HomeTrust Bancshares(HTBI) - 2024 Q4 - Annual Results

Executive Summary & Financial Highlights Second Quarter 2024 vs. First Quarter 2024 Highlights The company's Q2 2024 net income and diluted EPS declined sequentially, while its net interest margin expanded amid a significant increase in the provision for credit losses Key Financial Metrics Q2 2024 vs. Q1 2024 | Metric | Quarter Ended Jun 30, 2024 | Quarter Ended Mar 31, 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Net Income | $12.4 million | $15.1 million | (17.9)% | | Diluted EPS | $0.73 | $0.88 | (17.0)% | | Annualized Return on Assets (ROA) | 1.13% | 1.37% | (17.5)% | | Annualized Return on Equity (ROE) | 9.58% | 11.91% | (19.6)% | | Net Interest Margin | 4.08% | 4.02% | 1.5% | | Provision for Credit Losses | $4.3 million | $1.2 million | 258.3% | - The company repurchased 23,483 shares of common stock at an average price of $27.48 per share during the quarter[13] - The quarterly cash dividend was maintained at $0.11 per share, totaling $1.9 million[13] Six Months Ended June 30, 2024 vs. June 30, 2023 Highlights For the six months ended June 30, 2024, net income and diluted EPS grew significantly year-over-year, driven by a lower provision for credit losses and the absence of prior-year merger-related expenses Key Financial Metrics Six Months Ended June 30, 2024 vs. June 30, 2023 | Metric | Six Months Ended Jun 30, 2024 | Six Months Ended Jun 30, 2023 | Change (%) | | :--- | :--- | :--- | :--- | | Net Income | $27.5 million | $21.8 million | 26.1% | | Diluted EPS | $1.61 | $1.30 | 23.8% | | Annualized Return on Assets (ROA) | 1.25% | 1.06% | 17.9% | | Annualized Return on Equity (ROE) | 10.73% | 9.65% | 11.2% | | Net Interest Margin | 4.05% | 4.43% | (8.6)% | | Provision for Credit Losses | $5.4 million | $9.2 million | (41.3)% | - Cash dividends increased from $0.20 to $0.22 per share, totaling $3.7 million[13] - The prior year period included the impact of the Quantum Capital Corp merger, which added $656.7 million in total assets and $570.6 million in deposits, and incurred $4.7 million in merger-related expenses and a $5.3 million provision for credit losses[13] CEO Commentary CEO Hunter Westbrook highlighted the company's strong financial performance, with a net interest margin above 4.00% and stable noninterest income and expenses, attributing the quarterly net income decline to increased provisions for potential credit losses - "Our second quarter financial results continue to reflect our strategic objectives of pursuing high performance and being a great place to work"[13] - "Our performance remains strong, supported by the expansion of our net interest margin, which again remained above 4.00%, while both noninterest income and expense were flat compared to the prior quarter"[13] - "The decline in net income for the quarter reflects an increased provision for potential credit losses on individual equipment finance and SBA loans that are in the early stages of collateral and recoverability evaluation"[13] - HomeTrust was named a "Best Place to Work in South Carolina" for 2024 and a "Most Loved Workplace" for 2024[13] Comparison of Results of Operations: Q2 2024 vs. Q1 2024 Net Income Q2 2024 net income was $12.4 million, with diluted EPS of $0.73, representing decreases of 17.6% and 17.0% respectively from the previous quarter, primarily due to a $3.1 million increase in the provision for credit losses Net Income and Diluted EPS (USD in millions) | Metric | Quarter Ended Jun 30, 2024 | Quarter Ended Mar 31, 2024 | Change (USD in millions) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net Income | $12.4 | $15.1 | $(2.7) | (17.6)% | | Diluted EPS | $0.73 | $0.88 | $(0.15) | (17.0)% | - The decrease in net income was primarily driven by a $3.1 million increase in the provision for credit losses[14] Net Interest Income Analysis Net interest income increased by $0.9 million quarter-over-quarter, driven by a $2.1 million increase in interest income from earning assets, partially offset