Hometrust Bancshares, Inc. · NYSE:HTB
Hometrust Bancshares — Raymond James U.S. Bank and Banking on Tech Conferences 2022
33 slides from Hometrust Bancshares's conference presentation, Sep 8, 2022
Slide 1: Raymond James U.S. Bank and Banking on Tech Conferences
September 7-8, 2022 Raymond James U.S. Bank and Banking on Tech Conferences
Slide 2: Forward-looking statements
This document includes "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
Slide 3: HomeTrust Bancshares, Inc. Overview
• Financial data as of June 30, 2022 • Market data as of September 2, 2022 • Shares repurchased from February 19, 2013 to June 30, 2022 3 HomeTrust Bancshares, Inc. Overview $3.5B Assets NASDAQ: HTBI Headquarters: Asheville, NC $2.7B/$3.1B Loans/Deposits Founded: 1926 Locations: 32 102% Price to TBV
Slide 4: Investment highlights
4 Footprint in attractive metro markets experiencing growth rates above the national average (See Page 9) Successful transition from a mutual/thrift to a commercial bank (See Pages 6-7 & 10-13) • Expansion of lines of business, adding further diversity to our loan portfolio • Strong experienced team
Slide 5: Profitability Improvements & Balance Sheet Restructuring
5 Repayment of Long-Term Borrowings • $475 million in long-term debt retired in March and June 2021 • Estimated 3.6 year earn back of the $22.7 million prepayment penalty • $5.7 million in estimated annual interest expense reductions Branch Closures • On September 16, 2021, closed nine branches in N
Slide 6: Business Transformation: Phases of Progress
6 Greenville, SC (2013) Tri-Cities and Knoxville, TN (2014) Charlotte, NC (2014) Roanoke, VA (2014) Raleigh, NC (2015) Re-engineered of CML LOB (2014) Introduced Indirect Auto (2014) Re-engineered Mtg LOB (2016) Re-engineered Treasury Mgmt (2016) Introduced SBA and Equipment Finance (2018) Introduce
Slide 7: Business transformation timeline
7 Pre-Stock Conversion Retail / Consumer – Limited Offerings Mortgage – Old S&L Model Commercial – Very Limited Capabilities Stock Conversion July – Converted from mutual to stock form with focus on commercial banking Equipment Finance February – Launched line of business SBA Lending September – Lau
Slide 8: Pyramid of Success
8 High Performance Deposit Growth Maturing Lines of Business Business Transformation Engaged Employees Enterprise Risk Management Franchise and Line of Business Investments Our Results Our Business Objectives Our Foundation Pyramid of Success
Slide 9: Geographic Expansion – Focus on High-Growth Markets
9 Geographic Expansion – Focus on High-Growth Markets HomeTrust branch (34) *Quantum branch (3) *Reflects the combined branch footprint after the closing of the Quantum merger (pending approval) Source: S&P Global Market Intelligence for MSA Demographics Raleigh 5.1% Population Growth 12.3% HH Incom
Slide 10: Hybrid Branch Strategy
10 “Branch Heavy” Consumer Markets Asheville Roanoke Tri-Cities Branch Manager & Consumer Banker Introducing Micro-Business Loans Hybrid Branch Strategy “Branch-Lite” Business Banking Centers Charlotte Greenville Knoxville Raleigh Branch Manager & Small Business Banker Small Business Banking & Profe
Slide 11: Loan Portfolio Transformation: Transition to a Commercial Bank
*Excludes PPP loans 11 $- $100,000 $200,000 $300,000 $400,000 $500,000 $600,000 $700,000 $800,000 $900,000 Commercial RE (NOO) Commercial RE (OO) Construction and Development Equipment Finance Other Commercial 1-4 Family HELOCs and Other Consumer 2016 2017 2018 2019 2020 2021 2022 (Dollars in thousa
Slide 12: Portfolios to Highlight: Non-Owner Occupied CRE & Equipment Finance
