		192,960		194,465
Equipment finance	—		7,693		7,693		—		426,507		426,507
Municipal leases	—		288		288		—		135,922		135,922
PPP loans	—		—		—		—		214		214
Total commercial	646		11,736		12,382		1,505		755,603		757,108
Residential real estate
Construction and land development	—		1,576		1,576		—		100,002		100,002
One-to-four family	—		4,983		4,983		1,932		398,663		400,595
HELOCs	—		2,489		2,489		—		194,296		194,296
Total residential real estate	—		9,048		9,048		1,932		692,961		694,893
Consumer	—		2,370		2,370		—		105,148		105,148
Total	$	646	$	38,213	$	38,859	$	3,437	$	2,982,186	$	2,985,623

HOMETRUST BANCSHARES, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share data)


	Allowance for Credit Losses						Total Loans Receivable
	Loans Individually Evaluated		Loans Collectively Evaluated		Total		Loans Individually Evaluated		Loans Collectively Evaluated		Total
June 30, 2022
Commercial real estate
Construction and land development	$	—	$	4,402	$	4,402	$	—	$	291,202	$	291,202
Commercial real estate - owner occupied	—		3,038		3,038		—		335,658		335,658
Commercial real estate - non-owner occupied	—		5,589		5,589		—		662,159		662,159
Multifamily	—		385		385		—		81,086		81,086
Total commercial real estate	—		13,414		13,414		—		1,370,105		1,370,105
Commercial
Commercial and industrial	2,191		2,892		5,083		2,854		189,798		192,652
Equipment finance	—		6,651		6,651		—		394,541		394,541
Municipal leases	—		302		302		—		129,766		129,766
PPP loans	—		—		—		—		661		661
Total commercial	2,191		9,845		12,036		2,854		714,766		717,620
Residential real estate
Construction and land development	—		1,052		1,052		—		81,847		81,847
One-to-four family	—		4,673		4,673		2,486		351,717		354,203
HELOCs	—		1,886		1,886		—		160,137		160,137
Total residential real estate	—		7,611		7,611		2,486		593,701		596,187
Consumer	—		1,629		1,629		—		85,383		85,383
Total	$	2,191	$	32,499	$	34,690	$	5,340	$	2,763,955	$	2,769,295

In estimating expected credit losses, 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 tables provide 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 for the periods indicated below:

Type of Collateral and Extent to Which Collateral Secures Financial Assets Financial Assets Not Considered Collateral Dependent
September 30, 2022 Residential Property Investment Property Commercial Property Business Assets Total
Commercial real estate
Construction and land development $ — $ — $ — $ — $ 310,985 $ 310,985
Commercial real estate - owner occupied — — — — 336,456 336,456
Commercial real estate - non-owner occupied — — — — 661,644 661,644
Multifamily — — — — 79,082 79,082
Total commercial real estate — — — — 1,388,167 1,388,167
Commercial
Commercial and industrial — — — 2,479 203,127 205,606
Equipment finance — — — — 411,012 411,012
Municipal leases — — — — 130,777 130,777
PPP loans — — — — 238 238
Total commercial — — — 2,479 745,154 747,633
Residential real estate
Construction and land development — — — — 91,488 91,488
One-to-four family 1,311 — — — 373,538 374,849
HELOCs — — — — 164,701 164,701
Total residential real estate 1,311 — — — 629,727 631,038
Consumer — — — — 100,945 100,945
Total $ 1,311 $ — $ — $ 2,479 $ 2,863,993 $ 2,867,783
Total collateral value $ 2,443 $ — $ — $ —


		Type of Collateral and Extent to Which Collateral Secures Financial Assets								Financial Assets Not Considered Collateral Dependent				Type of Collateral and Extent to Which Collateral Secures Financial Assets										Financial Assets Not Considered Collateral Dependent
June 30, 2022		Residential Property		Investment Property		Commercial Property		Business Assets					Total
December 31, 2022																	December 31, 2022	Residential Property		Investment Property		Commercial Property				Business Assets	Financial Assets Not Considered Collateral Dependent					Total
Commercial real estate	Commercial real estate																Commercial real estate
Construction and land development	Construction and land development	$	—	$	—	$	—	$	—		$	291,202			$	291,202	Construction and land development	$	—	$	—	$	—	$	—			$	328,253	$	328,253
Commercial real estate - owner occupied	Commercial real estate - owner occupied	—		—		—		—			335,658				335,658		Commercial real estate - owner occupied	—		—		—		—				340,824		340,824
Commercial real estate - non-owner occupied	Commercial real estate - non-owner occupied	—		—		—		—			662,159				662,159		Commercial real estate - non-owner occupied	—		—		—		—				690,241		690,241
Multifamily	Multifamily	—		—		—		—			81,086				81,086		Multifamily	—		—		—		—				69,156		69,156
Total commercial real estate	Total commercial real estate	—		—		—		—			1,370,105				1,370,105		Total commercial real estate	—		—		—		—				1,428,474		1,428,474
Commercial	Commercial																Commercial
Commercial and industrial	Commercial and industrial	—		—		—		2,594			190,058				192,652		Commercial and industrial	—		—		—		816				193,649		194,465
Equipment finance	Equipment finance	—		—		—		—			394,541				394,541		Equipment finance	—		—		—		—				426,507		426,507
Municipal leases	Municipal leases	—		—		—		—			129,766				129,766		Municipal leases	—		—		—		—				135,922		135,922
PPP loans	PPP loans	—		—		—		—			661				661		PPP loans	—		—		—		—				214		214
Total commercial	Total commercial	—		—		—		2,594			715,026				717,620		Total commercial	—		—		—		816				756,292		757,108
Residential real estate	Residential real estate																Residential real estate
Construction and land development	Construction and land development	—		—		—		—			81,847				81,847		Construction and land development	—		—		—		—				100,002		100,002
One-to-four family	One-to-four family	1,318		—		—		—			352,885				354,203		One-to-four family	765		—		—		—				399,830		400,595
HELOCs	HELOCs	—		—		—		—			160,137				160,137		HELOCs	—		—		—		—				194,296		194,296
Total residential real estate	Total residential real estate	1,318		—		—		—			594,869				596,187		Total residential real estate	765		—		—		—				694,128		694,893
Consumer	Consumer	—		—		—		—			85,383				85,383		Consumer	—		—		—		—				105,148		105,148
Total	Total	$	1,318	$	—	$	—	$	2,594		$	2,765,383			$	2,769,295	Total	$	765	$	—	$	—	$	816			$	2,984,042	$	2,985,623
Total collateral value	Total collateral value	$	2,443	$	—	$	—	$	69								Total collateral value	$	1,293	$	—	$	—	$	—

2223

HOMETRUST BANCSHARES, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share data)


	Type of Collateral and Extent to Which Collateral Secures Financial Assets								Financial Assets Not Considered Collateral Dependent
June 30, 2022	Residential Property		Investment Property		Commercial Property		Business Assets					Total
Commercial real estate
Construction and land development	$	—	$	—	$	—	$	—		$	291,202	$	291,202
Commercial real estate - owner occupied	—		—		—		—			335,658		335,658
Commercial real estate - non-owner occupied	—		—		—		—			662,159		662,159
Multifamily	—		—		—		—			81,086		81,086
Total commercial real estate	—		—		—		—			1,370,105		1,370,105
Commercial
Commercial and industrial	—		—		—		2,594			190,058		192,652
Equipment finance	—		—		—		—			394,541		394,541
Municipal leases	—		—		—		—			129,766		129,766
PPP loans	—		—		—		—			661		661
Total commercial	—		—		—		2,594			715,026		717,620
Residential real estate
Construction and land development	—		—		—		—			81,847		81,847
One-to-four family	1,318		—		—		—			352,885		354,203
HELOCs	—		—		—		—			160,137		160,137
Total residential real estate	1,318		—		—		—			594,869		596,187
Consumer	—		—		—		—			85,383		85,383
Total	$	1,318	$	—	$	—	$	2,594		$	2,765,383	$	2,769,295
Total collateral value	$	2,443	$	—	$	—	$	69

The following ~~table presents~~tables present a breakdown of the types of concessions made on TDRs by loan class for the periods indicated below:


		Three Months Ended September 30,
		2022					2021
		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 real estate

Commercial and industrial		5	$	569	$	569	—	$	—	$	—

													Three Months Ended December 31,
													2022					2021
													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

Total below market interest rate		5	569		569		—	—		—

Other TDRs	Other TDRs											Other TDRs

Residential real estate	Residential real estate											Residential real estate

One-to-four family												One-to-four family	—	$	—	$	—	3	$	215	$	212
HELOCs	HELOCs	—	$	—	$	—	1	$	18	$	18	HELOCs	—	—		—		1	51		51
Consumer	Consumer	3	37		31		5	84		83		Consumer	1	11		10		—	—		—
Total other TDRs	Total other TDRs	3	37		31		6	102		101		Total other TDRs	1	11		10		4	266		263
Total	Total	8	$	606	$	600	6	$	102	$	101	Total	1	$	11	$	10	4	$	266	$	263

HOMETRUST BANCSHARES, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share data)


	Six Months Ended December 31,
	2022					2021
	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 loans
Commercial and industrial	5	$	569	$	569	—	$	—	$	—







Total below market interest rate	5	$	569	$	569	—	$	—	$	—


















Other TDRs









Residential real estate loans

One-to-four family	—	$	—	$	—	3	$	215	$	212
HELOCs	—	—		—		2	68		70
Consumer	4	49		41		5	84		80
Total other TDRs	4	49		41		10	367		362
Total	9	$	618	$	610	10	$	367	$	362

The following ~~table presents~~tables present loans that were modified as TDRs within the previous 12 months and for which there was a payment default during the periods indicated below:

Three Months Ended September 30,
2022 2021
Number of
Loans Recorded
Investment Number of
Loans Recorded
Investment
Extended payment terms
Residential real estate loans
One-to-four family 1 $ 34 — $ —
Total extended payment terms 1 34 — —
Other TDRs
Consumer 1 $ 2 2 $ 44
Total other TDRs 1 $ 2 2 $ 44
Total 2 $ 36 2 $ 44


	Three Months Ended December 31,
	2022			2021
	Number of Loans	Recorded Investment		Number of Loans	Recorded Investment
Below market interest rate
Commercial loans


Commercial and industrial	1	$	140	—	$	—






















Total	1	$	140	—	$	—


	Six Months Ended December 31,
	2022			2021
	Number of Loans	Recorded Investment		Number of Loans	Recorded Investment
Below market interest rate
Commercial loans
Commercial and industrial	1	$	140	—	$	—



Total below market interest rate	1	$	140	—	$	—

Extended payment terms


Residential real estate loans
One-to-four family	1	$	34	—	$	—

Total extended payment terms	1	$	34	—	$	—

Other TDRs













Consumer	1	$	2	2	$	44
Total other TDRs	1	$	2	2	$	44
Total	3	$	176	2	$	44

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.

In determining the ACL, management considers TDRs for all loan classes, and the subsequent nonperformance in accordance with their modified terms, by measuring a 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.

HOMETRUST BANCSHARES, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share data)

Off-Balance-Sheet Credit Exposure

The Company maintains a separate reserve for credit losses on off-balance-sheet credit exposures, including unfunded loan commitments, which is included in other liabilities on the consolidated balance sheet. The reserve for credit losses on off-balance-sheet credit exposures is adjusted as a provision for credit losses in the consolidated statement 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 ~~September 30,~~December 31, 2022 and June 30, 2022, the ACL on off-balance-sheet credit exposures included in other liabilities was ~~$3,747~~$3,662 and $3,304, respectively.

~~HOMETRUST BANCSHARES, INC. AND SUBSIDIARY~~

~~Notes to Consolidated Financial Statements~~

~~(Dollars in thousands, except per share data)~~

6. 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. 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 Sheet. The Company recognizes lease expenses for these leases over the lease term.

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	Supplemental Balance Sheet Information	September 30, 2022			June 30, 2022			Supplemental Balance Sheet Information	December 31, 2022			June 30, 2022
ROU assets (included in other assets)		$	5,651		$	5,846
ROU assets								ROU assets	$	7,189		$	5,846

Lease liabilities (included in other liabilities)		6,443			6,641
Lease liabilities								Lease liabilities	8,235			6,641

Weighted-average remaining lease terms (years)	Weighted-average remaining lease terms (years)	10.8			10.8			Weighted-average remaining lease terms (years)	10.7			10.8
Weighted-average discount rate	Weighted-average discount rate	2.90		%	2.90		%	Weighted-average discount rate	3.21		%	2.90		%

The following schedule summarizes aggregate future minimum lease payments under these operating leases at ~~September 30,~~December 31, 2022:


Fiscal year ending June 30	Fiscal year ending June 30			Fiscal year ending June 30
Remaining 2023	Remaining 2023	$	1,083	Remaining 2023	$	846
2024	2024	1,002		2024	1,247
2025	2025	700		2025	946
2026	2026	575		2026	821
2027	2027	593		2027	838
Thereafter	Thereafter	3,794		Thereafter	5,267
Total undiscounted minimum lease payments	Total undiscounted minimum lease payments	7,747		Total undiscounted minimum lease payments	9,965
Less: amount representing interest	Less: amount representing interest	(1,304)		Less: amount representing interest	(1,730)
Total lease liability	Total lease liability	$	6,443	Total lease liability	$	8,235

The following table presents components of operating lease expense for the periods indicated:


		Three Months Ended September 30,				Three Months Ended December 31,				Six Months Ended December 31,
		2022		2021				2022		2021		2022		2021
Operating lease cost (included in occupancy expense, net)	Operating lease cost (included in occupancy expense, net)	$	347	$	467		Operating lease cost (included in occupancy expense, net)	$	345	$	400	$	692	$	867
Variable lease cost (included in occupancy expense, net)	Variable lease cost (included in occupancy expense, net)	2		6			Variable lease cost (included in occupancy expense, net)	3		—		5		6
Sublease income (included in other, noninterest income)	Sublease income (included in other, noninterest income)	(57)		(47)			Sublease income (included in other, noninterest income)	(28)		(47)		(85)		(94)
Total operating lease expense, net	Total operating lease expense, net	$	292	$	426		Total operating lease expense, net	$	320	$	353	$	612	$	779

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 ~~September 30,~~December 31, 2022 and June 30, 2022 and is included in other assets. The corresponding lease liability totaled ~~$1,752~~$1,741 and $1,763 at ~~September 30,~~December 31, 2022 and June 30, 2022, respectively, and is included in other liabilities. For the three months ended ~~September 30,~~December 31, 2022 and 2021, interest expense on the lease liability totaled ~~$23.~~$23 and $24, while for the six months ended December 31, 2022 and 2021, interest expense on the lease liability totaled $46 and $48, respectively. The finance lease ~~has a maturity date of~~matures in July 2028 and the Company has applied a discount rate of 5.18%.

~~The following schedule summarizes aggregate future minimum lease payments under this finance lease obligation at September 30, 2022:~~

Fiscal year ending June 30
Remaining 2023 $ 100
2024 145
2025 146
2026 146
2027 146
Thereafter 1,557
Total undiscounted minimum lease payments 2,240
Less: amount representing interest (488)
Total lease liability $ 1,752

2426

HOMETRUST BANCSHARES, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share data)

The following schedule summarizes aggregate future minimum lease payments under this finance lease obligation at December 31, 2022:


Fiscal year ending June 30
Remaining 2023	$	66
2024	145
2025	146
2026	146
2027	146
Thereafter	1,557
Total undiscounted minimum lease payments	2,206
Less: amount representing interest	(465)
Total lease liability	$	1,741

Supplemental lease cash flow information for the periods indicated:


		Three Months Ended September 30,					Six Months Ended December 31,
		2022		2021			2022		2021
ROU assets - noncash additions (operating leases)	ROU assets - noncash additions (operating leases)	$	—	$	959	ROU assets - noncash additions (operating leases)	$	2,108	$	946

Cash paid for amounts included in the measurement of lease liabilities (operating leases)	Cash paid for amounts included in the measurement of lease liabilities (operating leases)	315		628		Cash paid for amounts included in the measurement of lease liabilities (operating leases)	720		797
Cash paid for amounts included in the measurement of lease liabilities (finance leases)	Cash paid for amounts included in the measurement of lease liabilities (finance leases)	33		33		Cash paid for amounts included in the measurement of lease liabilities (finance leases)	67		67

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 construction, transportation, healthcare, and manufacturing 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 one to five 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 ~~$18,568~~$20,047 and $20,075 with a residual value of ~~$12,737~~$13,046 and $12,874 as of ~~September 30,~~December 31, 2022 and June 30, 2022, respectively.