by a $1.1 million increase in interest expense on interest-bearing liabilities, expanding the net interest margin to 4.08% Net Interest Income and Net Interest Margin (in thousands) | Metric | Quarter Ended Jun 30, 2024 | Quarter Ended Mar 31, 2024 | | :--- | :--- | :--- | | Net Interest Income | $42,166 | $41,230 | | Net Interest Margin | 4.08% | 4.02% | | Interest Rate Spread | 3.28% | 3.28% | Average Balances and Rates Total average interest-earning assets grew to $4.16 billion, with loans receivable at $3.89 billion yielding 6.32%, while total average interest-bearing liabilities rose to $3.07 billion, with deposits at $2.98 billion costing 3.04% Average Balances and Rates (Q2 2024 vs. Q1 2024) (in thousands) | Metric | Avg Balance Jun 30, 2024 | Yield/Rate Jun 30, 2024 | Avg Balance Mar 31, 2024 | Yield/Rate Mar 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Interest-Earning Assets | $4,159,932 | 6.32% | $4,122,439 | 6.18% | | Loans Receivable | $3,885,222 | 6.43% | $3,864,258 | 6.24% | | Total Interest-Bearing Liabilities | $3,072,834 | 3.04% | $3,064,627 | 2.90% | | Total Interest-Bearing Deposits | $2,975,465 | 2.93% | $2,951,443 | 2.77% | | Certificates of Deposit | $902,864 | 4.44% | $887,618 | 4.16% | Volume and Rate Analysis The increase in net interest income was primarily driven by a $1.5 million positive impact from interest rates, supplemented by a $0.5 million contribution from changes in average balances Volume and Rate Analysis of Net Interest Income (Q2 2024 vs. Q1 2024) (in thousands) | Item | Change Due to Volume (USD) | Change Due to Rate (USD) | Total Increase/Decrease (USD) | | :--- | :--- | :--- | :--- | | Total Interest Income on Earning Assets | $545 | $1,514 | $2,059 | | Loans Receivable | $325 | $1,884 | $2,209 | | Total Interest Expense on Bearing Liabilities | $34 | $1,089 | $1,123 | | Increase in Net Interest Income | | | $936 | Provision for Credit Losses The total provision for credit losses increased significantly by 266% to $4.3 million, mainly due to a $3.2 million increase in the provision for loan losses, including a $2.0 million specific provision for individually evaluated loans in the equipment finance and SBA portfolios Provision for Credit Losses (Q2 2024 vs. Q1 2024) (in thousands) | Item | Quarter Ended Jun 30, 2024 | Quarter Ended Mar 31, 2024 | Change (USD) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Provision for credit losses on loans | $4,300 | $1,145 | $3,155 | 276% | | Off-balance sheet credit exposures | $(40) | $20 | $(60) | (300)% | | Total provision for credit losses | $4,260 | $1,165 | $3,095 | 266% | - The provision for credit losses on loans included a $2.0 million increase in specific reserves for individually evaluated loans within the equipment finance and SBA loan portfolios[16] - Net charge-offs for the quarter were $2.6 million[16] Noninterest Income Noninterest income decreased by $0.7 million (7.9%) quarter-over-quarter, primarily due to a $1.0 million decline in bank-owned life insurance (BOLI) income and a $0.3 million drop in operating lease income, partially offset by higher service charges and gains on loan sales Noninterest Income (Q2 2024 vs. Q1 2024) (in thousands) | Item | Quarter Ended Jun 30, 2024 | Quarter Ended Mar 31, 2024 | Change (USD) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Service charges on deposit accounts | $2,354 | $2,149 | $205 | 10% | | Gain on sale of loans held for sale | $1,828 | $1,457 | $371 | 25% | | Bank-owned life insurance (BOLI) income | $807 | $1,835 | $(1,028) | (56)% | | Operating lease income | $1,591 | $1,859 | $(268) | (14)% | | Total noninterest income | $8,113 | $8,811 | $(698) | (8)% | - The decrease in BOLI income was due to the recognition of a $1.1 million tax-exempt death benefit in the previous quarter, with no similar benefit in the current quarter[54] - The decline in operating lease income resulted from a $0.5 million increase in losses on leased equipment, partially offset by a $0.2 million increase in contractual