Hometrust Bancshares, Inc. · NYSE:HTB
Hometrust Bancshares — Keefe, Bruyette & Woods Community Bank Investor Conference 2020
49 slides from Hometrust Bancshares's conference presentation, Jul 28, 2020
Slide 1: KBW Community Bank Investor Conference July 28-30, 2020
Keefe, Bruyette & Woods Community Bank Investor Conference July 28-30, 2020
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements often include words such as “believe,” “expect,” “anticipate,” “estimate,” and “intend” or future or conditional verbs such a
Slide 3: HomeTrust Bancshares, Inc. Overview
HomeTrust Bancshares, Inc. Overview Headquarters: Asheville, NC Exchange/Ticker: NASDAQ: HTBI Founded: 1926 Number of Employees: 575 Locations: 41 (NC, SC, VA, TN) Stock Price: $14.07 Total Assets: $3.7 billion Price to TBV: 63% Total Loans: $2.7 billion Market Cap: $239 million Total Deposits: $2.8
Slide 4: Current and Long-Term Focus
Current and Long-Term Focus p Current focus on safety of employees and meeting customer needs Long-term focus has not changed with our foundation based on p soundness, profitability, and growth Value Creation for Shareholders • EPS growth • Increasing franchise value • Investing in the future with e
Slide 5: Response to COVID-19
Response to COVID-19 pPrimary focus on the health and well-being of our teammates, clients, and shareholders Teammates Clients Shareholders Split team rotations and Digital channels to expand social distancing (up to 70% communication and reduce Sound balance sheet working remotely) branch interacti
Slide 6: Paycheck Protection Program (PPP)
Paycheck Protection Program (PPP) • Continue to support our clients and communities in response to pandemic • $80.7 million originated as of June 30, 2020 for 285 customers • $2.1 million net fees deferred and amortized into interest income over the life of the loans • Funded through deposit growth
Slide 7: Industry Exposure
Industry Exposure Higher Risk Industries (% of total loans as of June 30, 2020) Total Loan Portfolio - $2,769,119 (Dollars in thousands) • Equipment finance – 8.3% • Other retail businesses – 5.4% $229,239 • Lodging – 4.3% $2,136,077 $150,229 • Shopping centers – 3.2% $118,729 $89,285 • Restaurants
Slide 8: Loan Deferrals by Exposure
Loan Deferrals by Exposure As of June 30, 2020 (Dollars in thousands) Deferral by Category $250,000 $200,000 $150,000 $100,000 $50,000 62% 91% 60% 19% 24% $- Restaurants Lodging Shopping Center Equipment Finance Other Retail Not in Deferral $17,516 $10,558 $35,948 $185,398 $114,128 In Deferral $28,0
Slide 9: Total Loan Deferrals
Total Loan Deferrals As of July 22, 2020 1st Deferral 2nd Deferral $19,401 $1,072 $20,428 $8,871 $933 • Loan deferrals: $1,488 • Commercial - 90-day • Consumer - 60-day $392,714 $82,147 • Continue to closely monitor the effects of Total 1 st deferral: $433,615 Total 2 nd deferral: $93,439 COVID-19 o
Slide 10: Capital Management Cash Dividend
Capital Management Cash Dividend • Initiated quarterly cash dividends of $0.06 on November 21, 2018 • Increased to $0.07 in November 2020 • $0.07 payable on September 3, 2020 to shareholders on record as of August 20, 2020 • Continue to remain well-capitalized and pay quarterly cash dividends 10
Slide 11: Capital Management Stock Buybacks
Capital Management Stock Buybacks Percent of Outstanding Shares Number of Tangible Authorized to Shares Avg Cost / Book Approved Buy Backs be Purchased Purchased Total Cost Share Value 1st Buy Back (completed 4/29/13) 4% 846,400 $ 13,299 $ 15.71 $ 17.91 2nd Buy Back (completed 12/2/13) 5% 1,041,245
Slide 12: Line of Business Alignment
Line of Business Alignment Prior Line of Business New Line of Business Promoted/Hired Retail Kristin Powell Consumer Mortgage Promoted to Consumer Banking Banking Group Executive Branch 20 years banking experience Operations Latrella McElrath Business Promoted to Business and Bankers Professional Ba