The following table presents total equipment finance operating lease income and depreciation expense for the periods indicated:


		Three Months Ended September 30,				Three Months Ended December 31,				Six Months Ended December 31,
		2022		2021				2022		2021		2022		2021
Operating lease income	Operating lease income	$	1,585	$	1,540		Operating lease income	$	1,156	$	1,718	$	2,741	$	3,258
Depreciation expense	Depreciation expense	1,164		1,385			Depreciation expense	1,178		1,497		2,343		2,882

The following schedule summarizes, as of December 31, 2022, aggregate future minimum lease payments to be ~~received at September 30, 2022:~~received:


Fiscal year ending June 30	Fiscal year ending June 30			Fiscal year ending June 30
Remaining 2023	Remaining 2023	$	3,623	Remaining 2023	$	3,498
2024	2024	2,916		2024	5,088
2025	2025	937		2025	1,869
2026	2026	355		2026	697
2027	2027	113		2027	113
Thereafter	Thereafter	—		Thereafter	—
Total of future minimum lease payments	Total of future minimum lease payments	$	7,944	Total of future minimum lease payments	$	11,265

As Lessor - Direct Financing 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 of the loan portfolio. For the three months ended ~~September 30,~~December 31, 2022 and 2021, interest income on equipment finance leases totaled ~~$758~~$818 and ~~$759,~~$753, respectively. For the six months ended December 31, 2022 and 2021, interest income on equipment finance leases totaled $1,575 and $1,512, respectively.

The lease receivable component of finance lease net investment included within the equipment finance class of financing receivables was ~~$63.3~~$63.9 million and $62.2 million at ~~September 30,~~December 31, 2022 and June 30, 2022, respectively.

~~The following schedule summarizes aggregate future minimum finance lease payments to be received at September 30, 2022:~~

Fiscal year ending June 30
Remaining 2023 $ 17,066
2024 19,324
2025 14,696
2026 10,338
2027 5,254
Thereafter 3,972
Total undiscounted minimum lease payments 70,650
Less: amount representing interest (7,305)
Total lease receivable $ 63,345

2527

HOMETRUST BANCSHARES, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share data)

The following schedule summarizes, as of December 31, 2022, aggregate future minimum finance lease payments to be received:


Fiscal year ending June 30
Remaining 2023	$	12,478
2024	20,448
2025	15,905
2026	11,646
2027	6,650
Thereafter	5,658
Total undiscounted minimum lease payments	72,785
Less: amount representing interest	(8,874)
Total lease receivable	$	63,911

7. Equity Incentive Plan

The Company ~~provides~~historically provided stock-based awards through the 2013 Omnibus Incentive Plan, which ~~provides~~provided for awards of restricted stock, restricted stock units, stock options, stock appreciation rights and cash awards to directors, directors emeritus, officers, employees and advisory directors. On November 14, 2022, at the Company's annual meeting, stockholders approved the 2022 Omnibus Incentive Plan which provides for the same types of awards as described under the 2013 Omnibus Incentive Plan. Going forward, any future grants will be made under this plan.

The cost of equity-based awards under the ~~2013~~2022 Omnibus Incentive Plan generally is based on the fair value of the awards on their grant 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.~~1,000,000. Shares of common stock issued under the plan ~~would~~will be issued out of authorized but unissued shares, some or all of which may be repurchased shares. The Company repurchased a number of shares on the open market sufficient to cover awards of restricted stock and restricted stock units available to be granted under the 2013 Omnibus Incentive Plan, for $13,297, at an average cost of $15.71 per share during the year ended June 30, 2013.

The table below presents share-based compensation expense and the estimated related tax benefit for stock options and restricted stock for the dates indicated below:


		Three Months Ended September 30,				Three Months Ended December 31,				Six Months Ended December 31,
		2022		2021				2022		2021		2022		2021
Share-based compensation expense	Share-based compensation expense	$	567	$	415		Share-based compensation expense	$	464	$	485	$	1,031	$	900
Tax benefit	Tax benefit	134		98			Tax benefit	110		114		244		212

The table below presents stock option activity and related information for the ~~three~~six months ended ~~September 30,~~December 31, 2022 and 2021:


		Options	Weighted- Average Exercise Price		Remaining Contractual Life (Years)	Aggregate Intrinsic Value			Options	Weighted- Average Exercise Price		Remaining Contractual Life (Years)	Aggregate Intrinsic Value
Options outstanding at June 30, 2021	Options outstanding at June 30, 2021	1,319,456	$	19.07	3.9	$	11,657	Options outstanding at June 30, 2021	1,319,456	$	19.07	3.9	$	11,657

Exercised	Exercised	(46,200)	15.16		—	—		Exercised	(347,800)	14.50		—	—
Forfeited	Forfeited	(2,600)	25.42		—	—		Forfeited	(18,600)	23.06		—	—

Options outstanding at September 30, 2021		1,270,656	$	19.19	3.7	$	11,164
Exercisable at September 30, 2021		1,030,506	$	17.75	2.9	$	10,546
Non-vested at September 30, 2021		240,150	$	25.41	7.3	$	617
Options outstanding at December 31, 2021								Options outstanding at December 31, 2021	953,056	$	20.65	4.1	$	9,840
Exercisable at December 31, 2021								Exercisable at December 31, 2021	727,506	$	19.12	3.2	$	8,631
Non-vested at December 31, 2021								Non-vested at December 31, 2021	225,550	$	25.62	6.9	$	1,210

Options outstanding at June 30, 2022	Options outstanding at June 30, 2022	928,870	$	21.49	4.1	$	4,036	Options outstanding at June 30, 2022	928,870	$	21.49	4.1	$	4,036
Granted	Granted	5,000	24.07		—	—		Granted	5,000	24.07		—	—

Exercised	Exercised	(27,000)	14.37		—	—		Exercised	(74,047)	14.37		—	—
Forfeited	Forfeited	(400)	31.35		—	—		Forfeited	(10,200)	26.98		—	—

Options outstanding at September 30, 2022		906,470	$	21.71	3.9	$	2,633
Exercisable at September 30, 2022		729,720	$	20.46	3.1	$	2,633
Non-vested at September 30, 2022		176,750	$	26.87	7.3	$	—
Options outstanding at December 31, 2022								Options outstanding at December 31, 2022	849,623	$	22.06	3.9	$	2,958
Exercisable at December 31, 2022								Exercisable at December 31, 2022	682,673	$	20.88	3.1	$	2,918
Non-vested at December 31, 2022								Non-vested at December 31, 2022	166,950	$	26.88	7.1	$	40

HOMETRUST BANCSHARES, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share data)

Assumptions used in estimating the fair value of options granted during the ~~three~~six months ended ~~September 30,~~December 31, 2022 have been detailed below. There were no options granted during the ~~three~~six months ended ~~September 30,~~December 31, 2021.


	~~September 30,~~December 31, 2022
Weighted-average volatility	27.78		%
Expected dividend yield	1.62		%
Risk-free interest rate	3.11		%
Expected life (years)	6.5
Weighted-average fair value of options granted	$	6.77

At ~~September 30,~~December 31, 2022, the Company had ~~$800~~$613 of unrecognized compensation expense related to ~~176,750~~166,950 stock options originally scheduled to vest over a five-year period. The weighted average period over which compensation cost related to non-vested awards expected to be recognized was ~~1.4~~1.1 years at ~~September 30,~~December 31, 2022. At ~~September 30,~~December 31, 2021, the Company had ~~$1,083~~$894 of unrecognized compensation expense related to ~~240,150~~225,550 stock options originally scheduled to vest over a five-year period. The weighted average period over which compensation cost related to non-vested awards expected to be recognized was ~~1.4~~1.1 years at ~~September 30,~~December 31, 2021.

~~HOMETRUST BANCSHARES, INC. AND SUBSIDIARY~~

~~Notes to Consolidated Financial Statements~~

~~(Dollars in thousands, except per share data)~~

The table below presents restricted stock award activity and related information:


		Restricted Stock Awards	Weighted- Average Grant Date Fair Value		Aggregate Intrinsic Value			Restricted Stock Awards	Weighted- Average Grant Date Fair Value		Aggregate Intrinsic Value
Non-vested at June 30, 2021	Non-vested at June 30, 2021	151,575	$	25.06	$	4,229	Non-vested at June 30, 2021	151,575	$	25.06	$	4,229

Vested	Vested	(8,918)	26.93		—		Vested	(8,918)	26.93		—
Forfeited	Forfeited	(3,000)	26.31		—		Forfeited	(9,400)	24.57		—
Non-vested at September 30, 2021		139,657	$	25.00	$	3,908
Non-vested at December 31, 2021							Non-vested at December 31, 2021	133,257	$	25.06	$	4,128

Non-vested at June 30, 2022	Non-vested at June 30, 2022	135,910	$	27.40	$	2,345	Non-vested at June 30, 2022	135,910	$	27.40	$	2,345
Granted	Granted	7,986	25.32		—		Granted	7,986	25.32		—
Vested	Vested	(13,861)	27.11		—		Vested	(13,861)	27.11		—
Forfeited	Forfeited	(400)	31.35		—		Forfeited	(6,200)	27.64		—
Non-vested at September 30, 2022		129,635	$	27.29	$	1,943
Non-vested at December 31, 2022							Non-vested at December 31, 2022	123,835	$	27.28	$	2,033

The table above includes non-vested performance-based restricted stock units totaling 22,843 and 23,662 at ~~September 30,~~December 31, 2022 and 2021, respectively. Each issuance of these stock units is scheduled to vest over 3.0 years assuming the applicable dilutive EPS goals are met.

At ~~September 30,~~December 31, 2022, unrecognized compensation expense was ~~$2,490~~$2,037 related to ~~129,635~~123,835 shares of restricted stock originally scheduled to vest over three- and five-year periods. The weighted average period over which compensation cost related to non-vested awards is expected to be recognized was ~~1.6~~1.3 years at ~~September 30,~~December 31, 2022. At ~~September 30,~~December 31, 2021, unrecognized compensation expense was ~~$2,483~~$2,043 related to ~~139,657~~133,257 shares of restricted stock originally scheduled to vest over three- and five-year periods. The weighted average period over which compensation cost related to non-vested awards is expected to be recognized was ~~1.5~~1.3 years at ~~September 30,~~December 31, 2021.

8. Net Income per Share

The following table sets forth the computation of basic and diluted net income per common share for the periods indicated:


		Three Months Ended September 30,				Three Months Ended December 31,				Six Months Ended December 31,
		2022		2021				2022		2021		2022		2021
Numerator	Numerator						Numerator
Net income	Net income	$	9,199	$	10,527		Net income	$	13,658	$	11,078	$	22,857	$	21,605
Allocation of earnings to participating securities	Allocation of earnings to participating securities	(79)		(92)			Allocation of earnings to participating securities	(112)		(94)		(187)		(182)
Numerator for basic EPS - Net income available to common stockholders	Numerator for basic EPS - Net income available to common stockholders	$	9,120	$	10,435		Numerator for basic EPS - Net income available to common stockholders	$	13,546	$	10,984	$	22,670	$	21,423
Effect of dilutive securities	Effect of dilutive securities						Effect of dilutive securities
Dilutive effect of participating securities	Dilutive effect of participating securities	—		2			Dilutive effect of participating securities	—		2		—		4
Numerator for diluted EPS	Numerator for diluted EPS	$	9,120	$	10,437		Numerator for diluted EPS	$	13,546	$	10,986	$	22,670	$	21,427
Denominator	Denominator						Denominator
Weighted-average common shares outstanding - basic	Weighted-average common shares outstanding - basic	14,988,006		15,761,247			Weighted-average common shares outstanding - basic	15,028,179		15,632,283		15,008,092		15,696,765
Dilutive effect of assumed exercises of stock options	Dilutive effect of assumed exercises of stock options	142,756		385,364			Dilutive effect of assumed exercises of stock options	132,974		357,323		137,609		360,842
Weighted-average common shares outstanding - diluted	Weighted-average common shares outstanding - diluted	15,130,762		16,146,611			Weighted-average common shares outstanding - diluted	15,161,153		15,989,606		15,145,701		16,057,607
Net income per share - basic	Net income per share - basic	$	0.61	$	0.66		Net income per share - basic	$	0.90	$	0.70	$	1.51	$	1.36
Net income per share - diluted	Net income per share - diluted	$	0.60	$	0.65		Net income per share - diluted	$	0.90	$	0.68	$	1.50	$	1.33

Potential dilutive shares are excluded from the computation of earnings per share if their effect is anti-dilutive. There were ~~550,400 and 446,250~~540,600 of stock options that were anti-dilutive for the three and six months ended ~~September 30, 2022~~December 31, 2022. There were 41,000 and 56,000 of stock options that were anti-dilutive for the three and six months ended December 31, 2021, respectively.

2729

HOMETRUST BANCSHARES, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share data)

9. 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 ~~September 30,~~December 31, 2022 and June 30, 2022, respectively, loan commitments (excluding ~~$301,336~~$272,250 and $312,893 of undisbursed portions of construction loans) totaled ~~$130,492~~$90,214 and $104,745 of which ~~$8,664~~$11,604 and $23,159 were variable rate commitments and ~~$121,828~~$78,610 and $81,586 were fixed rate commitments. The fixed rate ~~loans~~loan commitments had interest rates ranging from ~~1.59%~~1.41% to ~~8.78%~~9.44% at ~~September 30,~~December 31, 2022 and 1.41% to 9.00% at June 30, 2022, 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 ~~$511,398~~$540,370 and $485,239 at ~~September 30,~~December 31, 2022 and June 30, 2022, 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, the Company enters into forward loan sale commitments ~~on a “best efforts” basis, which do not meet the definition of a derivative instrument.~~such as TBAs, mandatory delivery commitments with investors, or best efforts forward sale commitments with investors. The fair value of these interest rate lock commitments was not material at ~~September 30,~~December 31, 2022 or June 30, 2022.

The Company grants construction and permanent loans collateralized primarily by residential and commercial real estate to customers throughout its primary market areas. In addition, the Company grants equipment financing throughout the United States and municipal financing to customers throughout North ~~Carolina,~~and South ~~Carolina and, to a lesser extent, Virginia.~~Carolina. The Company’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 – In response to COVID-19, the FRB reduced the reserve requirements to zero on March 15, 2020. Prior to this change the Bank was required by regulation to maintain a varying cash reserve balance with 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 ~~September 30,~~December 31, 2022 and June 30, 2022 were ~~$19,760~~$19,997 and $18,362, respectively. There was no liability recorded for these letters of credit at ~~September 30,~~December 31, 2022 or June 30, ~~2022, respectively.~~2022.

Litigation – From time to time, the Company is involved in 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.

10. Fair Value of Financial Instruments

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values:

Level 1: ~~Valuation is based upon quoted~~Quoted prices (unadjusted) for identical ~~instruments traded~~assets or liabilities in active ~~markets.~~markets that the entity has the ability to access as of the measurement date.

Level 2: ~~Valuation is based upon~~Significant other observable inputs other than Level 1 prices such as quoted prices for similar ~~instruments in active markets,~~assets or liabilities; quoted prices ~~for identical or similar instruments~~ in markets that are not ~~active, and model-based valuation techniques for which all significant assumptions~~active; or other inputs that are observable ~~in the market.~~or can be corroborated by observable market data.

Level 3: ~~Valuation is generated from model-based techniques~~Significant unobservable inputs that ~~use at least one significant assumption not observable in~~reflect a company's own assumptions about the ~~market. These unobservable assumptions reflect estimates of~~ assumptions that market participants would use in pricing an asset or liability.