income[54] Noninterest Expense Total noninterest expense increased slightly by $0.3 million (1%), driven by a $1.0 million rise in "Other" expenses, primarily from operating lease equipment depreciation, partially offset by decreases in salaries and employee benefits and core deposit intangible amortization Noninterest Expense (Q2 2024 vs. Q1 2024) (in thousands) | Item | Quarter Ended Jun 30, 2024 | Quarter Ended Mar 31, 2024 | Change (USD) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Salaries and employee benefits | $16,608 | $16,976 | $(368) | (2)% | | Core deposit intangible amortization | $567 | $762 | $(195) | (26)% | | Other | $5,783 | $4,817 | $966 | 20% | | Total noninterest expense | $30,210 | $29,864 | $346 | 1% | - The increase in "Other" expenses was primarily due to a $0.3 million increase in depreciation expense on operating lease equipment[31] - The decrease in core deposit intangible amortization is due to the slowing amortization of intangibles from the QNB merger, which uses an accelerated method[31] Income Taxes The effective tax rate for Q2 2024 rose to 21.4% from 20.8% in the prior quarter, mainly because the previous quarter included a $1.1 million tax-exempt BOLI death benefit Effective Tax Rate | Metric | Quarter Ended Jun 30, 2024 | Quarter Ended Mar 31, 2024 | | :--- | :--- | :--- | | Effective tax rate | 21.4% | 20.8% | - The increase in the effective tax rate was primarily due to the recognition of a $1.1 million tax-exempt BOLI death benefit in the previous quarter[31] Comparison of Results of Operations: H1 2024 vs. H1 2023 Net Income For the six months ended June 30, 2024, net income was $27.5 million with diluted EPS of $1.61, representing year-over-year increases of 26.4% and 23.8% respectively, driven by a $3.7 million decrease in the provision for credit losses and the absence of $4.7 million in prior-year merger-related expenses Net Income and Diluted EPS (USD in millions) | Metric | Six Months Ended Jun 30, 2024 | Six Months Ended Jun 30, 2023 | Change (USD in millions) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net Income | $27.5 | $21.7 | $5.8 | 26.4% | | Diluted EPS | $1.61 | $1.30 | $0.31 | 23.8% | - The growth in net income was primarily due to a $3.7 million decrease in the provision for credit losses and the absence of $4.7 million in merger-related expenses from the prior year[32] Net Interest Income Analysis Net interest income decreased by $2.0 million year-over-year as the increase in interest expense on interest-bearing liabilities outpaced the growth in interest income from earning assets, causing the net interest margin to contract from 4.43% to 4.05% Net Interest Income and Net Interest Margin (in thousands) | Metric | Six Months Ended Jun 30, 2024 | Six Months Ended Jun 30, 2023 | | :--- | :--- | :--- | | Net Interest Income | $83,396 | $85,350 | | Net Interest Margin | 4.05% | 4.43% | | Interest Rate Spread | 3.28% | 3.92% | Average Balances and Rates Total average interest-earning assets grew to $4.14 billion, with loans receivable at $3.87 billion yielding 6.25%, while total average interest-bearing liabilities rose to $3.07 billion, with deposits at $2.96 billion costing 2.97% Average Balances and Rates (H1 2024 vs. H1 2023) (in thousands) | Metric | Avg Balance Jun 30, 2024 | Yield/Rate Jun 30, 2024 | Avg Balance Jun 30, 2023 | Yield/Rate Jun 30, 2023 | | :--- | :--- | :--- | :--- | :--- | | Total Interest-Earning Assets | $4,141,186 | 6.25% | $3,884,299 | 5.70% | | Loans Receivable | $3,874,740 | 6.34% | $3,592,527 | 5.84% | | Total Interest-Bearing Liabilities | $3,068,731 | 2.97% | $2,784,585 | 1.78% | | Total Interest-Bearing Deposits | $2,963,454 | 2.85% | $2,642,983 | 1.57% | | Money market accounts | $1,289,758 | 3.10% | $1,197,856 | 1.83% | | Certificates of Deposit | $895,242 | 4.30% | $578,639 | 2.59% | Volume and Rate Analysis The decline in net interest income was primarily driven by a $17.0 million increase in interest expense due to higher rates on interest-bearing