12 (Dollars in thousands, as of June 30, 2022) $- $20,000 $40,000 $60,000 $80,000 $100,000 Equipment Finance (“EF”) Composition Portfolios to Highlight: Non-Owner Occupied CRE & Equipment Finance 52%48% EF Southeast Footprint Outside Southeast Southeast 73% 27% EF National Footprint East of Mississi
Slide 13: Move Towards Core Deposits
• Deposit balances as of fiscal year end; Cost of deposits are averages for the fiscal year 13 0.00% 0.20% 0.40% 0.60% 0.80% 1.00% 1.20% 2018 2019 2020 2021 2022 Avg. Cost of Deposits $- $200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000 $1,400,000 $1,600,000 Time Deposits Money Market/Saving
Slide 14: Digital Customer Experience
• The Zelle offering was launched during the quarter ended September 30, 2020 • Digital Banking Transfers includes both mobile and online banking 14 - 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 $45,000 $120,000 $195,000 $270,000 $345,000 June '20 June '21 June '22 Digital Banking Transf
Slide 15: Digital Customer Experience (Continued)
15 • Core banking system (2020 conversion) intentionally selected for its open architecture to quickly integrate future FinTech partnerships • Integrated 2nd FinTech partner in March 2022 focused on small business lending • Integrated 3rd FinTech partner in June 2022 focused on consumer lending • In
Slide 16: Strong Asset Quality and Credit Discipline
* Includes $6 million charge-off for one commercial relationship. Excluding that charge-off, the Bank had net recoveries of $669,000. ** Reflects the adoption of CECL on July 1, 2020. 16 -0.05% 0.00% 0.05% 0.10% 0.15% 0.20% 0.25% $(1,000) $1,000 $3,000 $5,000 2018 2019* 2020 2021 2022 Net Charge-Off
Slide 17: Strong Capital Position to Support Continued Growth
17 0% 2% 4% 6% 8% 10% 12% 14% 2018 2019 2020 2021 2022 Common Equity Tier I Capital (to Risk-Weighted Assets) CET I Capital Minimum to Be Well Capitalized (Dollars in thousands, by fiscal year) 0% 2% 4% 6% 8% 10% 12% 14% 2018 2019 2020 2021 2022 Tier I Capital (to Total Adjusted Assets) Tier I Capit
Slide 18: Capital Strategy
• 11th Buyback was approved on February 28, 2022 • First dividend declared November 2018 18 0% 5% 10% 15% 20% 25% 30% 35% $- $0.05 $0.10 $0.15 $0.20 $0.25 $0.30 $0.35 $0.40 2019 2020 2021 2022 Cash Dividends Dividend Dividend Payout Ratio (By fiscal year) 0% 20% 40% 60% 80% 100% 120% 140% 160% $- $5
Slide 19: Improvement in Profitability Metrics
19 $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $- $10,000 $20,000 $30,000 $40,000 2018 2019 2020 2021 2022 Adjusted Earnings Performance Adjusted Net Income Adjusted Diluted EPS 0.00% 0.20% 0.40% 0.60% 0.80% 1.00% 1.20% 2018 2019 2020 2021 2022 Adjusted Return on Assets (Dollars in thousands, by fiscal year
Slide 20: Growth in Noninterest Income
20 0.00% 0.20% 0.40% 0.60% 0.80% 1.00% 1.20% $- $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 $40,000 $45,000 2018 2019 2020 2021 2022* Adjusted Noninterest Income Adjusted Noninterest Income % of Total Assets Service charges on deposits Loan income and fees Gain on sale of loans held for s
Slide 21: Loans originated for sale
21 • Mortgage Banking – 1-4 family and jumbo loans for sale • Began selling pools of jumbo mortgages in FY 2022 • Sold $203.9 million, $406.5 million and $263.0 million in loans over fiscal years 2020, 2021 and 2022 • HELOCs Originated for Sale • Loans originated in HTB’s name, sourced through a thi
Slide 22: Contact information
Hunter Westbrook President and Chief Executive Officer hunter.westbrook@htb.com Tony VunCannon EVP / Chief Financial Officer / Corporate Secretary / Treasurer tony.vuncannon@htb.com 10 Woodfin Street Asheville, NC 28801 (828) 259-3939 www.htb.com 22
Slide 23: Appendix A – Announced Merger with Quantum Capital Corp.