A financial instrument's level within the ~~asset. Valuation techniques include use~~fair value hierarchy is based on the lowest level of ~~option pricing models, discounted cash flow models and similar techniques.~~any input that is significant to the fair value measurement. The 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.

The methods of determining the fair value of assets and liabilities presented in this note are consistent with the methodologies disclosed in Note 19 of the 2022 Form 10-K.

2830

HOMETRUST BANCSHARES, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share data)

Financial Assets Recorded at Fair Value

The following table presents financial assets measured at fair value on a recurring basis at the dates indicated:


		September 30, 2022									December 31, 2022
		Total		Level 1		Level 2		Level 3			Total		Level 1		Level 2		Level 3
Debt securities available for sale										Debt securities available for sale
U.S government agencies	U.S government agencies	$	17,316	$	—	$	17,316	$	—	U.S government agencies	$	15,399	$	—	$	15,399	$	—
MBS, residential	MBS, residential	91,507		—		91,507		—		MBS, residential	84,447		—		84,447		—
Municipal bonds	Municipal bonds	5,420		—		5,420		—		Municipal bonds	4,409		—		4,409		—
Corporate bonds	Corporate bonds	47,498		—		47,498		—		Corporate bonds	43,687		—		43,687		—
Total debt securities available for sale										Total debt securities available for sale	$	147,942	$	—	$	147,942	$	—

Total		$	161,741	$	—	$	161,741	$	—
Loans held for sale										Loans held for sale	$	518	$	—	$	518	$	—


		June 30, 2022									June 30, 2022
		Total		Level 1		Level 2		Level 3			Total		Level 1		Level 2		Level 3
Debt securities available for sale										Debt securities available for sale
U.S government agencies	U.S government agencies	$	18,459	$	—	$	18,459	$	—	U.S government agencies	$	18,459	$	—	$	18,459	$	—
MBS, residential	MBS, residential	47,233		—		47,233		—		MBS, residential	47,233		—		47,233		—
Municipal bonds	Municipal bonds	5,558		—		5,558		—		Municipal bonds	5,558		—		5,558		—
Corporate bonds	Corporate bonds	55,728		—		55,728		—		Corporate bonds	55,728		—		55,728		—
Total debt securities available for sale										Total debt securities available for sale	$	126,978	$	—	$	126,978	$	—

Total		$	126,978	$	—	$	126,978	$	—

Loans held for sale carried at fair value are valued at the individual loan level using quoted secondary market prices.

There were no transfers between levels during the ~~three~~six months ended ~~September 30,~~December 31, 2022 and 2021.

The following table presents financial assets measured at fair value on a non-recurring basis at the dates indicated:


		September 30, 2022									December 31, 2022
		Total		Level 1		Level 2		Level 3			Total		Level 1		Level 2		Level 3
Collateral dependent loans	Collateral dependent loans									Collateral dependent loans

Commercial loans	Commercial loans									Commercial loans
Commercial and industrial	Commercial and industrial	$	344	$	—	$	—	$	344	Commercial and industrial	$	169	$	—	$	—	$	169


	June 30, 2022
	Total		Level 1		Level 2		Level 3
Collateral dependent loans
Commercial loans
Commercial and industrial	$	415	$	—	$	—	$	415

A loan is considered to be collateral dependent when, based on current information and events, the Company expects repayment of the financial assets to be provided substantially through the operation or sale of the collateral and the Company has determined that the borrower is experiencing financial difficulty as of the measurement date. For real estate loans, the fair value of the loan's collateral is determined by a third party appraisal, which is then adjusted for the estimated selling and closing costs related to liquidation of the collateral (typically ranging from 8% to 12% of the appraised value). For this asset class, the actual valuation methods (income, sales comparable, or cost) vary based on the status of the project or property. Additional discounts of 5% to 15% may be applied depending on the age of the appraisals. The unobservable inputs may vary depending on the individual asset with no one of the three methods being the predominant approach. For non-real estate loans, the fair value of the loan's collateral may be determined using an appraisal, net book value per the borrower's financial statements, or aging reports, adjusted or discounted based on management's historical knowledge, changes in market conditions from the time of the valuation, and management's expertise and knowledge of the customer and customer's business.

2931

HOMETRUST BANCSHARES, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share data)

The stated carrying value and estimated fair value amounts of financial instruments as of ~~September 30,~~December 31, 2022 and June 30, 2022, are summarized below:


		September 30, 2022											December 31, 2022
		Carrying Value		Fair Value		Level 1		Level 2		Level 3			Carrying Value		Fair Value		Level 1		Level 2		Level 3
Assets	Assets											Assets
Cash and cash equivalents	Cash and cash equivalents	$	94,159	$	94,159	$	94,159	$	—	$	—	Cash and cash equivalents	$	165,034	$	165,034	$	165,034	$	—	$	—
Commercial paper, net		85,296		85,296		85,296		—		—

Certificates of deposit in other banks	Certificates of deposit in other banks	27,535		27,535		—		27,535		—		Certificates of deposit in other banks	29,371		29,371		—		29,371		—
Debt securities available for sale		161,741		161,741		—		161,741		—
Loans held for sale		76,252		77,513		—		—		77,513
Loans, net		2,829,482		2,756,169		—		—		2,756,169
Debt securities available for sale, at fair value												Debt securities available for sale, at fair value	147,942		147,942		—		147,942		—
FHLB and FRB stock	FHLB and FRB stock	9,404		N/A		N/A		N/A		N/A		FHLB and FRB stock	13,661		N/A		N/A		N/A		N/A
SBIC investments	SBIC investments	12,235		12,235		—		—		12,235		SBIC investments	12,414		12,414		—		—		12,414
Loans held for sale, at fair value												Loans held for sale, at fair value	518		518		—		518		—
Loans held for sale, at the lower of cost or fair value												Loans held for sale, at the lower of cost or fair value	72,777		74,917		—		—		74,917
Loans, net												Loans, net	2,946,764		2,867,148		—		—		2,867,148
Accrued interest receivable	Accrued interest receivable	9,667		9,667		—		777		8,890		Accrued interest receivable	11,076		11,076		—		642		10,434
Liabilities	Liabilities											Liabilities
Noninterest-bearing and NOW deposits	Noninterest-bearing and NOW deposits	1,431,101		1,431,101		—		1,431,101		—		Noninterest-bearing and NOW deposits	1,365,312		1,365,312		—		1,365,312		—
Money market accounts	Money market accounts	960,150		960,150		—		960,150		—		Money market accounts	992,083		992,083		—		992,083		—
Savings accounts	Savings accounts	240,412		240,412		—		240,412		—		Savings accounts	230,896		230,896		—		230,896		—
Certificates of deposit	Certificates of deposit	471,005		462,500		—		462,500		—		Certificates of deposit	459,729		450,270		—		450,270		—

Borrowings												Borrowings	130,000		130,000		—		130,000		—
Accrued interest payable	Accrued interest payable	193		193		—		193		—		Accrued interest payable	358		358		—		358		—


		June 30, 2022											June 30, 2022
		Carrying Value		Fair Value		Level 1		Level 2		Level 3			Carrying Value		Fair Value		Level 1		Level 2		Level 3
Assets	Assets											Assets
Cash and cash equivalents	Cash and cash equivalents	$	105,119	$	105,119	$	105,119	$	—	$	—	Cash and cash equivalents	$	105,119	$	105,119	$	105,119	$	—	$	—
Commercial paper, net	Commercial paper, net	194,427		194,427		194,427		—		—		Commercial paper, net	194,427		194,427		194,427		—		—
Certificates of deposit in other banks	Certificates of deposit in other banks	23,551		23,551		—		23,551		—		Certificates of deposit in other banks	23,551		23,551		—		23,551		—
Debt securities available for sale	Debt securities available for sale	126,978		126,978		—		126,978		—		Debt securities available for sale	126,978		126,978		—		126,978		—
FHLB and FRB stock												FHLB and FRB stock	9,326		N/A		N/A		N/A		N/A
SBIC investments												SBIC investments	12,758		12,758		—		—		12,758
Loans held for sale	Loans held for sale	79,307		80,489		—		—		80,489		Loans held for sale	79,307		80,489		—		—		80,489
Loans, net	Loans, net	2,734,605		2,687,293		—		—		2,687,293		Loans, net	2,734,605		2,687,293		—		—		2,687,293
FHLB and FRB stock		9,326		N/A		N/A		N/A		N/A
SBIC investments		12,758		12,758		—		—		12,758
Accrued interest receivable	Accrued interest receivable	8,573		8,573		24		580		7,969		Accrued interest receivable	8,573		8,573		24		580		7,969
Liabilities	Liabilities											Liabilities
Noninterest-bearing and NOW deposits	Noninterest-bearing and NOW deposits	1,400,727		1,400,727		—		1,400,727		—		Noninterest-bearing and NOW deposits	1,400,727		1,400,727		—		1,400,727		—
Money market accounts	Money market accounts	969,661		969,661		—		969,661		—		Money market accounts	969,661		969,661		—		969,661		—
Savings accounts	Savings accounts	238,197		238,197		—		238,197		—		Savings accounts	238,197		238,197		—		238,197		—
Certificates of deposit	Certificates of deposit	491,176		485,452		—		485,452		—		Certificates of deposit	491,176		485,452		—		485,452		—

Accrued interest payable	Accrued interest payable	80		80		—		80		—		Accrued interest payable	80		80		—		80		—

The Company had off-balance sheet financial commitments, which included approximately ~~$962,986~~$922,831 and $921,239 of commitments to originate loans, undisbursed portions of construction loans, unused lines of credit, and standby letters of credit at ~~September 30,~~December 31, 2022 and June 30, 2022, respectively (see "Note 9 – Commitments and Contingencies"). Since these commitments are based on current rates, the carrying amount approximates the fair value.

3032

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

In November 2020, the SEC adopted amendments to Regulation S-K to eliminate certain disclosure requirements and to revise several others to make the disclosures provided in the management's discussion and analysis section more useful for investors. When providing a discussion and analysis of interim period results, the amendments provide a registrant with the option to discuss its interim results by comparing its most recent quarter to the immediately preceding quarter rather than to the same quarter of the prior year. The Company elected to exercise this option as it believes that the comparison of current quarter results to a linked quarter, rather than the prior year comparable quarter, more accurately reflects management's perspective of the organization and its results. In the first quarter of fiscal year 2023, which is the first period of transition, the Company has provided comparisons to both the immediately preceding quarter and the comparable quarter of the prior year, as required in the amendments.

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, but instead 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.

The factors that could result in material differentiation include, but are not limited to:

•the remaining effect of the COVID-19 pandemic, including on our 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 remaining duration of the impact on public health, the U.S. and global economies, and consumer and corporate customers, including economic activity, employment levels, labor shortages and market liquidity, both nationally and in our market areas;

•expected revenues, cost savings, synergies and other benefits from our merger and acquisition activities, including the proposed acquisition of Quantum Capital ~~Corporation,~~Corp., might not be realized to the extent anticipated, within the anticipated time frames, or at all, and costs or difficulties relating to integration matters, including but not limited to customer and employee retention, might be greater than expected;

•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 credit losses and provision for credit 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 and the effects of inflation ofor a potential recession;

•uncertainty regarding the limited future of LIBOR, and the expected transition 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;

•results of examinations of us by the Federal Reserve, the NCCOB, or other regulatory authorities, including the possibility that any such regulatory authority may, among other things, require us to increase our allowance for credit 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, 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 credit 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;

•disruptions, security breaches, or other adverse events, failures or interruptions in, or attacks on, our information technology systems or on 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 we may in the future acquire into our 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;

•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 FASB;

•other economic, competitive, governmental, regulatory, and technological factors affecting our operations, pricing, products and services including the CARES Act; and

•other risks detailed from time to time in our filings with the SEC, including this report on Form 10-Q.

Many of the forward-looking statements are based upon management’s beliefs and assumptions at the time they are made. We undertake 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, including HomeTrust Bank (“HomeTrust” or "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 the Bank’s conversion from mutual to stock form, which was completed on July 10, 2012. As a bank holding company and financial holding company, we are regulated by the Federal Reserve. The Company has not engaged in any significant activity other than holding the stock of the Bank. As a North Carolina state-chartered bank, and member of the 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 FDIC. The Bank is a member of the FHLB of Atlanta, which is one of the 11 regional banks in the FHLB System. Our headquarters is located in Asheville, North Carolina.

The Bank has more than 30 locations across North Carolina, South Carolina, Tennessee, and Virginia, many of which are located in markets experiencing growth rates above the national average. Historically, our branches and facilities have primarily been located in small- to medium-sized communities, but in recent years we have implemented a strategy of expanding into larger, higher growth markets via business banking centers rather than retail-focused branches.

Our principal business consists of attracting deposits from the general public and investing those funds, along with borrowed funds, in commercial real estate loans, construction and development loans, commercial and industrial loans, equipment finance leases, municipal leases, loans secured by first and second mortgages on one-to-four family residences including home equity and other consumer loans. We also originate one-to-four family loans, SBA loans, and HELOCs to sell to third parties. In addition, we invest in debt securities issued by United States Government agencies and GSEs, corporate bonds, commercial paper, and certificates of deposit in other banks insured by the FDIC. We offer a variety of deposit accounts for individuals, businesses, and nonprofit organizations.

Our primary source of pre-tax income is net interest income. Net interest income is the difference between interest income, which is the income that we earn on our loans and investments, and interest expense, which is the interest that we pay on our deposits and borrowings. Changes in levels of interest rates affect our net interest income.

A secondary source of income is noninterest income, which includes revenue we receive from providing products and services, including service charges and fees on deposit accounts, loan income and fees, gains on the sale of loans held for sale, BOLI income, and operating lease income.

An offset to net interest income is the provision for credit losses which is required to establish the ACL at a level that adequately provides for current expected credit losses inherent in our loan portfolio, off balance sheet credit commitments, and available for sale debt securities. See "Note 1 – Summary of Significant Accounting Policies" in Item 1 of our 2022 Form 10-K for 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.

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 which could 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.

The following represents our critical accounting policy:

Allowance for Credit Losses, or ACL, on Loans. The ACL reflects our estimate of credit losses that will result from the inability of our borrowers to make required loan payments. We charge off loans against the ACL and subsequent recoveries, if any, increase the ACL when they are recognized. We use a systematic methodology to determine our 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. We consider the effects of past events, current conditions, and reasonable and supportable forecasts on the collectability of the loan portfolio. The estimate of our ACL involves a high degree of judgment; therefore, our process for determining expected credit losses may result in a range of expected credit losses. Our ACL recorded in the balance sheet reflects our best estimate within the range of expected credit losses. We recognize in net income the amount needed to adjust the ACL for management’s current estimate of expected credit losses. Our ACL is calculated using collectively evaluated and individually evaluated loans.

Financial Highlights

For the quarter ended December 31, 2022 compared to the quarter ended September 30, 2022:

•net income was $13.7 million compared to $9.2 million;

•diluted EPS was $0.90 compared to $0.60;

•annualized ROA was 1.54% compared to 1.02%;

•annualized ROE was 13.37% compared to 9.25%;

•net interest income was $37.5 million compared to $34.5 million;

•tax-equivalent net interest margin increased from 4.13% to 4.56%;

•provision for credit losses was $2.2 millioncompared to $4.0 million;

•noninterest income was $8.5 million compared to $7.4 million;

•net loan growth was $117.8 million, or 16.4% annualized, compared to $98.5 million, or 14.2% annualized; and

•quarterly cash dividends increased $0.01 per share, or 11.1%, to $0.10 per share totaling $1.5 million compared to $0.09 per share totaling $1.4 million.

For the six months ended December 31, 2022 compared to the six months ended December 31, 2021:

•net income was $22.9 million compared to $21.6 million;

•diluted EPS was $1.50 compared to $1.33;

•annualized ROA was 1.28% compared to 1.21%;

•annualized ROE was 11.32% compared to 10.78%;

•net interest income was $72.1 million compared to $54.9 million;

•tax-equivalent net interest margin increased from 3.37% to 4.35%;

•provision for credit losses was $6.2 million compared to a net benefit of $4.0 million;

•noninterest income was $15.9 million compared to $20.4 million;

•net loan growth was $216.3 million, or 15.6% annualized, compared to a net decrease of $37.2 million, or (1.4)% annualized; and

•cash dividends of $0.19 per share totaling $2.9 million compared to $0.17 per share totaling $2.7 million.