Slide 13: Maturing Lines of Business
Maturing Lines of Business 2012: Pre-Conversion 2020: 8 Years Post Conversion • Retail / Consumer – Limited Offerings • Equipment Finance • Mortgage – Old S&L Model • SBA Lending • Commercial – Very Limited Capabilities • Mortgage Banking • HELOCS Originated for Sale • Business Banking • Commercial
Slide 14: Maturing Lines of Business: Equipment Finance
Maturing Lines of Business . Equipment Finance . Historical/Current . Began in February 2018 . Implemented industry leading leasing core technology system and processes . Built out team of 7 with deep experience in equipment finance . Current portfolio of over $250 million with yield of 4.55% . Look
Slide 15: Maturing Lines of Business: Mortgage Banking
Maturing Lines of Business . Mortgage Banking . Historical/Current . Traditionally strong product . Expanded into five additional metro markets since 2012 . Restructured mortgage loan origination process . Added 19 new mortgage loan officers since beginning of FY 2017 . Increased rates for better ex
Slide 16: Maturing Lines of Business: SBA Lending
Maturing Lines of Business . SBA Lending . Historical/Current . Began in September 2017 . Originate SBA 7(a) and USDA B&I loans, selling the guaranteed portion (typically 75%) at a gain and retaining 25% in portfolio . Gain on sale of $2.8 million and $3.4 million for FY 2020 and 2019, respectively
Slide 17: Maturing Lines of Business: HELOCs Originated for Sale
Maturing Lines of Business . HELOCS Originated for Sale . Historical/Current . Partnered with third party to purchase HELOCs beginning in December 2014 - grew portfolio to $160 million in 2018 . Began to transition to origination of HELOCs with warehouse to sell to others in March 2019 . Gain on sal
Slide 18: Maturing Lines of Business: Business and Commercial Banking
Maturing Lines of Business . Business Banking . Historical/Current . New line of business . Looking forward . Adding seasoned bankers to grow loans and deposits . Enhance debit card revenue . Bundled products through Treasury Management . Commercial Banking . Historical/Current . Expanded footprint
Slide 19: Maturing Lines of Business: Core Banking System
Maturing Lines of Business . Core Banking System . Successful conversion and upgrade of our core technology systems in February 2020 . Leading to better operational alignment and process improvements to achieve more cost efficiencies . Strategic technological transformations to ensure future readine
Slide 20: Foundation for Growth and Performance
Foundation for Growth and Performance • Converted to stock in July 2012 raising $211.6 million • Added 7 larger growing markets in NC, SC, VA and East TN since conversion • Hired key experienced team members to buildout infrastructure to transition from historic rural thrift to top quartile performi
Slide 21: Foundation for Growth and Performance
Foundation for Growth and Performance • Reinvented existing business lines: Mortgage, Home Equity Lines of Credit, Retail Offices, and Municipal Finance • Added new lines of business and experienced leaders: Indirect Auto Finance, Treasury Management, SBA 7(a) Loan Program, Business Banking, Profess
Slide 22: Organic and M&A Growth Since 2012 Conversion
Organic and M&A Growth Since 2012 Conversion $4,000 $3,722 Assets Loans Deposits Merger with TriSummit Bank Merger with Bank January 2017 $3,476 $3,500 of Commerce July 2014 $3,304 Acquisition of 10 $3,207 Bank of America Branches Mergers with Nov 2014 BankGreenville $3,000 July 2013 Jefferson Feder
Slide 23: Strong Footprint for Growth
Strong Footprint for Growth 23
Slide 24: Earnings Performance
Earnings Performance (Dollars in thousands) $30,000 $1.46 $1.60 $1.38 $25,000 $1.40 $26,821 $1.24 $25,886 $21,825 $1.20 $20,000 $0.94 $1.00 $0.95 $17,111 $17,037 $15,000 $0.70 $0.80 $0.61 $12,228 $0.60 $10,000 $11,784 $0.40 $5,000 FirstFirsthalfhalf FY FY 2020 2020 $0.20 $- $- 2015 2016 2017 2018 20
