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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 March 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 classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $.01 per share
HTBIThe 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 15,720,503 shares of common stock, par value of $.01 per share, issued and outstanding as of May 4, 2022.



HOMETRUST BANCSHARES, INC. AND SUBSIDIARIES
10-Q
TABLE OF CONTENTS
 Page
Number
 
Item 1.  
  
  
  
  
  
  
  
Item 2. 
  
Item 3. 
  
Item 4. 
  
 
  
Item 1. 
  
Item 1A. 
  
Item 2. 
  
Item 3. 
  
Item 4. 
  
Item 5 
  
Item 6. 
  

1


Glossary of Defined Terms
The following items 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.
TermDefinition
ACLAllowance for Credit Losses
AFSAvailable-For-Sale
ASCAccounting Standards Codification
ASUAccounting Standards Update
BOLIBank Owned Life Insurance
CARES Act
Coronavirus Aid, Relief, and Economic Security Act of 2020
CD
Certificate of Deposit
CDACollateral Dependent Asset
CECLCurrent Expected Credit Losses
CET1
Common Equity Tier 1
COVID-19
Coronavirus Disease 2019
CPI
Consumer Price Index
DCFDiscounted Cash Flow
ECLExpected Credit Losses
EPSEarnings Per Share
ESOPEmployee Stock Ownership Plan
FASBFinancial Accounting Standards Board
FDICFederal Deposit Insurance Corporation
FHLBFederal Home Loan Bank
FRBFederal Reserve Bank of Richmond
GAAP
Generally Accepted Accounting Principles in the United States
GSEGovernment-Sponsored Enterprises
HELOCHome Equity Line of Credit
LIBORLondon Interbank Offered Rate
MBS
Mortgage-Backed Securities
NCCOB
North Carolina Office of the Commissioner of Banks
OTTIOther Than Temporary Impairment
PCDPurchased Financial Assets with Credit Deterioration
PCIPurchase Credit Impaired
PPPPaycheck Protection Program
REOReal Estate Owned
ROURight of Use
RSURestricted Stock Unit
SEC
Securities and Exchange Commission
SBAU.S. Small Business Administration
SBICSmall Business Investment Companies
TDRTroubled Debt Restructuring

2


PART I.  FINANCIAL INFORMATION
Item 1.    Financial Statements
HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Consolidated Balance Sheets
(Dollars in thousands, except per share data)
(Unaudited)
March 31, 2022
June 30, 2021
Assets
Cash$19,783 $22,312 
Interest-bearing deposits32,267 28,678 
Cash and cash equivalents52,050 50,990 
Commercial paper312,918 189,596 
Certificates of deposit in other banks28,125 40,122 
Debt securities available for sale, at fair value (amortized cost of $108,130 and $154,493 at March 31, 2022 and June 30, 2021, respectively)
106,315 156,459 
Other investments, at cost23,040 23,710 
Loans held for sale85,263 93,539 
Total loans, net of deferred loan fees and costs2,699,538 2,733,267 
Allowance for credit losses on loans(31,034)(35,468)
Loans, net2,668,504 2,697,799 
Premises and equipment, net69,629 70,909 
Accrued interest receivable7,980 7,933 
REO— 188 
Deferred income taxes, net12,494 16,901 
BOLI94,740 93,108 
Goodwill25,638 25,638 
Core deposit intangibles, net135 343 
Other assets54,954 57,488 
Total Assets$3,541,785 $3,524,723 
Liabilities and stockholders' equity  
Liabilities  
Deposits$3,059,157 $2,955,541 
Borrowings30,000 115,000 
Other liabilities57,497 57,663 
Total liabilities3,146,654 3,128,204 
Commitments and Contingencies - See Note 9
Stockholders' equity  
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, 15,978,262 shares
    issued and outstanding at March 31, 2022; 16,636,483 at June 30, 2021
160 167 
Additional paid in capital136,181 160,582 
Retained earnings265,609 240,075 
Unearned ESOP shares(5,422)(5,819)
Accumulated other comprehensive income (loss)(1,397)1,514 
Total stockholders' equity395,131 396,519 
Total liabilities and stockholders' equity$3,541,785 $3,524,723 
The accompanying notes are an integral part of these consolidated financial statements.
3


HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Consolidated Statements of Income
(Dollars in thousands, except per share data)
(Unaudited)
Three Months EndedNine Months Ended
March 31,March 31,
2022202120222021
Interest and dividend income
Loans$26,616 $27,629 $81,440 $84,564 
Commercial paper and interest-bearing deposits563 611 1,362 2,106 
Debt securities available for sale384 496 1,319 1,528 
Other investments632 585 1,867 1,729 
Total interest and dividend income28,195 29,321 85,988 89,927 
Interest expense   
Deposits1,151 1,996 4,028 7,596 
Borrowings1,632 45 5,007 
Total interest expense1,155 3,628 4,073 12,603 
Net interest income27,040 25,693 81,915 77,324 
Provision (benefit) for credit losses(45)(4,100)(4,005)(6,180)
Net interest income after provision (benefit) for credit losses27,085 29,793 85,920 83,504 
Noninterest income   
Service charges and fees on deposit accounts2,216 2,194 7,101 6,707 
Loan income and fees752 636 2,536 1,679 
Gain on sale of loans held for sale2,969 4,881 10,927 11,929 
BOLI income492 508 1,500 1,551 
Operating lease income1,661 1,432 4,920 4,107 
Other857 1,027 2,496 2,688 
Total noninterest income8,947 10,678 29,480 28,661 
Noninterest expense   
Salaries and employee benefits14,730 15,784 44,882 46,691 
Occupancy expense, net2,483 2,456 7,201 7,010 
Computer services2,455 2,581 7,148 7,108 
Telephone, postage, and supplies686 812 2,133 2,345 
Marketing and advertising573 319 2,110 971 
Deposit insurance premiums412 363 1,280 1,361 
REO related expense, net220 84 478 462 
Core deposit intangible amortization50 165 208 605 
Prepayment penalties on borrowings— 3,656 — 3,656 
Other4,190 4,286 12,285 12,740 
Total noninterest expense25,799 30,506 77,725 82,949 
Net income before income taxes10,233 9,965 37,675 29,216 
Income tax expense2,210 2,096 8,047 6,133 
Net income$8,023 $7,869 $29,628 $23,083 
Per share data:   
Net income per common share:    
Basic$0.51 $0.49 $1.87 $1.42 
Diluted$0.51 $0.48 $1.84 $1.40 
Average shares outstanding:    
Basic15,523,813 15,979,590 15,666,093 16,139,059 
Diluted15,793,012 16,485,718 15,997,377 16,339,130 
The accompanying notes are an integral part of these consolidated financial statements.
4


HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Consolidated Statements of Comprehensive Income
(Dollars in thousands)
(Unaudited)
Three Months EndedNine Months Ended
March 31,March 31,
 2022202120222021
Net income$8,023 $7,869 $29,628 $23,083 
Other comprehensive loss   
  Unrealized holding losses on debt securities available for sale    
Losses arising during the period(2,595)(839)(3,781)(724)
Deferred income tax benefit598 193 870 166 
Total other comprehensive loss$(1,997)$(646)(2,911)(558)
Comprehensive income$6,026 $7,223 $26,717 $22,525 
The accompanying notes are an integral part of these consolidated financial statements.
5


HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Consolidated Statements of Changes in Stockholders' Equity
(Dollars in thousands)

(Unaudited)
Three Months Ended March 31, 2022
Common StockAdditional
Paid In
Capital
Retained
Earnings
Unearned
ESOP
Shares
Accumulated
Other
Comprehensive
Income
Total
Stockholders'
Equity
SharesAmount
Balance at December 31, 202116,303,461 $163 $147,552 $258,986 $(5,555)$600 $401,746 
Net income— — — 8,023 — — 8,023 
Cash dividends declared on common stock, $0.09/ common share
— — — (1,400)— — (1,400)
Common stock repurchased(419,931)(4)(12,911)— — — (12,915)
Forfeited restricted stock(2,600)— — — — — — 
Retired stock(8,627)— (270)— — — (270)
Granted restricted stock40,123 — — — — — — 
Exercised stock options65,836 1,038 — — — 1,039 
Share-based compensation expense— — 507 — — — 507 
ESOP compensation expense— — 265 — 133 — 398 
Other comprehensive loss— — — — — (1,997)(1,997)
Balance at March 31, 202215,978,262 $160 $136,181 $265,609 $(5,422)$(1,397)$395,131 
(Unaudited)
Nine Months Ended March 31, 2022
Common StockAdditional
Paid In
Capital
Retained
Earnings
Unearned
ESOP
Shares
Accumulated
Other
Comprehensive
Income
Total
Stockholders'
Equity
SharesAmount
Balance at June 30, 202116,636,483 $167 $160,582 $240,075 $(5,819)$1,514 $396,519 
Net income— — — 29,628 — — 29,628 
Cash dividends declared on common stock, $0.26/common share
— — — (4,094)— — (4,094)
Common stock repurchased(1,095,763)(11)(32,307)— — — (32,318)
Forfeited restricted stock(12,000)— — — — — — 
Retired stock(11,335)— (345)— — — (345)
Granted restricted stock40,123 — — — — — — 
Stock issued for RSUs7,118 — — — — — — 
Exercised stock options413,636 6,077 — — — 6,081 
Share-based compensation expense— — 1,407 — — — 1,407 
ESOP compensation expense— — 767 — 397 — 1,164 
Other comprehensive loss— — — — — (2,911)(2,911)
Balance at March 31, 202215,978,262 $160 $136,181 $265,609 $(5,422)$(1,397)$395,131 