	Three Months Ended				Six Months Ended
(Dollars in thousands)	December 31, 2022		September 30, 2022			December 31, 2022		December 31, 2021
Interest and dividend income	$	41,402	$	35,927		$	77,329	$	57,793
Interest expense	3,857		1,407			5,264		2,918
Net interest income	37,545		34,520			72,065		54,875
Provision (benefit) for credit losses	2,240		3,987			6,227		(3,960)
Net interest income after provision (benefit) for credit losses	35,305		30,533			65,838		58,835
Noninterest income	8,454		7,398			15,852		20,445
Noninterest expense	26,076		26,089			52,165		51,838
Income before income taxes	17,683		11,842			29,525		27,442
Income tax expense	4,025		2,643			6,668		5,837
Net income	$	13,658	$	9,199		$	22,857	$	21,605

Net income per common share(1)
Basic	$	0.90	$	0.61		$	1.51	$	1.36
Diluted	0.90		0.60			1.50		1.33
Cash dividends declared per common share	0.10		0.09			0.19		0.17
Book value per share at end of period	26.17		25.35			26.17		24.64
Tangible book value per share at end of period(2)	24.53		23.70			24.53		23.06
Market price per share at end of period	24.17		22.10			24.17		30.98

(1)Basic and diluted net income per common share have been prepared in accordance with the two-class method.

(2)See Non-GAAP reconciliations below for adjustments.

GAAP Reconciliation of Non-GAAP Financial Measures

We believe the non-GAAP financial measures included within this report provide useful information to management and investors that is supplementary to our financial condition, results of operations and cash flows computed in accordance with US GAAP; however, we acknowledge that our non-GAAP financial measures have a number of limitations. The following reconciliation tables provide detailed analyses of these non-GAAP financial measures.

Set forth below is a reconciliation to US GAAP of tangible book value and tangible book value per share:


									As of
		As of							December 31,		September 30,		June 30,		December 31,
(Dollars in thousands, except per share data)	(Dollars in thousands, except per share data)	September 30,		June 30,		September 30,		(Dollars in thousands, except per share data)	2022		2022		2022		2021
		2022		2022		2021
Total stockholders' equity	Total stockholders' equity	$	396,222	$	388,845	$	396,511	Total stockholders' equity	$	410,155	$	396,222	$	388,845	$	401,746
Less: goodwill, core deposit intangibles, net of taxes	Less: goodwill, core deposit intangibles, net of taxes	25,683		25,710		25,830		Less: goodwill, core deposit intangibles, net of taxes	25,663		25,683		25,710		25,780
Tangible book value	Tangible book value	$	370,539	$	363,135	$	370,681	Tangible book value	$	384,492	$	370,539	$	363,135	$	375,966
Common shares outstanding	Common shares outstanding	15,632,348		15,591,466		16,307,658		Common shares outstanding	15,673,595		15,632,348		15,591,466		16,303,461
Book value per share		$	25.35	$	24.94	$	22.73
Tangible book value per share		$	23.70	$	23.29	$	24.31
Book value per share at end of period								Book value per share at end of period	$	26.17	$	25.35	$	24.94	$	24.64
Tangible book value per share at end of period								Tangible book value per share at end of period	$	24.53	$	23.70	$	23.29	$	23.06

Set forth below is a reconciliation to US GAAP of tangible equity to tangible assets:


														As of
		As of					December 31,			September 30,	June 30,	December 31,
(Dollars in thousands)	(Dollars in thousands)	September 30,			June 30,			September 30,					(Dollars in thousands)	2022			2022			2022			2021
		2022			2022			2021
Tangible equity (1)	Tangible equity (1)	$	370,539		$	363,135		$	370,681				Tangible equity (1)	$	384,492		$	370,539		$	363,135		$	375,966
Total assets	Total assets	3,555,186			3,549,204			3,481,360					Total assets	3,647,015			3,555,186			3,549,204			3,502,819
Less: goodwill, core deposit intangibles, net of taxes	Less: goodwill, core deposit intangibles, net of taxes	25,683			25,710			25,830					Less: goodwill, core deposit intangibles, net of taxes	25,663			25,683			25,710			25,780
Total tangible assets	Total tangible assets	$	3,529,503		$	3,523,494		$	3,455,530				Total tangible assets	$	3,621,352		$	3,529,503		$	3,523,494		$	3,477,039
Tangible equity to tangible assets	Tangible equity to tangible assets	10.50		%	10.31		%	10.73		%			Tangible equity to tangible assets	10.62		%	10.50		%	10.31		%	10.81		%

(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.

Comparison of Results of Operations for the Three Months Ended ~~September 30,~~December 31, 2022 and ~~June~~September 30, 2022

Net Income. Net income totaled $13.7 million, or $0.90 per diluted share, for the three months ended December 31, 2022 compared to net income of $9.2 million, or $0.60 per diluted share, for the three months ended September 30, 2022, ~~compared to net income of $6.0 million, or $0.39 per diluted share, for the three months ended June 30, 2022,~~ an increase of ~~$3.2~~$4.5 million, or ~~52.7%~~48.5%. The results for the three months ended ~~September 30,~~December 31, 2022 were positively impacted by a ~~$5.7~~$3.0 million increase in net interest income ~~partially offset by~~and a ~~$2.3~~$1.1 million ~~decrease~~increase in noninterest income. Details of the changes in the various components of net income are further discussed below.

Net Interest Income. The following table presents the distribution of average assets, liabilities and equity, as well as interest income on average interest-earning assets and interest expense paid on average interest-bearing liabilities. All average balances are daily average balances. Nonaccruing loans have been included in the table as loans carrying a zero yield.


		Three Months Ended															Three Months Ended
		September 30, 2022							June 30, 2022								December 31, 2022							September 30, 2022
(Dollars in thousands)	(Dollars in thousands)	Average Balance Outstanding			Interest Earned/ Paid(2)		Yield/ Rate(2)		Average Balance Outstanding			Interest Earned/ Paid(2)		Yield/ Rate(2)		(Dollars in thousands)	Average Balance Outstanding			Interest Earned / Paid(2)		Yield / Rate(2)		Average Balance Outstanding			Interest Earned / Paid(2)		Yield / Rate(2)

Assets	Assets															Assets
Interest-earning assets	Interest-earning assets															Interest-earning assets
Loans receivable(1)	Loans receivable(1)	$	2,880,148		$	33,522	4.62	%	$	2,807,969		$	28,457	4.06	%	Loans receivable(1)	$	2,999,207		$	39,282	5.20	%	$	2,880,148		$	33,522	4.62	%
Commercial paper	Commercial paper	214,214			1,116		2.07		295,485			852		1.16		Commercial paper	34,487			184		2.12		214,214			1,116		2.07
Debt securities available for sale	Debt securities available for sale	135,015			678		1.99		118,075			483		1.64		Debt securities available for sale	167,818			1,151		2.72		135,015			678		1.99
Other interest-earning assets(3)	Other interest-earning assets(3)	113,821			888		3.10		92,026			628		2.74		Other interest-earning assets(3)	86,430			1,072		4.92		113,821			888		3.10
Total interest-earning assets	Total interest-earning assets	3,343,198			36,204		4.30		3,313,555			30,420		3.68		Total interest-earning assets	3,287,942			41,689		5.03		3,343,198			36,204		4.30
Other assets	Other assets	243,113							255,596							Other assets	236,159							243,113
Total assets	Total assets	3,586,311							3,569,151							Total assets	3,524,101							3,586,311
Liabilities and equity	Liabilities and equity															Liabilities and equity
Interest-bearing liabilities	Interest-bearing liabilities															Interest-bearing liabilities
Interest-bearing checking accounts	Interest-bearing checking accounts	$	654,154		$	268	0.16	%	$	664,966		$	340	0.20	%	Interest-bearing checking accounts	$	627,548		$	571	0.36	%	$	654,154		$	268	0.16	%
Money market accounts	Money market accounts	968,084			521		0.21		979,816			350		0.14		Money market accounts	954,007			1,935		0.80		968,084			521		0.21
Savings accounts	Savings accounts	238,992			45		0.07		235,848			42		0.07		Savings accounts	236,027			45		0.08		238,992			45		0.07
Certificate accounts	Certificate accounts	476,761			561		0.47		485,978			500		0.41		Certificate accounts	444,845			1,052		0.94		476,761			561		0.47
Total interest-bearing deposits	Total interest-bearing deposits	2,337,991			1,395		0.24		2,366,608			1,232		0.21		Total interest-bearing deposits	2,262,427			3,603		0.63		2,337,991			1,395		0.24
Borrowings	Borrowings	1,526			12		3.12		26,761			35		0.52		Borrowings	26,063			254		3.87		1,526			12		3.12
Total interest-bearing liabilities	Total interest-bearing liabilities	2,339,517			1,407		0.24		2,393,369			1,267		0.21		Total interest-bearing liabilities	2,288,490			3,857		0.67		2,339,517			1,407		0.24
Noninterest-bearing deposits	Noninterest-bearing deposits	800,912							738,734							Noninterest-bearing deposits	785,785							800,912
Other liabilities	Other liabilities	51,485							46,928							Other liabilities	44,333							51,485
Total liabilities	Total liabilities	3,191,914							3,179,031							Total liabilities	3,118,608							3,191,914
Stockholders' equity	Stockholders' equity	394,397							390,120							Stockholders' equity	405,493							394,397
Total liabilities and stockholders' equity	Total liabilities and stockholders' equity	3,586,311							3,569,151							Total liabilities and stockholders' equity	3,524,101							3,586,311

Net earning assets	Net earning assets	$	1,003,681						$	920,186						Net earning assets	$	999,452						$	1,003,681
Average interest-earning assets to average interest-bearing liabilities	Average interest-earning assets to average interest-bearing liabilities	142.90		%					138.45		%					Average interest-earning assets to average interest-bearing liabilities	143.67		%					142.90		%
Tax-equivalent	Tax-equivalent															Tax-equivalent
Net interest income	Net interest income				$	34,797						$	29,153			Net interest income				$	37,832						$	34,797
Interest rate spread	Interest rate spread						4.06	%						3.47	%	Interest rate spread						4.36	%						4.06	%
Net interest margin(4)	Net interest margin(4)						4.13	%						3.53	%	Net interest margin(4)						4.56	%						4.13	%
Non-tax-equivalent	Non-tax-equivalent															Non-tax-equivalent
Net interest income	Net interest income				$	34,520						$	28,859			Net interest income				$	37,545						$	34,520
Interest rate spread	Interest rate spread						4.02	%						3.43	%	Interest rate spread						4.33	%						4.02	%
Net interest margin(4)	Net interest margin(4)						4.10	%						3.49	%	Net interest margin(4)						4.53	%						4.10	%

(1)The average loans receivable balances include loans held for sale and nonaccruing loans.

(2)Interest income used in the average interest earned and yield calculation includes the tax equivalent adjustment of ~~$277~~$287 and ~~$294~~$277 for the three months ended ~~September 30,~~December 31, 2022 and ~~June~~September 30, 2022, respectively, calculated based on a combined federal and state tax rate of 24%.

(3)The average other interest-earning assets consist of FRB stock, FHLB stock, SBIC investments, and deposits in other banks.

(4)Net interest income divided by average interest-earning assets.

Total interest and dividend income for the three months ended ~~September 30,~~December 31, 2022 increased ~~$5.8~~$5.5 million, or ~~19.3%~~15.2%, compared to the three months ended ~~June~~September 30, 2022, which was driven by a ~~$5.1~~$5.8 million, or ~~18.0%~~17.3%, increase in interest income on loans. The overall increase in average yield on interest-earning assets and rate paid on liabilities was the result of rising interest ~~rates, while the rate paid on interest-bearing liabilities has not increased as rapidly.~~rates. Specific to ~~the commercial paper and~~ debt securities available for sale, the Company has intentionally maintained a relatively short-term duration ~~portfolios~~portfolio which has allowed, and will continue to allow, the Company to take advantage of rising rates when reinvesting the proceeds of maturing instruments.

Total interest expense for the three months ended ~~September 30,~~December 31, 2022 increased ~~$140,000,~~$2.5 million, or ~~11.0%~~174.1%, compared to the three months ended ~~June~~September 30, 2022. The increase was driven by a ~~$163,000,~~$2.2 million, or ~~13.2%~~158.3%, increase in interest expense on deposits as a result of a 339 basis point increase in the associated average cost of funds, ~~offset by~~and a ~~$23,000 decrease~~$242,000 increase in interest expense on ~~borrowings.~~

borrowings as a result of higher average balances and higher rates.

The following table shows the effects that changes in average balances (volume), including differences in the number of days in the periods compared, and average interest rates (rate) had on the interest earned on interest-earning assets and interest paid on interest-bearing liabilities:


(Dollars in thousands)	(Dollars in thousands)	Increase/ (Decrease) Due to				Total Increase/ (Decrease)		(Dollars in thousands)	Increase / (Decrease) Due to				Total Increase / (Decrease)
		Volume		Rate					Volume		Rate
Interest-earning assets	Interest-earning assets							Interest-earning assets
Loans receivable	Loans receivable	$	1,096	$	3,969	$	5,065	Loans receivable	$	1,386	$	4,374	$	5,760
Commercial paper	Commercial paper	(222)		486		264		Commercial paper	(936)		4		(932)
Debt securities available for sale	Debt securities available for sale	77		118		195		Debt securities available for sale	165		308		473
Other interest-earning assets	Other interest-earning assets	158		102		260		Other interest-earning assets	(214)		398		184
Total interest-earning assets	Total interest-earning assets	1,109		4,675		5,784		Total interest-earning assets	401		5,084		5,485
Interest-bearing liabilities	Interest-bearing liabilities							Interest-bearing liabilities
Interest-bearing checking accounts	Interest-bearing checking accounts	(3)		(69)		(72)		Interest-bearing checking accounts	(11)		314		303
Money market accounts	Money market accounts	1		170		171		Money market accounts	(8)		1,422		1,414
Savings accounts	Savings accounts	1		2		3		Savings accounts	(1)		1		—
Certificate accounts	Certificate accounts	(3)		64		61		Certificate accounts	(38)		529		491
Borrowings	Borrowings	(33)		10		(23)		Borrowings	193		49		242
Total interest-bearing liabilities	Total interest-bearing liabilities	(37)		177		140		Total interest-bearing liabilities	135		2,315		2,450
Net increase in tax equivalent interest income	Net increase in tax equivalent interest income					$	5,644	Net increase in tax equivalent interest income					$	3,035

Provision for Credit Losses. The provision for credit losses is the amount of expense that, based on our judgment, is required to maintain the ACL at an appropriate level under the CECL model.

The following table presents a breakdown of the components of the provision for credit losses:


		Three Months Ended									Three Months Ended
		September 30, 2022		June 30, 2022		$ Change		% Change			December 31, 2022		September 30, 2022		$ Change		% Change
Provision for credit losses	Provision for credit losses									Provision for credit losses
Loans	Loans	$	3,694	$	2,942	$	752	26	%	Loans	$	2,425	$	3,694	$	(1,269)	(34)	%
Off-balance-sheet credit exposure	Off-balance-sheet credit exposure	443		566		(123)		(22)		Off-balance-sheet credit exposure	(85)		443		(528)		(119)
Commercial paper	Commercial paper	(150)		(95)		(55)		(58)		Commercial paper	(100)		(150)		50		33
Total provision for credit losses	Total provision for credit losses	$	3,987	$	3,413	$	574	17	%	Total provision for credit losses	$	2,240	$	3,987	$	(1,747)	(44)	%

For the quarter ended December 31, 2022, the "loans" portion of the provision for credit losses was the result of the following, offset by net charge-offs of $1.9 million during the quarter:

•$1.6 million provision driven by loan growth and changes in the loan mix.