liabilities, which offset the $10.8 million increase in interest income from higher rates on earning assets Volume and Rate Analysis of Net Interest Income (H1 2024 vs. H1 2023) (in thousands) | Item | Change Due to Volume (USD) | Change Due to Rate (USD) | Total Increase/Decrease (USD) | | :--- | :--- | :--- | :--- | | Total Interest Income on Earning Assets | $8,172 | $10,800 | $18,972 | | Loans Receivable | $8,510 | $9,573 | $18,083 | | Total Interest Expense on Bearing Liabilities | $3,896 | $17,030 | $20,926 | | Decrease in Net Interest Income | | | $(1,954) | Provision for Credit Losses The total provision for credit losses decreased by 41% year-over-year to $5.4 million, mainly due to a $3.8 million reduction in the provision for loan losses, as the prior-year period included a $4.9 million provision for the Quantum loan portfolio Provision for Credit Losses (H1 2024 vs. H1 2023) (in thousands) | Item | Six Months Ended Jun 30, 2024 | Six Months Ended Jun 30, 2023 | Change (USD) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Provision for credit losses on loans | $5,445 | $9,270 | $(3,825) | (41)% | | Off-balance sheet credit exposures | $(20) | $(105) | $85 | 81% | | Total provision for credit losses | $5,425 | $9,165 | $(3,740) | (41)% | - The H1 2024 provision included a $1.3 million benefit from economic forecasts and qualitative adjustments, and a $1.8 million specific provision for individually evaluated loans in the equipment finance and SBA portfolios[20] - The H1 2023 provision included $4.9 million for the Quantum loan portfolio and $2.1 million due to loan growth and portfolio changes[20] Noninterest Income Noninterest income increased by $1.7 million (11%) year-over-year, primarily driven by significant growth in bank-owned life insurance (BOLI) income, operating lease income, and gains on the sale of loans Noninterest Income (H1 2024 vs. H1 2023) (in thousands) | Item | Six Months Ended Jun 30, 2024 | Six Months Ended Jun 30, 2023 | Change (USD) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Service charges on deposit accounts | $4,503 | $4,649 | $(146) | (3)% | | Gain on sale of loans held for sale | $3,285 | $2,920 | $365 | 13% | | Bank-owned life insurance (BOLI) income | $2,642 | $1,095 | $1,547 | 141% | | Operating lease income | $3,450 | $2,730 | $720 | 26% | | Gain (loss) on disposal of premises and equipment | $(9) | $982 | $(991) | (101)% | | Total noninterest income | $16,924 | $15,198 | $1,726 | 11% | - The increase in BOLI income was due to the recognition of a $1.1 million tax-exempt death benefit and higher-yielding policies from portfolio adjustments[34] - The increase in operating lease income was driven by a $1.2 million increase in contractual income, partially offset by higher losses on leased equipment[34] Noninterest Expense Total noninterest expense decreased by $3.7 million (6%) year-over-year, primarily because the $4.7 million in merger-related expenses from the prior-year period did not recur, partially offset by increases in salaries and employee benefits and "Other" expenses Noninterest Expense (H1 2024 vs. H1 2023) (in thousands) | Item | Six Months Ended Jun 30, 2024 | Six Months Ended Jun 30, 2023 | Change (USD) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Salaries and employee benefits | $33,584 | $32,922 | $662 | 2% | | Marketing and advertising | $1,251 | $1,068 | $183 | 17% | | Merger-related expenses | $0 | $4,741 | $(4,741) | (100)% | | Other | $10,600 | $9,817 | $783 | 8% | | Total noninterest expense | $60,074 | $63,744 | $(3,670) | (6)% | - The increase in "Other" expenses was primarily due to a $1.0 million increase in depreciation expense on operating lease equipment[9] Income Taxes The effective tax rate for the six months ended June 30, 2024 was 21.1%, slightly lower than the 21.3% for the same period in 2023 Effective Tax Rate | Metric | Six Months Ended Jun 30, 2024 | Six Months Ended Jun 30, 2023 | | :--- | :--- | :--- | | Effective tax rate | 21.1% | 21.3% | Financial Position and