Hometrust Bancshares, Inc. · NYSE:HTB
Hometrust Bancshares — Janney West Coast Bank CEO Forum 2023
34 slides from Hometrust Bancshares's conference presentation, Jan 31, 2023
Slide 1: Janney West Coast Bank CEO Forum, February 1-3, 2023
February 1-3, 2023 Janney West Coast Bank CEO Forum
Slide 2: Forward-Looking Statements
This document 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 as "will," "would," "should," "c
Slide 3: HomeTrust Bancshares, Inc. Overview
• Financial data as of December 31, 2022 • Market data as of January 30, 2023 • Shares repurchased from February 19, 2013 to December 31, 2022 3 HomeTrust Bancshares, Inc. Overview $3.6B Assets NASDAQ: HTBI Headquarters: Asheville, NC $3.0B/$3.0B Loans/Deposits Founded: 1926 Locations: 32 108.9% Pri
Slide 4: Investment highlights
4 Footprint in attractive metro markets experiencing growth rates above the national average (See Page 8) Successful transition to a commercial bank (See Pages 5-6 & 9-13) • Expansion of lines of business, adding further diversity to our loan portfolio • Strong experienced team of revenue producers
Slide 5: Business Transformation: Phases of Progress
5 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 6: Transformation timeline
6 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 7: Pyramid of Success
7 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 8: Geographic Expansion – Focus on High-Growth Markets
8 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 Source: S&P Global Market Intelligence for MSA Demographics Raleigh 7.4% Population Growth 11.8% HH Income Growth Charlotte
Slide 9: Hybrid Branch Strategy
9 “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 & Profes
Slide 10: Loan Portfolio Transformation: Transition to a Commercial Bank
*Excludes PPP loans 10 $- $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 12/31/22 (Dollars
Slide 11: Portfolios to Highlight: Non-Owner Occupied CRE & Construction
11 (Dollars in thousands, as of December 31, 2022) Portfolios to Highlight: Non-Owner Occupied CRE & Construction and Development $- $55,000 $110,000 $165,000 Non-Owner Occupied CRE Composition NOO CRE – Office Largest 5 Relationships: $6,707,000 $5,591,000 $5,258,000 $4,972,000 $4,483,000 Total - $
Slide 12: Portfolios to Highlight: SBA Loans & Equipment Finance
12 Portfolios to Highlight: SBA Loans & Equipment Finance * Payments on SBA loans are required to be adjusted annually. HomeTrust most recently adjusted payments in both October 2022 and February 2023. ** These loans are included in the “Other Commercial” category on slide 10. Excludes loans held fo
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% 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/Savings Checking Accounts Depos
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 - 20,000 40,000 60,000 80,000 $45,000 $120,000 $195,000 $270,000 $345,000 June '20 June '21 June '22 Dec '22 Digital Banking Transfers Volume ($) Trans
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 $7,000 2019* 2020 2021 2022 12/31/22 Net
Slide 17: Strong Capital Position to Support Continued Growth
17 0% 2% 4% 6% 8% 10% 12% 14% 2019 2020 2021 2022 12/31/22 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% 2019 2020 2021 2022 12/31/22 Tier I Capital (to Total Adjusted Assets) Tier
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 2023 Annualized Cash Dividends Dividend Dividend Payout Ratio (By fiscal year) 0% 20% 40% 60% 80% 100% 120%
Slide 19: Improvement in Profitability Metrics
19 $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 $- $10,000 $20,000 $30,000 $40,000 $50,000 2019 2020 2021 2022 2023 Annualized Adjusted Earnings Performance Adjusted Net Income Adjusted Diluted EPS 0.00% 0.20% 0.40% 0.60% 0.80% 1.00% 1.20% 1.40% 2019 2020 2021 2022 2023 Annualized Adjusted Return
Slide 20: 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 2019 2020 2021 2022 2023 Annualized Adjusted Noninterest Income Adjusted Noninterest Income % of Total Assets Service charges on deposits Loan income and fees Gain on sale of loans
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, $263.0 million, and $28.2 million in loans over fiscal years 2020, 2021, 2022 and 2023 (2 quarters) • HELOCs Originated for Sale • Loans originated i
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: earnings accretion and dilution
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 year ended December 31, 2022 2 Ratios have been tax adjusted Source: S&P Capital IQ Pro 26 Market Highlights Total Assets $663.9M Gross Loans $579.5M Total Deposits $589.1M Financial Highlights1 Balance Sheet ROA2 2.07% ROE2 29.33% NIM 4.70% Efficiency Ratio
Slide 27: Additional Details on Quantum – Loan Portfolio Composition
* Guarantees are in place for $53.6 million of the outstanding SBA balance 27 Additional Details on Quantum – Loan Portfolio Composition as of 12/31/22 Acquisition & Development $17,547,528 CRE $302,024,475 Residential - Construction $47,508,304 Residential - Permanent $80,078,606 C&I $32,326,877 SB
Slide 28: Consideration & Pricing, Deal 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: Further Accelerating Shareholder Value Creation
Fiscal 2021 Fiscal 2022 Fiscal YTD Q2 20231 Total assets $3,524,723 $3,549,204 $3,647,015 Gross loans $2,733,267 $2,769,295 $2,985,623 Deposits $2,955,541 $3,099,761 $3,048,020 Adjusted dilutive EPS3 $2.06 $2.23 $1.44 Adjusted ROA3 0.92% 1.01% 1.26% Adjusted efficiency ratio3 74.08% 69.25% 59.36% Ad
Slide 30: Appendix B – Quarterly Highlights
30 Earnings (GAAP) 12/31/2022 9/30/2022 6/30/2022 3/31/2022 12/31/2021 Net income 13,658$ 9,199$ 6,025$ 8,023$ 11,078$ Earnings per share (EPS) - diluted 0.90$ 0.60$ 0.39$ 0.51$ 0.68$ Return on assets (ROA) 1.54% 1.02% 0.68% 0.92% 1.24% Return on equity (ROE) 13.37% 9.25% 6.19% 8.15% 11.02% Net inte
Slide 31: Appendix B – Quarterly Highlights (Continued)
31 Appendix B – Quarterly Highlights (Continued) • Per Piper Sandler “4Q2022 Earnings Release Summary Metrics & Calendar”, dated January 26, 2023 As of or for the quarter ended 12/31/22 Nationwide Mean HomeTrust +/- Variance Tangible Common Equity / Tangible Assets 7.5% 10.6% 3.1% AOCI / Tangible Co
Slide 32: Appendix B – Quarterly Net Interest Margin
32 3.33% 3.39% 3.53% 4.13% 4.56% 3.25% 3.33% 3.51% 4.14% 4.58% 3.00% 3.25% 3.50% 3.75% 4.00% 4.25% 4.50% 4.75% Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Net Interest Margin Reported Core • Core net interest margin excludes accretion income and PPP and other loan fees Appendix B – Qtrly Net Interest Ma
Slide 33: Appendix B – Non-GAAP Reconciliation
33 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: 6 Months Ended (Dollars in thousands) 12/31/2022 6/30/2022 6/30/2021 6/30/2020 6/30/2019 Noninterest expens
Slide 34: Appendix B – Non-GAAP Reconciliation (Continued)
34 Set forth below is a reconciliation to GAAP net income, EPS, ROA, ROE, and ROATCE as adjusted to exclude certain state tax expense, adjustments for the change in federal tax law, merger expenses, gain on sale of equity securities, gains (losses) on sale of premises and equipment, branch closure a
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