Slide 25: ROA Trajectory
ROA Trajectory – Adjusted Return on Assets 1 0.90% 0.80% 0.79% 0.80% 0.70% 0.61% 0.58% 0.60% 0.50% 0.47% 0.45% 0.47% 0.40% 0.30% 0.20% FirstFirsthalfhalf FY FY 2020 2020 0.10% 0.00% 2015 2016 2017 2018 2019 2020 Fiscal Year (1) See Non-GAAP Disclosure Appendix 25
Slide 26: Improving Noninterest Income
Improving Noninterest Income (Dollars in thousands) $35,000 0.90% 0.84% 0.80% $30,000 $30,332 0.67% 0.70% 0.58% $25,000 0.60% 0.50% 0.52% 0.53% $22,940 $20,000 0.50% $18,972 0.40% $15,000 $16,107 $14,291 0.30% $12,519 $10,000 0.20% $5,000 0.10% $- 0.00% 2015 2016 2017 2018 2019 2020 % of total Incom
Slide 27: Loan Portfolio Composition
Loan Portfolio Composition Transitioning to a Commercial Bank Portfolio Loans: 6/30/20 (Dollars in millions) Commercial 66% HELOCs & Consumer 16% 19% 18% $3,000 1-4 Family 18% 5-Year CAGR of 11% 8% 16% $2,500 39% $2,000 1-4 Family ($474MM) HELOCs & Other Consumer ($434MM) Commercial RE ($1,052MM) $1
Slide 28: Non-Owner Occupied CRE Composition
Non-Owner Occupied CRE Composition As of 6/30/20 Total balance of 8% 12% $739 million 7% 15% 14% 3% 13% 12% 16% Multifamily Office Other Retail Lodging Shopping Centers Restaurants Industrial Healthcare Other 28
Slide 29: Equipment Finance Composition
Equipment Finance Composition As of 6/30/20 Industry and Equipment Type 11% 23% 5% 8% 2% 8% 3% 21% 10% 10% Construction Municipal Over the Road Tractors Light, Medium, Heavy Vehicles Manufacturing Material Handling Forestry Healthcare - Medical Office / Recycling / Other Trailers - All Trailers 29
Slide 30: Total Loan Production
Total Loan Production * (Dollars in thousands) Total Loan Production: 1,200,000 $1,177,681 Total Loan Total Loan $27,458 Production: Production: $53,544 Total Loan $1,040,164 $1,033,526 Production: $50,380 $983,186 $21,038 $22,748 $28,453 $73,351 1,000,000 $17,251 $61,687 $99,558 $84,707 $55,610 $16
Slide 31: Commercial Loan Production by Type
Commercial Loan Production by Type (Dollars in thousands) $250,000 $257,494 $257,494 $200,000 $238,870 $234,102 $234,102 $209,337 $209,337 $212,507 $212,507 $196,743 $196,743 $150,000 $192,803 $172,618 $172,618 $173,904 $173,904 $164,945 $164,945 $154,898 $154,898 Originations $100,000 $137,660 $22,
Slide 32: Consumer Loan Production
Consumer Loan Production (Dollars in thousands) $120,000 $100,000 $99,558 $99,558 $80,000 $87,844 $87,844 $84,707 $84,707 $79,628 $79,628 $60,000 $73,351 $73,351 Originations $60,118 $60,118 $55,610 $55,610 $40,000 $54,598 $53,010 $53,010 $50,380 $50,380 $49,794 $49,794 $49,841 $49,841 $20,000 $0 $-
Slide 33: Mortgage Loan Production
Mortgage Loan Production (Dollars in thousands) 400,000 90% 78% 77% 350,000 80% 63% 70% 300,000 62% 62% $154,549 $154,549 60% 250,000 59% 50% 200,000 $163,887 $163,887 $165,359 $165,359 40% $170,895 $170,895 Originations 150,000 $124,070 $124,070 30% $138,988 $138,988 100,000 $223,937 $223,937 20% 5
Slide 34: Asset Quality
Asset Quality (Dollars in thousands) Net Charge-Offs and NCO / Average Loans Allowance for Loan Losses and ALL / Total Loans 6,000 5,331 0.25% 30,000 1.50% 5,000 0.20% 25,000 4,000 0.15% 20,000 1.00% 3,000 15,000 1,857 0.10% 2,000 1,205 1,082 10,000 0.50% 1,000 0.05% 141 91 5,000 - 0.00% 2015 2016 2
Slide 35: Deposit Portfolio Mix
Deposit Portfolio Mix (Dollars in thousands) $1,200,000 Total Total Total Total Total Total 120% Deposits: Deposits: Deposits: Deposits: Deposits: Deposits: $1,583,046 $1,872,126 $1,802,696 $2,048,451 $2,327,257 $2,785,756 $1,000,000 100% $800,000 80% $600,000 60% $400,000 40% $200,000 20% $- 0% FY2
Slide 36: Deposit Composition
Deposit Composition Deposit Migration Deposit Composition 100% 6/30/20 90% Time Deposits 31.6% 32.1% 34.9% 35.9% $739,142 80% 38.1% 36.3% $1,012,200 Money Market/Savings 70% Checking Accounts $1,034,414 60% 50% 37.6% 37.3% (Dollars in thousands) 37.1% 40.6% 40.6% 39.4% 40% Cost of Funds 1.00% 30% 0.