•$0.4 million provision due to changes in the projected economic forecast, specifically the national unemployment rate, and changes in qualitative adjustments.

•$1.5 million reduction of specific reserves on individually evaluated credits, which was tied to two relationships which were fully charged-off during the quarter.

For the quarter ended September 30, 2022,, the "loans" portion of the provision for credit losses was the result of the following, offset by net charge-offs of $83,000 during the quarter:

•$1.3 million provision specific to fintech portfolios which have a riskier credit profile than loans originated in-house. The elevated credit risk is offset by the higher yields earned on the portfolios.

•$~~1.1~~1.3 million provision driven by loan growth and changes in the loan mix.

•$1.1 million provision due to a projected worsening of the economic forecast, specifically the national unemployment ~~rate.~~

•~~$1.3 million provision driven by loan growth,~~rate, and changes in ~~the loan mix, and~~ qualitative adjustments.

~~For the quarter ended~~ ~~June 30, 2022, the "loans" portion of the provision for credit losses was the result of the following, offset by net recoveries of $714,000 during the quarter:~~

•~~$1.2 million provision specific to fintech portfolios.~~

•~~$0.8 million provision driven by a projected worsening of the economic forecast, specifically the national unemployment rate.~~

•~~$0.8 million provision driven by loan growth, changes in the loan mix, and qualitative adjustments.~~

•~~$0.8 million provision to fully reserve a single individually evaluated commercial loan relationship where the borrower's financial performance deteriorated during the quarter.~~

For both periods presented, the change in the provision for credit losses for off-balance-sheet credit exposure ~~increased for~~was the ~~same reasons outlined above rather than as a~~ result of ~~significant increases~~changes in ~~outstanding commitments.~~the balance of loan commitments as well as changes in the loan mix and the projected economic forecast outlined above.

3538

Noninterest Income. Noninterest income for the three months ended ~~September 30,~~December 31, 2022 ~~decreased $2.3~~increased $1.1 million, or ~~23.7%~~14.3%, when compared to the quarter ended ~~June~~September 30, 2022. Changes in selected components of noninterest income are discussed below:


		Three Months Ended									Three Months Ended
		September 30, 2022		June 30, 2022		$ Change		% Change			December 31, 2022		September 30, 2022		$ Change		% Change
Noninterest income	Noninterest income									Noninterest income
Service charges and fees on deposit accounts	Service charges and fees on deposit accounts	$	2,338	$	2,361	$	(23)	(1)	%	Service charges and fees on deposit accounts	$	2,523	$	2,338	$	185	8	%
Loan income and fees	Loan income and fees	570		649		(79)		(12)		Loan income and fees	647		570		77		14
Gain on sale of loans held for sale	Gain on sale of loans held for sale	1,586		1,949		(363)		(19)		Gain on sale of loans held for sale	1,102		1,586		(484)		(31)
BOLI income	BOLI income	527		500		27		5		BOLI income	494		527		(33)		(6)
Operating lease income	Operating lease income	1,585		1,472		113		8		Operating lease income	1,156		1,585		(429)		(27)
Gain on sale of debt securities available for sale		—		1,895		(1,895)		(100)

Gain (loss) on sale of premises and equipment										Gain (loss) on sale of premises and equipment	1,127		(12)		1,139		9,492
Other	Other	804		890		(86)		(10)		Other	1,405		804		601		75
Total noninterest income	Total noninterest income	$	7,410	$	9,716	$	(2,306)	(24)	%	Total noninterest income	$	8,454	$	7,398	$	1,056	14	%

•Gain on sale of loans held for sale: The decrease in the gain on sale of loans held for sale was primarily driven by a decrease in volume of residential mortgage and SBA loans sold during the period as a result of rising interest rates. During the quarter ended ~~September 30,~~December 31, 2022, ~~$20.9~~$7.3 million of residential mortgage loans originated for sale were sold with gains of ~~$493,000~~$183,000 compared to ~~$38.3~~$20.9 million sold with gains of ~~$835,000~~$493,000 for the quarter ended ~~June~~September 30, 2022. There were ~~$12.1~~$8.2 million of sales of the guaranteed portion of SBA commercial loans with gains of ~~$891,000~~$568,000 in the current quarter compared to ~~$11.2~~$12.1 millionsold and gains of ~~$904,000~~$891,000 in the prior quarter. ~~Lastly, the Company sold $22.8~~There were $41.4 million of HELOCs sold during the current quarter for a gain of ~~$202,000~~$340,000 compared to $22.8 million sold and gains of ~~$210,000~~$202,000 in the prior quarter.

•~~Gain on sale of debt securities available for sale:~~Operating lease income: The decrease in operating lease income can be traced to lower contractual earnings as well as gains or losses incurred at the end of operating leases, where we recognized a net loss of $337,000 for the quarter ended December 31, 2022 versus a net gain of $148,000 for the quarter ended September 30, 2022.

•Gain (loss) on sale of premises and equipment: During the quarter ended December 31, 2022 two properties were sold for a combined gain of $1.6 million, partially offset by additional impairment of $420,000 on premises and equipment associated with prior branch closures.

•Other: The increase in other income was driven by a $721,000 gain recognized on the sale of ~~seven trust preferred~~closely held equity securities ~~during~~which the ~~quarter ended June 30, 2022 which had previously been written down to zero~~Company obtained through ~~purchase accounting adjustments from a merger in~~ a prior ~~period. No other securities were sold during either period presented.~~bank acquisition.

Noninterest Expense. Noninterest expense for the three months ended ~~September 30,~~December 31, 2022 decreased ~~$1.4 million,~~$12,000, or ~~4.9%~~0.0%, when compared to the three months ended ~~June~~September 30, 2022. Changes in selected components of noninterest expense are discussed below:


		Three Months Ended									Three Months Ended
		September 30, 2022		June 30, 2022		$ Change		% Change			December 31, 2022		September 30, 2022		$ Change		% Change
Noninterest expense	Noninterest expense									Noninterest expense
Salaries and employee benefits	Salaries and employee benefits	$	14,815	$	14,709	$	106	1	%	Salaries and employee benefits	$	14,484	$	14,815	$	(331)	(2)	%
Occupancy expense, net	Occupancy expense, net	2,408		2,491		(83)		(3)		Occupancy expense, net	2,428		2,396		32		1
Computer services	Computer services	2,763		2,811		(48)		(2)		Computer services	2,796		2,763		33		1
Telephone, postage and supplies	Telephone, postage and supplies	603		599		4		1		Telephone, postage and supplies	575		603		(28)		(5)
Marketing and advertising	Marketing and advertising	590		473		117		25		Marketing and advertising	481		590		(109)		(18)
Deposit insurance premiums	Deposit insurance premiums	542		432		110		25		Deposit insurance premiums	546		542		4		1

Core deposit intangible amortization	Core deposit intangible amortization	34		42		(8)		(19)		Core deposit intangible amortization	26		34		(8)		(24)
Merger-related expenses	Merger-related expenses	474		—		474		100		Merger-related expenses	250		474		(224)		(47)
Officer transition agreement expense		—		1,795		(1,795)		(100)

Other	Other	3,872		4,107		(235)		(6)		Other	4,490		3,872		618		16
Total noninterest expense	Total noninterest expense	$	26,101	$	27,459	$	(1,358)	(5)	%	Total noninterest expense	$	26,076	$	26,089	$	(13)	—	%

•Salaries and employee benefits: The decrease in salaries and employee benefits expense is primarily the result of lower mortgage banking incentive pay as a result of the reduction in the volume of originations due to rising interest rates.

•Merger-related expenses: On July 24, 2022, the Company entered into an Agreement and Plan of Merger with Quantum Capital Corp. The expense for ~~the three months ended September 30, 2022~~both periods are costs incurred related to due diligence and legal work performed associated with the transaction, in addition to ongoing costs incurred in preparation for the transaction.

•Other: During the quarter ended December 31, 2022 the Company wrote off $350,000 in previously capitalized costs associated with a technology project which the Company is no longer pursuing. No such expense was incurred in the ~~quarter ended June 30, 2022.~~

•~~Officer transition agreement expense:~~ In May 2022, the Company entered into an amended and restated employment and transition agreement with the Company's Chairman and former CEO. As part of this agreement, the full amount of the estimated separation payment was accrued in the quarter ended June 30, 2022. No such expenses were incurred in the quarter ended September 30, 2022.prior quarter.

Income Taxes. The amount of income tax expense is influenced by the amount of pre-tax income, the amount of tax-exempt income, changes in the statutory rate, and the effect of changes in valuation allowances maintained against deferred tax benefits. Income tax expense for the three months ended ~~September 30,~~December 31, 2022 increased ~~$965,000~~$1.4 million as a result of higher taxable income in the current quarter and an increase in the effective tax rate which moved from ~~21.8%~~22.3% to ~~22.3%~~22.8% quarter-over-quarter.

3639

Comparison of Results of Operations for the ~~Three~~Six Months Ended ~~September 30,~~December 31, 2022 and ~~September 30,~~December 31, 2021

Net Income. Net income totaled ~~$9.2~~$22.9 million, or ~~$0.60~~$1.50 per diluted share, for the ~~three~~six months ended ~~September 30,~~December 31, 2022 compared to net income of ~~$10.5~~$21.6 million, or ~~$0.65~~$1.33 per diluted share, for the ~~three~~six months ended ~~September 30,~~December 31, 2021, ~~a decrease~~an increase of $1.3 million, or ~~12.6%~~5.8%. The results for the ~~three~~six months ended ~~September 30,~~December 31, 2022 were ~~negatively~~positively impacted by a $17.2 million increase in net interest income, partially offset by an increase of ~~$5.4~~$10.2 million in the provision for credit losses and a ~~$2.9~~$4.7 million decrease in noninterest ~~income, partially offset by a $6.8 million increase in net interest~~ income. Details of the changes in the various components of net income are further discussed below.

Net Interest Income. The following table presents the distribution of average assets, liabilities and equity, as well as interest income earned on average interest-earning assets and interest expense paid on average interest-bearing liabilities. All average balances are daily average balances. Nonaccruing loans have been included in the table as loans carrying a zero yield.


		Three Months Ended															Six Months Ended
		September 30, 2022							September 30, 2021								December 31, 2022							December 31, 2021
(Dollars in thousands)	(Dollars in thousands)	Average Balance Outstanding			Interest Earned/ Paid(2)		Yield/ Rate(2)		Average Balance Outstanding			Interest Earned/ Paid(2)		Yield/ Rate(2)		(Dollars in thousands)	Average Balance Outstanding			Interest Earned / Paid(2)		Yield / Rate(2)		Average Balance Outstanding			Interest Earned / Paid(2)		Yield / Rate(2)

Assets	Assets															Assets
Interest-earning assets	Interest-earning assets															Interest-earning assets
Loans receivable(1)	Loans receivable(1)	$	2,880,148		$	33,522	4.62	%	$	2,819,716		$	28,205	3.97	%	Loans receivable(1)	$	2,939,677		$	72,814	4.91	%	$	2,819,482		$	55,441	3.90	%
Commercial paper	Commercial paper	214,214			1,116		2.07		160,857			155		0.38		Commercial paper	124,351			1,300		2.07		191,712			458		0.47
Debt securities available for sale	Debt securities available for sale	135,015			678		1.99		138,435			524		1.50		Debt securities available for sale	151,417			1,829		2.40		130,143			935		1.43
Other interest-earning assets(3)	Other interest-earning assets(3)	113,821			888		3.10		138,438			731		2.09		Other interest-earning assets(3)	100,125			1,960		3.88		126,054			1,576		2.48
Total interest-earning assets	Total interest-earning assets	3,343,198			36,204		4.30		3,257,446			29,615		3.61		Total interest-earning assets	3,315,570			77,903		4.66		3,267,391			58,410		3.55
Other assets	Other assets	243,113							260,976							Other assets	239,636							260,288
Total assets	Total assets	3,586,311							3,518,422							Total assets	3,555,206							3,527,679
Liabilities and equity	Liabilities and equity															Liabilities and equity
Interest-bearing liabilities	Interest-bearing liabilities															Interest-bearing liabilities
Interest-bearing checking accounts	Interest-bearing checking accounts	$	654,154		$	268	0.16	%	$	635,456		$	397	0.25	%	Interest-bearing checking accounts	$	640,851		$	838	0.26	%	$	635,362		$	728	0.23	%
Money market accounts	Money market accounts	968,084			521		0.21		988,990			367		0.15		Money market accounts	961,045			2,456		0.51		993,643			716		0.14
Savings accounts	Savings accounts	238,992			45		0.07		223,658			41		0.07		Savings accounts	237,509			89		0.07		223,061			81		0.07
Certificate accounts	Certificate accounts	476,761			561		0.47		457,865			767		0.67		Certificate accounts	460,803			1,615		0.70		450,706			1,352		0.60
Total interest-bearing deposits	Total interest-bearing deposits	2,337,991			1,395		0.24		2,305,969			1,572		0.27		Total interest-bearing deposits	2,300,208			4,998		0.43		2,302,772			2,877		0.25
Borrowings	Borrowings	1,526			12		3.12		55,464			26		0.18		Borrowings	13,795			266		3.83		56,356			41		0.15
Total interest-bearing liabilities	Total interest-bearing liabilities	2,339,517			1,407		0.24		2,361,433			1,598		0.27		Total interest-bearing liabilities	2,314,003			5,264		0.45		2,359,128			2,918		0.25
Noninterest-bearing deposits	Noninterest-bearing deposits	800,912							708,219							Noninterest-bearing deposits	793,349							722,432
Other liabilities	Other liabilities	51,485							52,305							Other liabilities	46,501							48,393
Total liabilities	Total liabilities	3,191,914							3,121,957							Total liabilities	3,153,853							3,129,953
Stockholders' equity	Stockholders' equity	394,397							396,465							Stockholders' equity	401,353							397,726
Total liabilities and stockholders' equity	Total liabilities and stockholders' equity	3,586,311							3,518,422							Total liabilities and stockholders' equity	3,555,206							3,527,679

Net earning assets	Net earning assets	$	1,003,681						$	896,013						Net earning assets	$	1,001,567						$	908,263
Average interest-earning assets to average interest-bearing liabilities	Average interest-earning assets to average interest-bearing liabilities	142.90		%					137.94		%					Average interest-earning assets to average interest-bearing liabilities	143.28		%					138.50		%
Tax-equivalent	Tax-equivalent															Tax-equivalent
Net interest income	Net interest income				$	34,797						$	28,017			Net interest income				$	72,639						$	55,492
Interest rate spread	Interest rate spread						4.06	%						3.34	%	Interest rate spread						4.21	%						3.30	%
Net interest margin(4)	Net interest margin(4)						4.13	%						3.41	%	Net interest margin(4)						4.35	%						3.37	%
Non-tax-equivalent	Non-tax-equivalent															Non-tax-equivalent
Net interest income	Net interest income				$	34,520						$	27,707			Net interest income				$	72,065						$	54,875
Interest rate spread	Interest rate spread						4.02	%						3.30	%	Interest rate spread						4.18	%						3.26	%
Net interest margin(4)	Net interest margin(4)						4.10	%						3.37	%	Net interest margin(4)						4.31	%						3.33	%

(1)The average loans receivable balances include loans held for sale and nonaccruing loans.

(2)Interest income used in the average interest earned and yield calculation includes the tax equivalent adjustment of ~~$277~~$574 and ~~$310~~$617 for the ~~three~~six months ended ~~September 30,~~December 31, 2022 and ~~September 30,~~December 31, 2021, respectively, calculated based on a combined federal and state tax rate of 24%.

(3)The average other interest-earning assets consist of FRB stock, FHLB stock, SBIC investments, and deposits in other banks.

(4)Net interest income divided by average interest-earning assets.