6



HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Consolidated Statements of Changes in Stockholders' Equity
(Dollars in thousands)
(Unaudited)
Three Months Ended March 31, 2021
Common StockAdditional
Paid In
Capital
Retained
Earnings
Unearned
ESOP
Shares
Accumulated
Other
Comprehensive
Income
Total
Stockholders'
Equity
SharesAmount
Balance at December 31, 202016,791,027 $168 $166,352 $242,182 $(6,083)$2,105 $404,724 
Net income— — — 7,869 — — 7,869 
Cash dividends declared on common stock, $0.08/common share
— — — (1,284)— — (1,284)
Common stock repurchased(289,333)(3)(6,541)— — — (6,544)
Forfeited restricted stock— — — — — — 
Retired stock(8,473)— (195)— — — (195)
Granted restricted stock43,260 — — — — — — 
Exercised stock options118,866 1,712 — — — 1,714 
Share-based compensation expense— — 489 — — — 489 
ESOP compensation expense— — 193 — 132 — 325 
Other comprehensive loss— — — — — (646)(646)
Balance at March 31, 202116,655,347 $167 $162,010 $248,767 $(5,951)$1,459 $406,452 
(Unaudited)
Nine Months Ended March 31, 2021
Common StockAdditional
Paid In
Capital
Retained
Earnings
Unearned
ESOP
Shares
Accumulated
Other
Comprehensive
Income
Total
Stockholders'
Equity
SharesAmount
Balance at June 30, 202017,021,357 $170 $169,648 $242,776 $(6,348)$2,017 $408,263 
Net income— — — 23,083 — — 23,083 
Cumulative-effect adjustment due to the adoption of ASU 2016-13— — — (13,358)— — (13,358)
Cash dividends declared on common stock, $0.23/common share
— — — (3,734)— — (3,734)
Stock repurchased(566,455)(6)(11,717)— — — (11,723)
Forfeited restricted stock(6,575)— — — — — — 
Retired stock(9,106)— (204)— — — (204)
Granted restricted stock43,260 — — — — — 
Exercised stock options172,866 2,487 — — — 2,490 
Share-based compensation expense— — 1,449 — — — 1,449 
ESOP compensation expense— — 347 — 397 — 744 
Other comprehensive income— — — — — (558)(558)
Balance at March 31, 202116,655,347 $167 $162,010 $248,767 $(5,951)$1,459 $406,452 
The accompanying notes are an integral part of these consolidated financial statements.