Asset Quality Company Overview HomeTrust Bancshares, Inc is the holding company for HomeTrust Bank, a North Carolina-chartered community financial institution founded in 1926, with $4.7 billion in total assets and over 30 branches across the Southeast as of June 30, 2024 - HomeTrust Bancshares, Inc is the holding company for HomeTrust Bank, which was founded in 1926[11] - As of June 30, 2024, the company had $4.7 billion in total assets[11] - The bank operates over 30 branches in North Carolina, South Carolina, East Tennessee, Southwest Virginia, and Georgia[11] Balance Sheet Review As of June 30, 2024, total assets and liabilities decreased slightly to $4.7 billion and $4.1 billion respectively, as deposit growth and BOLI proceeds funded loan growth and borrowing repayments, while stockholders' equity increased by $23.7 million to $523.6 million, and the bank remained well-capitalized - As of June 30, 2024, total assets decreased by $1.8 million to $4.7 billion, and total liabilities decreased by $25.5 million to $4.1 billion[22] - Stockholders' equity increased by $23.7 million to $523.6 million, primarily driven by $27.5 million in net income, partially offset by $3.7 million in cash dividends[22] - The bank is considered "well-capitalized" and exceeds all regulatory capital requirements[22] Asset Quality Asset quality metrics showed an increase in nonperforming assets and loans both quarter-over-quarter and year-over-year, with nonperforming assets rising to $25.3 million (0.54% of total assets) and the nonperforming loans to total loans ratio increasing to 0.68%, while the allowance for credit losses remained stable at 1.33% of total loans Asset Quality Ratios | Metric | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | :--- | | Nonperforming assets to total assets | 0.54% | 0.43% | 0.41% | | Nonperforming loans to total loans | 0.68% | 0.55% | 0.53% | | Allowance for credit losses to nonperforming loans | 194.80% | 235.18% | 251.60% | | Allowance for credit losses to total loans | 1.33% | 1.30% | 1.34% | | Net charge-offs to average loans (annualized) | 0.27% | 0.24% | 0.29% | - As of June 30, 2024, the allowance for credit losses on loans was $49.2 million, or 1.33% of total loans[36] - Net charge-offs for the first half of the year were $4.9 million, concentrated in the equipment finance portfolio ($3.4 million), for which the company ceased new originations in Q1 2024[36] - Nonperforming assets increased by $5.9 million to $25.3 million, primarily consisting of equipment finance loans and one medical equipment relationship loan[36] Loans Portfolio Breakdown As of June 30, 2024, total loans, net of deferred loan fees and costs, amounted to $3.70 billion, with commercial real estate loans representing the largest segment, followed by commercial and residential real estate loans Loans Portfolio Breakdown (in thousands) | Loan Category | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | :--- | | Total commercial real estate | $1,846,626 | $1,808,109 | $1,806,131 | | Total commercial | $879,655 | $858,275 | $853,120 | | Total residential real estate | $880,340 | $875,684 | $866,929 | | Consumer loans | $94,833 | $106,084 | $113,842 | | Total loans, net of deferred loan fees and costs | $3,701,454 | $3,648,152 | $3,640,022 | Deposits Breakdown As of June 30, 2024, total deposits were $3.71 billion, a decrease from March 31, 2024, with core deposits forming the majority, and certificates of deposit increasing while noninterest-bearing and money market accounts declined Deposits Breakdown (in thousands) | Deposit Category | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | :--- | | Total core deposits | $2,742,574 | $2,874,231 | $2,817,513 | | Noninterest-bearing accounts | $683,346 | $773,901 | $784,950 | | NOW accounts | $561,789 | $600,561 | $591,270 | | Money market accounts | $1,311,940 | $1,308,467 | $1,246,807 | | Savings accounts | $185,499 | $191,302 | $194,486 | | Certificates of deposit | $965,205 | $925,576 | $843,860 | | Total deposits | $3,707,779 | $3,799,807 | $3,661,373 | Consolidated Financial Statements Consolidated Balance Sheets As of June 30, 2024, the company reported total assets of $4.67 billion and total liabilities of $4.15 billion, with net loans as the largest asset class and deposits as the largest liability, while stockholders' equity stood at $523.6 million Consolidated Balance Sheets Summary (in thousands) | Item | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | :--- | | Cash and cash equivalents | $294,190 | $380,493 | $347,140 | | Loans, net | $3,652,231 | $3,600,650 | $3,591,381 | | Total assets | $4,670,864 | $4,684,011 | $4,672,633 | | Deposits | $3,707,779 | $3,799,807 | $3,661,373 | | Borrowings | $364,513 | $291,513 | $433,763 | | Total liabilities | $4,147,236 | $4,170,838 | $4,172,740 | | Total stockholders' equity | $523,628 | $513,173 | $499,893 | Consolidated Statements of Income For the second quarter of 2024, net income was $12.4 million, derived from $42.2 million in net interest income, $8.1 million in noninterest income, and $30.2 million in noninterest expense, with a six-month net income of $27.5 million Consolidated Statements of Income Summary (in thousands) | Item | Quarter Ended Jun 30, 2024 | Quarter Ended Mar 31, 2024 | Six Months Ended Jun 30, 2024 | Six Months Ended Jun 30, 2023 | | :--- | :--- | :--- | :--- | :--- | | Total interest and dividend income | $65,414 | $63,355 | $128,769 | $109,797 | | Total interest expense | $23,248 | $22,125 | $45,373 | $24,447 | | Net interest income | $42,166 | $41,230 | $83,396 | $85,350 | | Provision for credit losses | $4,260 | $1,165 | $5,425 | $9,165 | | Total noninterest income | $8,113 | $8,811 | $16,924 | $15,198 | | Total noninterest expense | $30,210 | $29,864 | $60,074 | $63,744 | | Net income | $12,418 | $15,067 | $27,485 | $21,747 | Financial Ratios and Per Share Data Performance Ratios Q2 2024 performance ratios showed a sequential decline in return on assets and return on equity, though year-to-date figures improved year-over-year, while the net interest margin expanded quarter-over-quarter but contracted compared to the prior year Performance Ratios | Metric | Quarter Ended Jun 30, 2024 | Quarter Ended Mar 31, 2024 | Six Months Ended Jun 30, 2024 | Six Months Ended Jun 30, 2023 | | :--- | :--- | :--- | :--- | :--- | | Return on assets | 1.13% | 1.37% | 1.25% | 1.06% | | Return on equity | 9.58% | 11.91% | 10.73% | 9.65% | | Yield on interest-earning assets | 6.32% | 6.18% | 6.25% | 5.70% | | Rate paid on interest-bearing liabilities | 3.04% | 2.90% | 2.97% | 1.78% | | Average interest rate spread | 3.28% | 3.28% | 3.28% | 3.92% | | Net interest margin | 4.08% | 4.02% | 4.05% | 4.43% | | Noninterest expense to average total assets | 2.74% | 2.72% | 2.73% | 3.10% | | Efficiency ratio | 60.08% | 59.69% | 59.88% | 63.40% | Asset Quality Ratios Asset quality ratios indicate a rise in nonperforming assets and loans during the reporting period, while the allowance for credit losses as a percentage of total loans remained relatively stable Asset Quality Ratios | Metric | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | | :--- | :--- | :--- | :--- | :--- | :--- | | Nonperforming assets to total assets | 0.54% | 0.43% | 0.41% | 0.25% | 0.18% | | Nonperforming loans to total loans | 0.68% | 0.55% | 0.53% | 0.32% | 0.23% | | Total classified assets to total assets | 0.91% | 0.80% | 0.90% | 0.76% | 0.53% | | Allowance for credit losses to nonperforming loans | 194.80% | 235.18% | 251.60% | 400.41% | 567.56% | | Allowance for credit losses to total loans | 1.33% | 1.30% | 1.34% | 1.30% | 1.29% | | Net charge-offs to average loans (annualized) | 0.27% | 0.24% | 0.29% | 0.27% | 0.13% | Capital Ratios Capital ratios remained strong, with both the equity to total assets ratio and the tangible equity to tangible assets ratio showing an upward trend, indicating the bank is well-capitalized Capital Ratios | Metric | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | | :--- | :--- | :--- | :--- | :--- | :--- | | Equity