Total interest and dividend income for the ~~three~~six months ended ~~September 30,~~December 31, 2022 increased ~~$6.6~~$19.5 million, or ~~22.6%~~33.8%, compared to the ~~three~~six months ended ~~September 30,~~December 31, 2021, which was driven by a ~~$5.4~~$17.4 million, or ~~19.2%~~31.8%, increase in interest income on loans, and a ~~$961,000,~~combined increase of $1.7 million, or ~~620.0%~~124.6%, ~~increase~~ in interest income on commercial ~~paper.~~paper and debt securities available for sale. The overall increase in average yield on interest-earning assets and rate paid on liabilities was the result of

rising interest ~~rates, while the rate paid on interest-bearing liabilities has not increased as rapidly.~~rates. Specific to ~~the commercial paper and~~ debt securities available for sale, the Company has intentionally maintained a relatively short-term duration ~~portfolios~~portfolio which has allowed, and will continue to allow, the Company to take advantage of rising rates when reinvesting the proceeds of maturing instruments.

Total interest expense for the ~~three~~six months ended ~~September 30,~~December 31, 2022 ~~decreased $191,000,~~increased $2.3 million, or ~~12.0%~~80.4%, compared to the ~~three~~six months ended ~~September 30,~~December 31, 2021. The ~~decrease~~increase was driven by a ~~$177,000,~~$2.1 million, or ~~11.3%~~73.7%, ~~decrease~~increase in interest expense on deposits as a result of ~~a 3~~an 18 basis point ~~decrease~~increase in the associated average cost of funds.


(Dollars in thousands)	(Dollars in thousands)	Increase/ (Decrease) Due to				Total Increase/ (Decrease)		(Dollars in thousands)	Increase / (Decrease) Due to				Total Increase / (Decrease)
		Volume		Rate					Volume		Rate
Interest-earning assets	Interest-earning assets							Interest-earning assets
Loans receivable	Loans receivable	$	604	$	4,713	$	5,317	Loans receivable	$	2,363	$	15,011	$	17,374
Commercial paper	Commercial paper	51		910		961		Commercial paper	(161)		1,003		842
Debt securities available for sale	Debt securities available for sale	(13)		167		154		Debt securities available for sale	153		740		893
Other interest-earning assets	Other interest-earning assets	(130)		287		157		Other interest-earning assets	(324)		708		384
Total interest-earning assets	Total interest-earning assets	512		6,077		6,589		Total interest-earning assets	2,031		17,462		19,493
Interest-bearing liabilities	Interest-bearing liabilities							Interest-bearing liabilities
Interest-bearing checking accounts	Interest-bearing checking accounts	12		(141)		(129)		Interest-bearing checking accounts	6		104		110
Money market accounts	Money market accounts	(8)		162		154		Money market accounts	(23)		1,763		1,740
Savings accounts	Savings accounts	3		1		4		Savings accounts	5		3		8
Certificate accounts	Certificate accounts	32		(238)		(206)		Certificate accounts	30		233		263
Borrowings	Borrowings	(25)		11		(14)		Borrowings	(31)		256		225
Total interest-bearing liabilities	Total interest-bearing liabilities	14		(205)		(191)		Total interest-bearing liabilities	(13)		2,359		2,346
Net increase in tax equivalent interest income	Net increase in tax equivalent interest income					$	6,780	Net increase in tax equivalent interest income					$	17,147

Provision (Benefit) for Credit Losses. The following table presents a breakdown of the components of the provision (benefit) for credit losses:


		Three Months Ended									Six Months Ended
		September 30, 2022		September 30, 2021		$ Change		% Change			December 31, 2022		December 31, 2021		$ Change		% Change
Provision (benefit) for credit losses	Provision (benefit) for credit losses									Provision (benefit) for credit losses
Loans	Loans	$	3,694	$	(1,335)	$	5,029	(377)	%	Loans	$	6,119	$	(3,775)	$	9,894	262	%
Off-balance-sheet credit exposure	Off-balance-sheet credit exposure	443		(125)		568		(454)		Off-balance-sheet credit exposure	358		(235)		593		252
Commercial paper	Commercial paper	(150)		—		(150)		(100)		Commercial paper	(250)		50		(300)		(600)
Total provision (benefit) for credit losses	Total provision (benefit) for credit losses	$	3,987	$	(1,460)	$	5,447	(373)	%	Total provision (benefit) for credit losses	$	6,227	$	(3,960)	$	10,187	257	%

For the ~~quarter~~six months ended ~~September 30,~~December 31, 2022, the "loans" portion of the provision (benefit) for credit losses was the result of the following, offset by net charge-offs of ~~$83,000~~$1.9 million during the ~~quarter:~~period:

•$~~1.1~~2.9 million provision driven by aloan growth and changes in the loan mix.

•$1.5 million provision due to changes in the projected ~~worsening of the~~ economic forecast, specifically the national unemployment ~~rate.~~rate, and changes in qualitative adjustments.

•$~~1.3~~1.5 million ~~provision driven by loan growth, changes in~~reduction of specific reserves on individually evaluated credits, which was tied to two relationships which were fully charged-off during the ~~loan mix, and qualitative adjustments.~~period.

For the ~~quarter~~six months ended ~~September 30,~~December 31, 2021, the "loans" portion of the benefit for credit losses was driven by ~~a slight~~an improvement in the economic forecast, as more clarity was gained regarding the impact of COVID-19 upon the loan portfolio.

For both periods presented, the change in the provision for credit losses for off-balance-sheet credit exposure was the result of changes in the balance of loan commitments as well as changes in the loan mix and the projected economic forecast outlined above.

3841

Noninterest Income. Noninterest income for the ~~three~~six months ended ~~September 30,~~December 31, 2022 decreased ~~$2.9~~$4.6 million, or ~~28.4%~~22.5%, when compared to the ~~quarter ended September 30, 2021.~~same period last year. Changes in selected components of noninterest income are discussed below:


		Three Months Ended									Six Months Ended
		September 30, 2022		September 30, 2021		$ Change		% Change			December 31, 2022		December 31, 2021		$ Change		% Change
Noninterest income	Noninterest income									Noninterest income
Service charges and fees on deposit accounts	Service charges and fees on deposit accounts	$	2,338	$	2,372	$	(34)	(1)	%	Service charges and fees on deposit accounts	$	4,861	$	4,885	$	(24)	—	%
Loan income and fees	Loan income and fees	570		979		(409)		(42)		Loan income and fees	1,217		1,784		(567)		(32)
Gain on sale of loans held for sale	Gain on sale of loans held for sale	1,586		4,057		(2,471)		(61)		Gain on sale of loans held for sale	2,688		7,958		(5,270)		(66)
BOLI income	BOLI income	527		518		9		2		BOLI income	1,021		1,008		13		1
Operating lease income	Operating lease income	1,585		1,540		45		3		Operating lease income	2,741		3,258		(517)		(16)
Gain on sale of debt securities available for sale		—		—		—		—

Gain (loss) on sale of premises and equipment										Gain (loss) on sale of premises and equipment	1,115		(87)		1,202		1,382
Other	Other	804		886		(82)		(9)		Other	2,209		1,639		570		35
Total noninterest income	Total noninterest income	$	7,410	$	10,352	$	(2,942)	(28)	%	Total noninterest income	$	15,852	$	20,445	$	(4,593)	(22)	%

•Loan income and fees: The decrease in loan income and fees ~~during the quarter ended September 30, 2022~~ was ~~the result of~~driven by lower ~~prepayment and~~ underwriting fees, ~~recognized during~~interest rate swap fees, and prepayment penalties in the current period compared to the same period last ~~year.~~year, all of which were impacted by rising interest rates.

•Gain on sale of loans held for sale: The decrease in the gain on sale of loans held for sale was primarily driven by a decrease in ~~the~~ volume of residential mortgage ~~loans,~~and SBA ~~commercial~~ loans ~~and HELOCs~~ sold during the period as a result of rising interest rates. During the ~~quarter~~six months ended ~~September 30,~~December 31, 2022, ~~$20.9~~$28.2 million of residential mortgage loans originated for sale were sold with gains of ~~$493,000~~$676,000 compared to ~~$63.8~~$150.7 million sold with gains of ~~$2.1~~$4.3 million for the ~~quarter ended September 30, 2021.~~corresponding period in the prior year. There were ~~$12.1~~$20.3 million of sales of the guaranteed portion of SBA commercial loans with gains of ~~$891,000~~$1.5 million in the current ~~quarter compared to $14.4 million~~period compared to $27.0 million sold and gains of ~~$1.7~~$3.1 millionfor the corresponding period in the prior year. There were $64.2 million of HELOCs sold during the current period for a gain of $542,000 compared to $72.2 million sold and gains of $426,000 for the corresponding period in the prior year. Lastly, $11.5 million of indirect auto finance loans were sold out of the held for investment portfolio during the six months ended December 31, 2021 for a gain of $205,000. No such sales occurred in the same period in the current year.

•Operating lease income: The decrease in operating lease income can be traced to lower contractual earnings as well as gains or losses incurred at the end of operating leases, where we recognized a net loss of $189,000 for the six months ended December 31, 2022 versus a net loss of $92,000 in the same period last year.

•Gain (loss) on sale of premises and equipment: During the six months ended December 31, 2022 two properties were sold for a combined gain of $1.6 million, partially offset by additional impairment of $420,000 on premises and equipment associated with prior branch closures. No such sales occurred in the same period in the prior year. ~~Lastly,~~

•Other: The increase in other income was driven by a $721,000 gain recognized on the sale of closely held equity securities which the Company ~~sold $22.8 million of HELOCs during the quarter for~~obtained through a ~~gain of $202,000 compared to $47.4 million sold and gains of $267,000~~prior bank acquisition. No such sales occurred in the same period ~~last~~in the prior year.

Noninterest Expense. Noninterest expense for the ~~three~~six months ended ~~September 30,~~December 31, 2022 increased ~~$85,000,~~$265,000, or ~~0.3%~~0.5%, when compared to the ~~three months ended September 30, 2021.~~same period last year. Changes in selected components of noninterest expense are discussed below:


		Three Months Ended									Six Months Ended
		September 30, 2022		September 30, 2021		$ Change		% Change			December 31, 2022		December 31, 2021		$ Change		% Change
Noninterest expense	Noninterest expense									Noninterest expense
Salaries and employee benefits	Salaries and employee benefits	$	14,815	$	15,280	$	(465)	(3)	%	Salaries and employee benefits	$	29,299	$	30,152	$	(853)	(3)	%
Occupancy expense, net	Occupancy expense, net	2,408		2,317		91		4		Occupancy expense, net	4,824		4,718		106		2
Computer services	Computer services	2,763		2,521		242		10		Computer services	5,559		5,130		429		8
Telephone, postage and supplies	Telephone, postage and supplies	603		650		(47)		(7)		Telephone, postage and supplies	1,178		1,322		(144)		(11)
Marketing and advertising	Marketing and advertising	590		705		(115)		(16)		Marketing and advertising	1,071		1,537		(466)		(30)
Deposit insurance premiums	Deposit insurance premiums	542		566		(24)		(4)		Deposit insurance premiums	1,088		868		220		25

Core deposit intangible amortization	Core deposit intangible amortization	34		93		(59)		(63)		Core deposit intangible amortization	60		158		(98)		(62)
Merger-related expenses	Merger-related expenses	474		—		474		100		Merger-related expenses	724		—		724		100
Officer transition agreement expense		—		—		—		—

Other	Other	3,872		3,884		(12)		—		Other	8,362		7,953		409		5
Total noninterest expense	Total noninterest expense	$	26,101	$	26,016	$	85	—	%	Total noninterest expense	$	52,165	$	51,838	$	327	1	%

•Salaries and employee benefits: The decrease in salaries and employee benefits expense in the current period compared to the same period last year is primarily the result of branch closures and lower mortgage banking incentive pay as a result of the reduction in the volume of originations due to rising interest rates.

•Computer services: The increase in expense between periods is due to continued investments in technology as well as increases in the cost of services provided by third parties.

•Marketing and advertising: The decrease in expense between periods is due to lower projected marketing expenses for the current fiscal year versus the prior period.

•Deposit insurance premiums: The rates the Company is charged for deposit insurance have increased year-over-year.

•Merger-related expenses: On July 24, 2022, the Company entered into an Agreement and Plan of Merger with Quantum Capital Corp. The expense for the ~~three~~six months ended ~~September 30,~~December 31, 2022 are costs incurred related to due diligence and legal work performed associated with the transaction, in addition to ongoing costs incurred in preparation for the transaction. No such expense was incurred in the ~~quarter~~prior period.

•Other: During the six months ended ~~September 30, 2021.~~December 31, 2022 the Company wrote off $350,000 in previously capitalized costs associated with a technology project which the Company is no longer pursuing. No such expense was incurred in the prior period.

Income Taxes. The amount of income tax expense is influenced by the amount of pre-tax income, the amount of tax-exempt income, changes in the statutory rate, and the effect of changes in valuation allowances maintained against deferred tax benefits. Income tax expense for the ~~three~~six months ended ~~September 30,~~December 31, 2022 ~~decreased $333,000~~increased $831,000 as a result of ~~lower~~higher taxable income in the current quarter compared to the corresponding period in the prior year, ~~partially offset by~~and an increase in the effective tax rate from ~~22.0%~~21.3% to ~~22.3%~~22.6% between periods.

Comparison of Financial Condition at ~~September 30,~~December 31, 2022 and June 30, 2022

General. Total assets increased by ~~$5.9~~$97.8 million to $3.6 billion and total liabilities ~~decreased~~increased by ~~$1.4~~$76.5 million to $3.2 billion ~~respectively,~~ at ~~September 30,~~December 31, 2022 as compared to June 30, 2022.The combined decrease in commercial paper of ~~$109.1~~$194.4 million and net increase in funding sources of $78.3 million was used to fund loan growth of ~~$98.5~~$216.3 million ~~and an increase of $34.8 million in available for sale debt securities~~ during the period.

Cash and cash equivalents and commercial paper. Total cash and cash equivalents ~~decreased $11.0~~increased $59.9 million, or ~~10.4%~~57.0%, to ~~$94.2~~$165.0 million at ~~September 30,~~December 31, 2022 from $105.1 million at June 30, 2022. Commercial paper decreased ~~$109.1 million, or 56.1%, to $85.3 million at September 30, 2022~~ from $194.4 million to none at ~~June 30,~~December 31, 2022.

Debt securities available for sale and other investments. Debt securities available for sale increased ~~$34.8~~$21.0 million, or ~~27.4%~~16.5%, to ~~$161.7~~$147.9 million at ~~September 30,~~December 31, 2022 from $127.0 million at June 30, 2022, with the majority of the increase being ~~invested~~additional investment in residential MBS.

Loans held for sale. Loans held for sale decreased ~~$3.0~~$6.0 million, or ~~3.9%~~7.6%, to ~~$76.3~~$73.3 million at ~~September 30,~~December 31, 2022 from $79.3 million at June 30, 2022. This was ~~primarily~~ driven by a combined decrease of ~~$6.1~~$28.6 million, or ~~9.5%~~44.3%, in mortgage loans held for sale and HELOCs originated for sale, partially offset by a ~~$3.1~~$22.6 million, or ~~20.7%~~153.0%, increase in SBA loans held for sale.