23 Accelerated Shareholder Value Creation HomeTrust’s Transition to High Performing Market Expansion 20%+ EPS Accretion Expanded SBA Footprint A unique opportunity for HomeTrust to expand its franchise and meaningfully enhance its profitability New Deposit Line of Business “You can’t cross a chasm i
Slide 24: Strategic Rationale for Transaction
24 Strategic Rationale for Transaction HomeTrust explores opportunistic merger partners, specifically those that will leverage our infrastructure and lines of business to accelerate earnings growth and value creation for our shareholders. Below we have evaluated our merger with Quantum against the i
Slide 25: Financial rationale: EPS accretion and earnback
25 • Earnings accretion of 10% or more ➢ Earnings per share (“EPS”) accretion of 20%+ after the full realization of cost savings ➢ Driven by Quantum’s profitability rather than significant expense reductions • Dilution earnback period of three years or less ➢ Tangible book value per share (“TBVPS”)
Slide 26: Quantum Highlights
1 Financial highlights as of and for the quarter ended March 31, 2022 2 Ratios have been tax adjusted Source: S&P Capital IQ Pro 26 Market Highlights Total Assets $679.9M Gross Loans $547.8M Total Deposits $609.4M Financial Highlights1 Balance Sheet ROA2 1.59% ROE2 24.13% NIM 4.17% Efficiency Ratio
Slide 27: Additional Details on Quantum – Loan Portfolio Composition
*Guarantees are in place for $51.8 million of the outstanding SBA balance 27 Additional Details on Quantum – Loan Portfolio Composition as of 5/31/22 Acquisition & Development $15,299,202 CRE $306,618,948 Residential - Construction $40,484,895 Residential - Permanent $57,264,818 C&I $19,455,709 SBA
Slide 28: Deal terms and metrics
28 Consideration & pricing Fixed HTBI shares issued of 1,374,646 Fixed cash consideration of $33.0 million 51% stock / 49% cash Closing Anticipate closing in the first quarter of calendar year 2023 (third quarter of fiscal year 2023) Pro forma ownership 91.9% HTBI / 8.1% Quantum Cost savings 24.0% o
Slide 29: HomeTrust positive momentum and merger opportunity
Fiscal 2020 Fiscal 2021 Fiscal YTD Q3 20221 Total assets $3,722,852 $3,524,723 $3,541,785 Gross loans $2,769,119 $2,733,267 $2,699,538 Deposits $2,785,756 $2,955,541 $3,059,157 Adjusted dilutive EPS3 $1.30 $2.06 $1.84 Adjusted ROA3 0.63% 0.92% 1.12% Adjusted efficiency ratio3 71.62% 74.08% 69.19% Ad
Slide 30: Quarterly earnings, loan growth and asset quality
30 Earnings (GAAP) 6/30/2022 3/31/2022 12/31/2021 9/30/2021 6/30/2021 Net income 6,025$ 8,023$ 11,078$ 10,527$ (7,408)$ Earnings per share (EPS) - diluted 0.39$ 0.51$ 0.68$ 0.65$ (0.46)$ Return on assets (ROA) 0.68% 0.92% 1.24% 1.20% (0.81%) Net interest margin (tax-equivalent) 3.53% 3.39% 3.33% 3.4
Slide 31: Appendix B – Quarterly Net Interest Margin
31 3.10% 3.41% 3.33% 3.39% 3.53% 2.96% 3.30% 3.25% 3.33% 3.51% 2.60% 2.85% 3.10% 3.35% 3.60% Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Net Interest Margin Reported Core • Core net interest margin excludes accretion income and PPP and other loan fees Appendix B – Qtrly Net Interest Margin
Slide 32: Non-GAAP Reconciliation
32 Set forth is a reconciliation to GAAP of our efficiency ratio: Set forth is a reconciliation to GAAP of tangible book value, tangible book value per share, and price to tangible book value: (Dollars in thousands) 6/30/2022 6/30/2021 6/30/2020 6/30/2019 6/30/2018 Noninterest expense 105,184$ 131,1
Slide 33: Appendix B – Non-GAAP Reconciliation (Continued)
33 Set forth below is a reconciliation to GAAP net income, EPS, ROA, and ROE as adjusted to exclude certain state tax expense, adjustments for the change in federal tax law, gain on sale of premises and equipment, branch closure and restructuring expenses, prepayment penalties on borrowings, gain on
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