to total assets at end of period | 11.21% | 10.96% | 10.70% | 10.41% | 10.23% | | Tangible equity to tangible assets | 10.44% | 10.18% | 9.91% | 9.60% | 9.39% | | Average equity to average assets | 11.78% | 11.51% | 11.03% | 10.84% | 10.79% | Per Share Data Diluted earnings per share decreased quarter-over-quarter but increased year-over-year, while book value per share and tangible book value per share continued to grow, and the quarterly cash dividend was maintained at $0.11 per share Per Share Data | Metric | Quarter Ended Jun 30, 2024 | Quarter Ended Mar 31, 2024 | Six Months Ended Jun 30, 2024 | Six Months Ended Jun 30, 2023 | | :--- | :--- | :--- | :--- | :--- | | Diluted earnings per share | $0.73 | $0.88 | $1.61 | $1.30 | | Book value per share at end of period | $30.03 | $29.42 | $30.03 | $27.13 | | Tangible book value per share at end of period | $27.73 | $27.10 | $27.73 | $24.69 | | Cash dividends declared per common share | $0.11 | $0.11 | $0.22 | $0.20 | Non-GAAP Reconciliations Efficiency Ratio Reconciliation The adjusted efficiency ratio for Q2 2024 was 59.66%, a slight improvement from the previous quarter, while the H1 2024 ratio of 60.14% was higher than the 58.91% in H1 2023, with these non-GAAP metrics providing an alternative view of the company's operational efficiency Efficiency Ratio Reconciliation (in thousands) | Metric | Quarter Ended Jun 30, 2024 | Quarter Ended Mar 31, 2024 | Six Months Ended Jun 30, 2024 | Six Months Ended Jun 30, 2023 | | :--- | :--- | :--- | :--- | :--- | | Adjusted noninterest expense | $30,210 | $29,864 | $60,074 | $59,003 | | Adjusted net interest income plus noninterest income | $50,633 | $49,256 | $99,890 | $100,154 | | Adjusted efficiency ratio | 59.66% | 60.64% | 60.14% | 58.91% | Tangible Equity and Tangible Assets Reconciliation Tangible equity and tangible book value per share continued to grow, reflecting the company's financial health after excluding goodwill and core deposit intangibles, while the ratio of tangible equity to tangible assets also showed a positive trend Tangible Equity and Tangible Assets Reconciliation (in thousands, except per share data) | Metric | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | | :--- | :--- | :--- | :--- | :--- | :--- | | Total stockholders' equity | $523,628 | $513,173 | $499,893 | $484,411 | $471,186 | | Less: Goodwill and core deposit intangibles, net of tax | $40,063 | $40,500 | $41,086 | $41,748 | $42,410 | | Tangible equity | $483,565 | $472,673 | $458,807 | $442,663 | $428,776 | | Tangible book value per share | $27.73 | $27.10 | $26.39 | $25.47 | $24.69 | | Total assets | $4,670,864 | $4,684,011 | $4,672,633 | $4,651,997 | $4,607,487 | | Less: Goodwill and core deposit intangibles, net of tax | $40,063 | $40,500 | $41,086 | $41,748 | $42,410 | | Total tangible assets | $4,630,801 | $4,643,511 | $4,631,547 | $4,610,249 | $4,565,077 | | Tangible equity to tangible assets ratio | 10.44% | 10.18% | 9.91% | 9.60% | 9.39% | Forward-Looking Statements Disclaimer on Forward-Looking Statements This report contains forward-looking statements based on management's beliefs and assumptions, which are subject to known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially from expectations, including bank failures, the COVID-19 pandemic, merger integration risks, competition, interest rate changes, economic conditions, and inflation - Forward-looking statements are based on management's beliefs and assumptions and are subject to known and unknown risks, uncertainties, and other factors[23] - Factors that could cause actual results to differ include: bank failures or adverse developments, the impact of the COVID-19 pandemic, merger integration costs or difficulties, competitive pressures, changes in the interest rate environment, economic conditions, legislative and regulatory changes, and inflation[23] - The company undertakes no obligation to revise any forward-looking statements to reflect expected or unexpected events or circumstances[23]