Loans, net of deferred loan fees and costs. Total loans increased ~~$98.5~~$216.3 million, or ~~3.6%~~7.8%, to ~~$2.9~~$3.0 billion at ~~September 30,~~December 31, 2022 from $2.8 billion at June 30, ~~2022, which was funded by the maturation of commercial paper.~~

2022. The following table illustrates the changes within the portfolio:


		As of								Percent of Total					As of								Percent of Total
(Dollars in thousands)	(Dollars in thousands)	September 30,		June 30,		Change				September 30,		June 30,		(Dollars in thousands)	December 31,		June 30,		Change				December 31,		June 30,
		2022		2022		$		%		2022		2022			2022		2022		$		%		2022		2022
Commercial real estate loans	Commercial real estate loans													Commercial real estate loans
Construction and land development	Construction and land development	$	310,985	$	291,202	$	19,783	7	%	11	%	11	%	Construction and land development	$	328,253	$	291,202	$	37,051	13	%	11	%	11	%
Commercial real estate - owner occupied	Commercial real estate - owner occupied	336,456		335,658		798		—		12		12		Commercial real estate - owner occupied	340,824		335,658		5,166		2		12		12
Commercial real estate - non-owner occupied	Commercial real estate - non-owner occupied	661,644		662,159		(515)		—		23		24		Commercial real estate - non-owner occupied	690,241		662,159		28,082		4		23		24
Multifamily	Multifamily	79,082		81,086		(2,004)		(2)		3		3		Multifamily	69,156		81,086		(11,930)		(15)		2		3
Total commercial real estate loans	Total commercial real estate loans	1,388,167		1,370,105		18,062		1		49		50		Total commercial real estate loans	1,428,474		1,370,105		58,369		4		48		50
Commercial loans	Commercial loans													Commercial loans
Commercial and industrial	Commercial and industrial	205,606		192,652		12,954		7		7		7		Commercial and industrial	194,465		192,652		1,813		1		7		7
Equipment finance	Equipment finance	411,012		394,541		16,471		4		14		14		Equipment finance	426,507		394,541		31,966		8		14		14
Municipal leases	Municipal leases	130,777		129,766		1,011		1		5		5		Municipal leases	135,922		129,766		6,156		5		4		5
PPP loans	PPP loans	238		661		(423)		(64)		—		—		PPP loans	214		661		(447)		(68)		—		—
Total commercial loans	Total commercial loans	747,633		717,620		30,013		4		26		26		Total commercial loans	757,108		717,620		39,488		6		25		26
Residential real estate loans	Residential real estate loans													Residential real estate loans
Construction and land development	Construction and land development	91,488		81,847		9,641		12		2		3		Construction and land development	100,002		81,847		18,155		22		3		3
One-to-four family	One-to-four family	374,849		354,203		20,646		6		13		13		One-to-four family	400,595		354,203		46,392		13		13		13
HELOCs	HELOCs	164,701		160,137		4,564		3		6		6		HELOCs	194,296		160,137		34,159		21		7		6
Total residential real estate loans	Total residential real estate loans	631,038		596,187		34,851		6		21		22		Total residential real estate loans	694,893		596,187		98,706		17		23		22
Consumer loans	Consumer loans	100,945		85,383		15,562		18		4		2		Consumer loans	105,148		85,383		19,765		23		4		2
Loans, net of deferred loan fees and costs	Loans, net of deferred loan fees and costs	$	2,867,783	$	2,769,295	$	98,488	4	%	100	%	100	%	Loans, net of deferred loan fees and costs	$	2,985,623	$	2,769,295	$	216,328	8	%	100	%	100	%

Asset quality. Nonperforming assets increased by ~~$706,000,~~$54,000, or ~~11.2%~~0.9%, to ~~$7.0~~$6.4 million, or ~~0.20%~~0.17% of total assets, at ~~September 30,~~December 31, 2022 compared to $6.3 million, or 0.18% of total assets, at June 30, 2022. Nonperforming assets included ~~$6.8~~$6.2 million in nonaccruing loans and $200,000 of REO at ~~September 30,~~December 31, 2022, compared to $6.1 million and $200,000 in nonaccruing loans and REO, respectively, at June 30, 2022. Nonperforming loans to total loans was ~~0.24%~~0.21% at ~~September 30,~~December 31, 2022 and 0.22% at June 30, 2022.

The ratio of classified assets to total assets decreased to ~~0.54%~~0.50% at ~~September 30,~~December 31, 2022 from 0.61% at June 30, 2022. Classified assets decreased ~~$2.2~~$3.2 million, or ~~10.2%~~15.1%, to ~~$19.3~~$18.3 million at ~~September 30,~~December 31, 2022 compared to $21.5 million at June 30, 2022, due to loan paydowns.

Our individually evaluated loans include loans on nonaccrual status and all TDRs, whether performing or on nonaccrual status under their restructured terms. Individually evaluated loans may be evaluated for reserve purposes using either the discounted cash flow or the collateral

valuation method. As of ~~September 30,~~December 31, 2022, there ~~were $5.6~~was$3.4 million in loans individually evaluated compared to $5.3 million at June 30, 2022. For more information on these individually evaluated loans, see "Note 5 – Loans and Allowance for Credit Losses on Loans" in this Quarterly Report on Form 10-Q.

Allowance for credit losses. The ACL on loans was ~~$38.3~~$38.9 million, or ~~1.34%~~1.30% of total loans, at ~~September 30,~~December 31, 2022 compared to $34.7 million, or 1.25% of total loans, as of June 30, 2022. Net charge-offs as a percentage of average loans was ~~0.01%~~0.13% for the ~~three~~six months ended~~September 30,~~ December 31, 2022 compared to ~~net recoveries of (0.10)%~~0.05% for the ~~three~~six months ended ~~June 30, 2022.~~December 31, 2021. The drivers of these quarter-over-quarter changes are discussed in the ~~"Three~~"Six Months Ended ~~September 30,~~December 31, 2022 and ~~June 30, 2022"~~December 31, 2021" section above.

Other assets. Other assets decreased ~~$5.7~~$4.1 million, or ~~10.6%~~7.6%, to ~~$47.3~~$48.9 million at ~~September 30,~~December 31, 2022 from $53.0 million at June 30, 2022. The decrease was primarily driven by lower current taxes receivable and the sale of properties held for ~~sale during the period.~~sale.

Other liabilities. Other liabilities decreased ~~$4.3~~$1.8 million, or ~~7.1%~~2.9%, during the ~~three~~six months ended ~~September 30,~~December 31, 2022 to ~~$56.3~~$58.8 million, as a result of the payout of annual short-term incentives for the prior fiscal year.

Deposits. The following table summarizes the composition of our deposit portfolio as of the dates indicated:


												As of
		As of								December 31,		June 30,		Change
(Dollars in thousands)	(Dollars in thousands)	September 30,		June 30,		Change					(Dollars in thousands)	2022		2022		$		%
		2022		2022		$		%
Core deposits	Core deposits										Core deposits
Noninterest-bearing accounts	Noninterest-bearing accounts	$	794,242	$	745,746	$	48,496	7	%		Noninterest-bearing accounts	$	726,416	$	745,746	$	(19,330)	(3)	%
NOW accounts	NOW accounts	636,859		654,981		(18,122)		(3)			NOW accounts	638,896		654,981		(16,085)		(2)
Money market accounts	Money market accounts	960,150		969,661		(9,511)		(1)			Money market accounts	992,083		969,661		22,422		2
Savings accounts	Savings accounts	240,412		238,197		2,215		1			Savings accounts	230,896		238,197		(7,301)		(3)
Core deposits	Core deposits	2,631,663		2,608,585		23,078		1			Core deposits	2,588,291		2,608,585		(20,294)		(1)
Certificates of deposit	Certificates of deposit	471,005		491,176		(20,171)		(4)			Certificates of deposit	459,729		491,176		(31,447)		(6)
Total	Total	$	3,102,668	$	3,099,761	$	2,907	—	%		Total	$	3,048,020	$	3,099,761	$	(51,741)	(2)	%

Liquidity

Management maintains a liquidity position that it believes will adequately provide for funding ~~for~~of loan demand and deposit run-off that may occur in the normal course of business. We rely on a number of different sources in order to meet our potential liquidity demands. The primary sources are increases in deposit accounts, wholesale borrowings, and cash flows from loan payments and the securities portfolio.

In addition to these primary sources of funds, management has several secondary sources available to meet potential funding requirements. As of ~~September 30,~~December 31, 2022, the Bank had an available borrowing capacity of ~~$211.2~~$111.4 million and $92.0 million with the FHLB of Atlanta ~~a $68.9 million line of credit with the~~and FRB, respectively, and ~~a line~~lines of credit with three unaffiliated banks totaling $120.0 million. Additionally, we classify our securities portfolio as available for sale, providing an additional source of liquidity. Management believes that our securities portfolio is of high quality and the securities would therefore be marketable. In addition, we have historically sold 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 we also utilize brokered time deposits to supplement our 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. We also utilize 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 ~~September 30,~~December 31, 2022 brokered deposits totaled ~~$24.0~~$50.4 million, or ~~0.8%~~1.7%, of total deposits.

Liquidity management is both a daily and long-term function of business management. Excess liquidity is generally invested in short-term investments, such as overnight deposits and federal funds. On a longer term basis, we maintain a strategy of investing in various lending products and debt securities, including MBS. On a stand-alone ~~level~~basis we are a separate legal entity from the Bank and must provide for our own liquidity and pay our own operating expenses. Our primary source of funds consists of dividends or capital distributions from the Bank, although there are regulatory restrictions on the ability of the Bank to pay dividends. At ~~September 30,~~December 31, 2022, we (on an unconsolidated basis) had liquid assets of ~~$6.1~~$5.7 million.

At the Bank level, we use our sources of funds primarily to meet our ongoing commitments, pay maturing deposits and fund withdrawals, and fund loan commitments. At ~~September 30,~~December 31, 2022, the total approved loan commitments and unused lines of credit outstanding amounted to ~~$431.8~~$362.5 million and ~~$511.4~~$540.4 million, respectively, as compared to $417.6 million and $485.2 million as of June 30, 2022. Certificates of deposit scheduled to mature in one year or less at ~~September 30,~~December 31, 2022, totaled ~~$389.8~~$331.8 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 a majority of our maturing deposits will remain with us.

Off-Balance Sheet Activities

In the normal course of operations, we engage in a variety of financial transactions that are not recorded in our financial statements, mainly to manage customers' requests for funding. These transactions primarily take the form of loan commitments and lines of credit and involve varying degrees of off-balance sheet credit, interest rate, and liquidity risks. For further information, see "Note 9 – Commitments and Contingencies" in this Quarterly Report on Form 10-Q.

Capital Resources

At ~~September 30,~~December 31, 2022, stockholders' equity totaled ~~$396.2~~$410.2 million compared to $388.8 million at June 30, 2022, an increase of ~~$7.4~~$21.4 million which was ~~mainly~~ the result of net income for the ~~quarter.~~six months. HomeTrust Bancshares, Inc. is a bank holding company subject to regulation by the Federal Reserve. As a bank holding company, we are 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~~FRB 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. Failure to meet minimum capital requirements can initiate certain mandatory and possibly ~~additional~~ discretionary actions by bank regulators that, if undertaken, could have a direct material effect on the Company's financial statements.

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 ~~September 30,~~December 31, 2022, HomeTrust Bancshares, Inc. and the Bank each exceeded all regulatory capital requirements. 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 September 30, 2022~~ under applicable regulatory requirements.

HomeTrust Bancshares, Inc.'s and the Bank's actual and required minimum capital amounts and ratios are as follows:


																			Regulatory Requirements
						Regulatory Requirements									Actual				Minimum for Capital Adequacy Purposes				Minimum to Be Well Capitalized
(Dollars in thousands)	(Dollars in thousands)	Actual				Minimum for Capital Adequacy Purposes				Minimum to Be Well Capitalized				(Dollars in thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio
		Amount		Ratio		Amount		Ratio		Amount		Ratio
HomeTrust Bancshares, Inc.	HomeTrust Bancshares, Inc.													HomeTrust Bancshares, Inc.
September 30, 2022
December 31, 2022														December 31, 2022
CET1 Capital (to risk-weighted assets)	CET1 Capital (to risk-weighted assets)	$	379,461	11.01	%	$	155,026	4.50	%	$	223,927	6.50	%	CET1 Capital (to risk-weighted assets)	$	392,737	11.36	%	$	155,612	4.50	%	$	224,773	6.50	%
Tier I Capital (to total adjusted assets)	Tier I Capital (to total adjusted assets)	379,461		10.64		142,626		4.00		178,283		5.00		Tier I Capital (to total adjusted assets)	392,737		11.21		140,111		4.00		175,139		5.00
Tier I Capital (to risk-weighted assets)	Tier I Capital (to risk-weighted assets)	379,461		11.01		206,701		6.00		275,602		8.00		Tier I Capital (to risk-weighted assets)	392,737		11.36		207,483		6.00		276,644		8.00
Total Risk-based Capital (to risk-weighted assets)	Total Risk-based Capital (to risk-weighted assets)	410,419		11.91		275,602		8.00		344,502		10.00		Total Risk-based Capital (to risk-weighted assets)	424,068		12.26		276,644		8.00		345,805		10.00

June 30, 2022	June 30, 2022													June 30, 2022
CET1 Capital (to risk-weighted assets)	CET1 Capital (to risk-weighted assets)	$	372,797	10.76	%	$	155,844	4.50	%	$	225,108	6.50	%	CET1 Capital (to risk-weighted assets)	$	372,797	10.76	%	$	155,844	4.50	%	$	225,108	6.50	%
Tier I Capital (to total adjusted assets)	Tier I Capital (to total adjusted assets)	372,797		10.50		142,028		4.00		177,535		5.00		Tier I Capital (to total adjusted assets)	372,797		10.50		142,028		4.00		177,535		5.00
Tier I Capital (to risk-weighted assets)	Tier I Capital (to risk-weighted assets)	372,797		10.76		207,792		6.00		277,057		8.00		Tier I Capital (to risk-weighted assets)	372,797		10.76		207,792		6.00		277,057		8.00
Total Risk-based Capital (to risk-weighted assets)	Total Risk-based Capital (to risk-weighted assets)	395,962		11.43		277,057		8.00		346,321		10.00		Total Risk-based Capital (to risk-weighted assets)	395,962		11.43		277,057		8.00		346,321		10.00

HomeTrust Bank	HomeTrust Bank													HomeTrust Bank
September 30, 2022
December 31, 2022														December 31, 2022
CET1 Capital (to risk-weighted assets)	CET1 Capital (to risk-weighted assets)	$	365,963	10.62	%	$	155,026	4.50	%	$	223,927	6.50	%	CET1 Capital (to risk-weighted assets)	$	379,838	10.98	%	$	155,612	4.50	%	$	224,773	6.50	%
Tier I Capital (to total adjusted assets)	Tier I Capital (to total adjusted assets)	365,963		10.26		142,619		4.00		178,273		5.00		Tier I Capital (to total adjusted assets)	379,838		10.84		140,102		4.00		175,127		5.00
Tier I Capital (to risk-weighted assets)	Tier I Capital (to risk-weighted assets)	365,963		10.62		206,701		6.00		275,602		8.00		Tier I Capital (to risk-weighted assets)	379,838		10.98		207,483		6.00		276,644		8.00
Total Risk-based Capital (to risk-weighted assets)	Total Risk-based Capital (to risk-weighted assets)	396,921		11.52		275,602		8.00		344,502		10.00		Total Risk-based Capital (to risk-weighted assets)	411,169		11.89		276,644		8.00		345,805		10.00

June 30, 2022	June 30, 2022													June 30, 2022
CET1 Capital (to risk-weighted assets)	CET1 Capital (to risk-weighted assets)	$	358,600	10.35	%	$	155,844	4.50	%	$	225,108	6.50	%	CET1 Capital (to risk-weighted assets)	$	358,600	10.35	%	$	155,844	4.50	%	$	225,108	6.50	%
Tier I Capital (to total adjusted assets)	Tier I Capital (to total adjusted assets)	358,600		10.11		141,814		4.00		177,267		5.00		Tier I Capital (to total adjusted assets)	358,600		10.11		141,814		4.00		177,267		5.00
Tier I Capital (to risk-weighted assets)	Tier I Capital (to risk-weighted assets)	358,600		10.35		207,792		6.00		277,057		8.00		Tier I Capital (to risk-weighted assets)	358,600		10.35		207,792		6.00		277,057		8.00
Total Risk-based Capital (to risk-weighted assets)	Total Risk-based Capital (to risk-weighted assets)	381,765		11.02		277,057		8.00		346,321		10.00		Total Risk-based Capital (to risk-weighted assets)	381,765		11.02		277,057		8.00		346,321		10.00

As permitted by the interim final rule issued on March 27, 2020 by the federal banking regulatory agencies, the Company elected the option to delay the estimated impact on regulatory capital of ASU 2016-13, which was adopted on July 1, 2020. The initial adoption of ASU 2016-13 as well as 25% of the quarterly increases in the ACL subsequent to adoption (collectively the “transition adjustments”) was delayed for two years. Starting July 1, 2022, the cumulative amount of the transition adjustments became fixed and will be phased out of the regulatory capital calculations evenly over a three-year period, with 75% recognized in year three, 50% recognized in year four, and 25% recognized in year five. After five years, the temporary regulatory capital benefits will be fully reversed.