Slide 37: Investment Portfolio Composition
Investment Portfolio Composition Investments: 6/30/20 ($486 million) US Gov't Agency ($4 million) MBS-Gov't Agcy/GSE ($47 million) Taxable Munis ($16 million) Corporate Bonds ($58 million) FDIC Insured CDs in Other Banks ($56 million) Commercial Paper ($305 million) - 60-Day Avg Life 11% 12% 3% Yiel
Slide 38: Quarter Ended June 30, 2020 Highlights
Quarter Ended June 30, 2020 Highlights (Dollars in thousands, except per share amounts) Quarter Ended Change A. Earnings 06/30/2020 06/30/2019 Amount Percent 1. Net income $ 3,595 $ 8,013 $ (4,418) -55% 2. Earnings per share (EPS) - diluted$ 0.22 $ 0.44 $ (0.22) -50% 3. Return on assets (ROA) 0.39%
Slide 39: Year Ended June 30, 2020 Highlights
Year Ended June 30, 2020 Highlights (Dollars in thousands, except per share amounts) Year Ended Change A. Earnings 06/30/2020 06/30/2019 Amount Percent Net Income $ 22,783 $ 27,146 $ (4,363) (16%) EPS - diluted $ 1.30 $ 1.46 $ (0.16) (11%) ROA 0.63% 0.80% (0.17%) (21%) Net interest margin (tax equiv
Slide 40: Balance Sheet Highlights
Balance Sheet Highlights (Dollars in thousands, except per share amounts) At Change 06/30/2020 06/30/2019 Amount Percent Total assets$ 3,722,852 $ 3,476,178 $ 246,674 7% Total loans, net 2,741,047 2,683,761 57,286 2% Core deposits 2,046,614 1,615,067 431,547 27% Total deposits 2,785,756 2,327,257 45
Slide 41: Market Price and Price to Tangible Book
Market Price and Price to Tangible Book $30.0 150.0% 141% $28.15 119% 130.0% $25.0 126% $24.40 $25.14 110.0% 93% $20.0 89% 97% 90.0% 71% $18.50 $28.15 $15.0 70.0% $15.77 $16.00 50.0% $10.0 30.0% $5.0 10.0% $- -10.0% 06/30/2014 06/30/2015 06/30/2016 06/30/2017 06/30/2018 06/30/2019 06/30/2020 Market
Slide 42: Value Drivers for HTBI
Value Drivers for HTBI Proven ability to grow organically Proven ability to grow through M&A Footprint in attractive metro markets with strong growth Strong experienced team of revenue producers Diversified loan portfolio including equipment finance/C&I lending Strong asset quality and c
Slide 43: Opportunistic Acquisition Strategy
Opportunistic Acquisition Strategy Goal – Leverage infrastructure and lines of business to accelerate earnings growth and value creation for shareholders . Earnings accretion of 10% or more . Strong core deposit base . Asset size – Target of $300 million to $1.5 billion . Geographic footprint – with
Slide 44: Investor Contacts
Investor Contacts Dana Stonestreet Chairman, President and CEO dana.stonestreet@htb.com Hunter Westbrook SEVP/Chief Operating 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) 2
Slide 45: Non-GAAP Disclosure Appendix
Non-GAAP Disclosure Appendix
Slide 46: Non-GAAP Disclosure Reconciliation
Non-GAAP Disclosure Reconciliation In addition to results presented in accordance with generally accepted accounting principles utilized in the United States ("GAAP"), this presentation contains certain non-GAAP financial measures, which include: the efficiency ratio; tangible book value; tangible b
Slide 47: Non-GAAP Disclosure Reconciliation: Efficiency Ratio
Non-GAAP Disclosure Reconciliation Set forth below is a reconciliation to GAAP of our efficiency ratio: 47
Slide 48: Non-GAAP Disclosure Reconciliation: Tangible Book Value
Non-GAAP Disclosure Reconciliation Set forth below is a reconciliation to GAAP of tangible book value, tangible book value per share, and share price to tangible book: 48
Slide 49: Non-GAAP Disclosure Reconciliation: Net Income, EPS, ROE, ROA
Non-GAAP Disclosure Reconciliation Set forth to the right is a reconciliation to GAAP net income, EPS, ROE, and ROA as adjusted to exclude merger-related expenses, certain state tax expense, adjustments for the change in federal tax law, gain on sale of premises and equipment, gain on sale of loans,
HomeTrust Bancshares — Keefe, Bruyette & Woods Community Bank Investor Conference 2020 on 6ix