In addition to the minimum CET1, Tier 1 and total risk-based capital ratios, both HomeTrust Bancshares, Inc. and the Bank have to maintain a capital conservation buffer consisting of additional CET1 capital of more than 2.50% 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. As of ~~September 30,~~December 31, 2022, the Company's and Bank's risk-based capital exceeded the required capital contribution buffer.

Dividends paid by HomeTrust Bank are limited, without regulatory approval, to current year earnings less dividends paid during the preceding two years.

Item 3. Quantitative and Qualitative ~~Disclosure~~Disclosures About Market Risk

There has not been any material change in the market risk disclosures contained in our 2022 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 ~~September 30,~~December 31, 2022, was carried out under the supervision and with the participation of the Company's Chief Executive Officer, Chief Financial Officer and 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 ~~September 30,~~December 31, 2022, 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.

The Company does not expect that its disclosure controls and procedures and internal control over financial reporting will prevent all errors 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 9 – Commitments and Contingencies" to the Consolidated Financial Statements included in Part I, Item 1 is incorporated herein by reference.

Item 1A. Risk Factors

There have been no material changes in the Risk Factors previously disclosed in Item 1A of the 2022 Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(a) Not applicable

(b) Not applicable


	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
~~July~~October 1 - ~~July~~October 31, 2022	—	$	—	—	266,639
~~August~~November 1 - ~~August 31,~~November 30, 2022	—	—		—	266,639
~~September~~December 1 - ~~September 30,~~December 31, 2022	—	—		—	266,639
Total	—	$	—	—	266,639

No stock was repurchased during the ~~three~~six months ended ~~September 30,~~December 31, 2022.

Item 3. Defaults Upon Senior Securities

Nothing to report.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Nothing to report.

4346

Item 6. Exhibits


Regulation S-K Exhibit Number	Document	Reference to Prior Filing or Exhibit Number Attached Hereto

3.1	Charter of HomeTrust Bancshares, Inc.	(d)
3.2	Amended and Restated Bylaws of HomeTrust Bancshares, Inc.	(f)
10.1	HomeTrust Bancshares, Inc. Senior Leadership Incentive Plan (formerly known as Operating Committee Incentive Program)	(a)
10.2	Amended and Restated Employment and Transition Agreement between HomeTrust Bancshares, Inc. and Dana L. Stonestreet	(a)
10.3	Amended and Restated Employment Agreement between HomeTrust Bancshares, Inc. and C. Hunter Westbrook	(g)
10.3A	Amendment No. 1 to Amended and Restated Employment Agreement between HomeTrust Bancshares, Inc. and C. Hunter Westbrook	(b)
10.3B	Amendment No. 2 to Amended and Restated Employment Agreement between HomeTrust Bancshares, Inc. and C. Hunter Westbrook	(h)
10.3C	Amendment No. 3 to Amended and Restated Employment Agreement between HomeTrust Bancshares, Inc. and C. Hunter Westbrook	(o)
10.3D	Amendment No. 4 to Amended and Restated Employment Agreement between HomeTrust Bancshares, Inc. and C. Hunter Westbrook	(e)
10.4	Amended and Restated Employment Agreement between HomeTrust Bancshares, Inc. and Tony J. VunCannon	(g)
10.4A	Amendment No. 1 to Amended and Restated Employment Agreement between HomeTrust Bancshares, Inc. and Tony VunCannon	(a)
10.5	HomeTrust Bank Executive Supplemental Retirement Income Master Agreement (“SERP”)	(d)
10.6	Amendment No. 1 to SERP	(m)
10.7	Amendment No. 2 to SERP	(l)
10.7A	SERP Joinder Agreement for F. Edward Broadwell, Jr.	(d)
10.7B	SERP Joinder Agreement for Dana L. Stonestreet	(d)
10.7C	SERP Joinder Agreement for Tony J. VunCannon	(d)
10.7D	SERP Joinder Agreement for Howard L. Sellinger	(d)
10.7E	SERP Joinder Agreement for Stan Allen	(d)
10.7F	SERP Joinder Agreement for Sidney A. Biesecker	(d)
10.7G	SERP Joinder Agreement for Peggy C. Melville	(d)
10.7H	SERP Joinder Agreement for William T. Flynt	(d)
10.7I	Amended and Restated Supplemental Income Agreement between HomeTrust Bank, as successor to Industrial Federal Savings Bank, and Sidney Biesecker	(i)
10.8	HomeTrust Bank Director Emeritus Plan (“Director Emeritus Plan”)	(d)
10.8A	Director Emeritus Plan Joinder Agreement for William T. Flynt	(d)
10.8B	Director Emeritus Plan Joinder Agreement for J. Steven Goforth	(d)
10.8C	Director Emeritus Plan Joinder Agreement for Craig C. Koontz	(d)
10.8D	Director Emeritus Plan Joinder Agreement for Larry S. McDevitt	(d)
10.8E	Director Emeritus Plan Joinder Agreement for F.K. McFarland, III	(d)
10.8F	Director Emeritus Plan Joinder Agreement for Peggy C. Melville	(d)
10.8G	Director Emeritus Plan Joinder Agreement for Robert E. Shepherd, Sr.	(d)
10.9	HomeTrust Bank Defined Contribution Executive Medical Care Plan	(d)
10.9A	Amendment No. 1 to HomeTrust Bank Defined Contribution Executive Medical Care Plan	(m)
10.9B	Form of Joinder Agreement Under the HomeTrust Bank Defined Contribution Executive Medical Care Plan	(m)
10.9C	Amendment No. 2 to HomeTrust Bank Defined Contribution Executive Medical Care Plan	~~10.9C~~(r)
10.10	HomeTrust Bank 2005 Deferred Compensation Plan	(d)
10.10A	Amendment No. 1 to HomeTrust Bank 2005 Deferred Compensation Plan	(m)
10.11	HomeTrust Bank Pre-2005 Deferred Compensation Plan	(d)
10.11A	Amendment No. 1 to HomeTrust Bank Pre-2005 Deferred Compensation Plan	(m)
10.12	HomeTrust Bancshares, Inc. 2013 Omnibus Incentive Plan (“Omnibus Incentive Plan”)	(j)
10.13	HomeTrust Bancshares, Inc. 2022 Omnibus Incentive Plan (“Omnibus Incentive Plan”)	(q)
10.14	Form of Incentive Stock Option Award Agreement under Omnibus Incentive Plan	(k)
10.15	Form of Non-Qualified Stock Option Award Agreement under Omnibus Incentive Plan	(k)

4447

10.14

Form of Non-Qualified Stock Option Award Agreement under Omnibus Incentive Plan

(k)

10.15

Form of Stock Appreciation Right Award Agreement under Omnibus Incentive Plan

(k)

10.16

Form of Restricted Stock Award Agreement under Omnibus Incentive Plan

(k)

10.16

Form of Stock Appreciation Right Award Agreement under Omnibus Incentive Plan

(k)

10.17

Form of Restricted Stock Unit Award Agreement under Omnibus Incentive Plan

(k)

10.17

Form of Restricted Stock Award Agreement under Omnibus Incentive Plan

(k)

10.18

Reserved

10.18

Form of Restricted Stock Unit Award Agreement under Omnibus Incentive Plan

(k)

10.19

Retirement Payment Agreement, dated as of September 1, 1987, between HomeTrust Bank and Larry S. McDevitt, as amended

(n)

10.19

Retirement Payment Agreement, dated as of September 1, 1987, between HomeTrust Bank and Larry S. McDevitt, as amended

(n)

10.20

Change in Control Severance Agreement between HomeTrust Bancshares, Inc. and Marty Caywood

(c)

10.20

Change in Control Severance Agreement between HomeTrust Bancshares, Inc. and Marty Caywood

(c)

10.20A

Amendment No. 1 to Change in Control Severance Agreement between HomeTrust Bancshares, Inc. and Marty Caywood

(a)

10.20A

Amendment No. 1 to Change in Control Severance Agreement between HomeTrust Bancshares, Inc. and Marty Caywood

(a)

10.21

Amended and Restated Change in Control Severance Agreement between HomeTrust Bancshares, Inc. and Keith J. Houghton

(g)

10.21

Amended and Restated Change in Control Severance Agreement between HomeTrust Bancshares, Inc. and Keith J. Houghton

(g)

10.21A

Amendment No. 1 to Amended and Restated Change in Control Severance Agreement between HomeTrust Bancshares, Inc. and Keith J. Houghton

(a)

10.21A

Amendment No. 1 to Amended and Restated Change in Control Severance Agreement between HomeTrust Bancshares, Inc. and Keith J. Houghton

(a)

10.22

Amended and Restated Change in Control Severance Agreement between HomeTrust Bancshares, Inc. and R. Parrish Little

(p)

10.22

Amended and Restated Change in Control Severance Agreement between HomeTrust Bancshares, Inc. and R. Parrish Little

(p)

10.22A

Amendment No. 1 to Amended and Restated Change in Control Severance Agreement between HomeTrust Bancshares, Inc. and R. Parrish Little

(a)

10.22A

Amendment No. 1 to Amended and Restated Change in Control Severance Agreement between HomeTrust Bancshares, Inc. and R. Parrish Little

(a)

10.23

Amended and Restated Change in Control Severance Agreement between HomeTrust Bancshares, Inc. and Mark DeMarcus

10.23

Change in Control Severance Agreement between HomeTrust Bancshares, Inc. and Mark DeMarcus

(r)

10.23A

Amendment No. 1 to Change in Control Severance Agreement between HomeTrust Bancshares, Inc. and Mark DeMarcus

(a)

10.23A

Amendment No. 1 to Change in Control Severance Agreement between HomeTrust Bancshares, Inc. and Mark DeMarcus

(a)

10.24

Change in Control Severance Agreement between HomeTrust Bancshares, Inc. and Kristin Powell

10.24

Change in Control Severance Agreement between HomeTrust Bancshares, Inc. and Kristin Powell

(r)

10.24A

Amendment No. 1 to Change in Control Severance Agreement between HomeTrust Bancshares, Inc. and Kristin Powell

(a)

10.24A

Amendment No. 1 to Change in Control Severance Agreement between HomeTrust Bancshares, Inc. and Kristin Powell

(a)

10.25

Change in Control Severance Agreement between HomeTrust Bancshares, Inc. and Megan Pelletier

(a)

10.25

Change in Control Severance Agreement between HomeTrust Bancshares, Inc. and Megan Pelletier

(a)

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

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

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

32.0

Certificate of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.0

Certificate of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.0

101

The following materials from HomeTrust Bancshares’ Annual Report on Form 10-K for the year ended June 30, 2022, 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 Annual Report on Form 10-K for the fiscal year ended June 30, 2022 (File No. 001-35593).

(b)Filed as an exhibit to HomeTrust Bancshares’s Current Report on Form 8-K filed on September 25, 2018 (File No. 001-35593).

(c)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).

(d)Filed as an exhibit to HomeTrust Bancshares’s Registration Statement on Form S-1 (File No. 333-178817) filed on December 29, 2011.

(e)Filed as an exhibit to HomeTrust Bancshares's Current Report on Form 8-K filed on May 24, 2022 (File No. 001-35593).

(f)Filed as an exhibit to HomeTrust Bancshares's Quarterly Report on Form 10-Q for the quarter ended March 31, 2021 (File No. 001-35593).

(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 October 28, 2020 (File No. 001-35593).

(i)Filed as an exhibit to Amendment No. 1 to HomeTrust Bancshares’s Registration Statement on Form S-1 (File No. 333-178817) filed on March 9, 2012.

(j)Attached as Appendix A to HomeTrust Bancshares’s definitive proxy statement filed on December 5, 2012 (File No. 001-35593).

(k)Filed as an exhibit to HomeTrust Bancshares’s Registration Statement on Form S-8 (File No. 333-186666) filed on February 13, 2013.

(l)Filed as an exhibit to HomeTrust Bancshares's Current Report on Form 8-K filed on February 15, 2022 (File No. 001-35593).

(m)Filed as an exhibit to HomeTrust Bancshares's Quarterly Report on Form 10-Q for the quarter ended March 31, 2022 (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, 2014 (File No. 001-35593).

(o)Filed as an exhibit to HomeTrust Bancshares's Current Report on Form 8-K filed on July 28, 2021 (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).

(q)Attached as Appendix A to HomeTrust Bancshares’s definitive proxy statement filed on October 3, 2022 (File No. 001-35593).

(r)Filed as an exhibit to HomeTrust Bancshares's Quarterly Report on Form 10-Q for the quarter ended September 30, 2022 (File No. 001-35593).

4548

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.


Date: ~~November 9, 2022~~February 7, 2023	By:	/s/ C. Hunter Westbrook
		C. Hunter Westbrook
		President and Chief Executive Officer
		(Duly Authorized Officer)

Date: ~~November 9, 2022~~February 7, 2023	By:	/s/ Tony J. VunCannon
		Tony J. VunCannon
		Executive Vice President, CFO, Corporate Secretary and Treasurer
		(Principal Financial and Accounting Officer)

4649


	(Unaudited)
	Three Months Ended September 30, 2021
	Common Stock			Additional Paid In Capital		Retained Earnings		Unearned ESOP Shares		Accumulated Other Comprehensive Income		Total Stockholders' Equity
	Shares	Amount
Balance at June 30, 2021	16,636,483	$	167	$	160,582	$	240,075	$	(5,819)	$	1,514	$	396,519
Net income	—	—		—		10,527		—		—		10,527

Cash dividends declared on common stock, $0.08/common share	—	—		—		(1,271)		—		—		(1,271)
Common stock repurchased	(376,435)	(4)		(10,429)		—		—		—		(10,433)
Forfeited restricted stock	(3,000)	—		—		—		—		—		—
Retired stock	(2,708)	—		(75)		—		—		—		(75)


Stock issued for RSUs	7,118	—		—		—		—		—		—
Exercised stock options	46,200	—		700		—		—		—		700
Share-based compensation expense	—	—		415		—		—		—		415
ESOP compensation expense	—	—		232		—		132		—		364
Other comprehensive loss	—	—		—		—		—		(235)		(235)
Balance at September 30, 2021	16,307,658	$	163	$	151,425	$	249,331	$	(5,687)	$	1,279	$	396,511


	Allowance for Loan Losses						Total Loans Receivable
	Loans Individually Evaluated		Loans Collectively Evaluated		Total		Loans Individually Evaluated		Loans Collectively Evaluated		Total
June 30, 2022
Commercial real estate
Construction and land development	$	—	$	4,402	$	4,402	$	—	$	291,202	$	291,202
Commercial real estate - owner occupied	—		3,038		3,038		—		335,658		335,658
Commercial real estate - non-owner occupied	—		5,589		5,589		—		662,159		662,159
Multifamily	—		385		385		—		81,086		81,086
Total commercial real estate	—		13,414		13,414		—		1,370,105		1,370,105
Commercial
Commercial and industrial	2,191		2,892		5,083		2,854		189,798		192,652
Equipment finance	—		6,651		6,651		—		394,541		394,541
Municipal leases	—		302		302		—		129,766		129,766
PPP loans	—		—		—		—		661		661
Total commercial	2,191		9,845		12,036		2,854		714,766		717,620
Residential real estate
Construction and land development	—		1,052		1,052		—		81,847		81,847
One-to-four family	—		4,673		4,673		2,486		351,717		354,203
HELOCs	—		1,886		1,886		—		160,137		160,137
Total residential real estate	—		7,611		7,611		2,486		593,701		596,187
Consumer	—		1,629		1,629		—		85,383		85,383
Total	$	2,191	$	32,499	$	34,690	$	5,340	$	2,763,955	$	2,769,295


Fiscal year ending June 30
Remaining 2023	$	17,066
2024	19,324
2025	14,696
2026	10,338
2027	5,254
Thereafter	3,972
Total undiscounted minimum lease payments	70,650
Less: amount representing interest	(7,305)
Total lease receivable	$	63,345