7


HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows
(Dollars in thousands)
(Unaudited)
Nine Months Ended March 31,
 20222021
Operating activities:
Net income$29,628 $23,083 
Adjustments to reconcile net income to net cash provided by operating activities:
Provision (benefit) for credit losses(4,005)(6,180)
Depreciation and amortization7,107 7,042 
Deferred income tax expense5,277 3,600 
Net accretion of purchase accounting adjustments on loans(1,283)(1,559)
Net amortization and accretion1,582 916 
Prepayment penalties paid on borrowings— 3,656 
Impairment on assets held for sale87 — 
Loss (gain) on sale of REO(49)
BOLI income(1,500)(1,551)
Gain on sale of loans held for sale(10,927)(11,929)
Origination of loans held for sale(387,252)(464,173)
Proceeds from sale of loans held for sale402,161 443,380 
New deferred loan origination fees, net(640)(541)
Decrease (increase) in accrued interest receivable and other assets(3,595)1,238 
ESOP compensation expense1,164 744 
Share-based compensation expense1,407 1,449 
Increase (decrease) in other liabilities(971)2,552 
Net cash provided by operating activities38,247 1,678 
Investing activities:  
Purchases of debt securities available for sale(9,762)(95,636)
Proceeds from maturities, calls and paydowns of debt securities available for sale55,600 59,021 
Purchases of commercial paper(463,446)(519,781)
Proceeds from maturities and calls of commercial paper340,999 586,862 
Purchases of CDs in other banks(996)(4,930)
Proceeds from maturities of CDs in other banks12,993 18,604 
Net redemptions of other investments, at cost670 10,047 
Net decrease in loans39,394 103,407 
Purchase of BOLI(132)(139)
Purchase of equipment for operating leases(2,888)(7,877)
Payoff of equipment for operating leases5,981 65 
Purchase of premises and equipment(6,043)(15,095)
Proceeds from sale of assets held for sale2,322 — 
Proceeds from sale of REO181 352 
Net cash provided by (used in) investing activities(25,127)134,900 
Financing activities:  
Net increase in deposits103,616 122,722 
Net decrease in short-term borrowings(115,000)— 
Proceeds from long-term borrowings60,000 — 
Repayment of long-term borrowings(30,000)(203,656)
Common stock repurchased(32,318)(11,723)
Cash dividends paid(4,094)(3,734)
Retired stock(345)(204)
Exercised stock options6,081 2,490 
Net cash used in financing activities(12,060)(94,105)
Net increase in cash and cash equivalents1,060 42,473 
Cash and cash equivalents at beginning of period50,990 121,622 
Cash and cash equivalents at end of period$52,050 $164,095 
8


HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows (continued)
(Dollars in thousands)
(Unaudited)
Nine Months Ended March 31,
 20222021
Supplemental disclosures:
Cash paid during the period for:
Interest$4,080 $13,302 
Income taxes269 472 
Noncash transactions:  
Unrealized loss in value of debt securities available for sale, net of income taxes(2,911)(558)
Transfer of loans to REO— 108 
Transfer of loans held for sale to loans held for investment19,032 14,702 
Transfer of loans held for investment to loans held for sale12,827 — 
ROU asset and lease liabilities for operating lease accounting1,186 599 
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.
9


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 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 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, 2021 ("2021 Form 10-K") filed with the SEC on September 10, 2021. The results of operations for the nine months ended March 31, 2022 are not necessarily indicative of results that may be expected for the entire fiscal year ending June 30, 2022.
The preparation of financial statements in conformity with 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 allowance for credit losses 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 2021 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.
The COVID-19 pandemic has caused significant, unprecedented disruption around the world that has affected daily living and negatively impacted the global economy. The effects of the COVID-19 pandemic may meaningfully impact significant estimates such as the allowance for credit losses or certain loan concentrations in the hospitality and healthcare industries. See "Note 6 - Loans and Allowance for Credit Losses on Loans" for more information on loans that have been modified or are in deferral due to COVID-19.

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.

2.    Recent Accounting Pronouncements
Newly Issued but Not Yet Effective Accounting Standards
ASU 2021-05, "Leases (Topic 842): Lessors—Certain Leases with Variable Lease Payments." This ASU amends 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 and early adoption is permitted. The Company is currently evaluating the impact of adopting the new guidance on the consolidated financial statements.
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.
10

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:
March 31, 2022
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Estimated
Fair
Value
U.S. government agencies$18,988 $34 $(446)$18,576 
MBS, residential34,641 86 (664)34,063 
Municipal bonds5,558 109 — 5,667 
Corporate bonds48,943 22 (956)48,009 
Total$108,130 $251 $(2,066)$106,315 
June 30, 2021
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Estimated
Fair
Value
U.S. government agencies$18,975 $135 $(37)$19,073 
MBS, residential42,119 1,339 (54)43,404 
Municipal bonds9,098 453 — 9,551 
Corporate bonds84,301 257 (127)84,431 
Total$154,493 $2,184 $(218)$156,459 
Debt securities available for sale by contractual maturity at March 31, 2022 and June 30, 2021 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.
 March 31, 2022
Amortized
Cost
Estimated
Fair Value
Due within one year$33,546 $33,497 
Due after one year through five years33,384 32,322 
Due after five years through ten years6,559 6,433 
Due after ten years— — 
MBS, residential34,641 34,063 
Total$108,130 $106,315 
 June 30, 2021
Amortized
Cost
Estimated
Fair Value
Due within one year$34,615 $34,684 
Due after one year through five years73,249 73,633 
Due after five years through ten years4,510 4,738 
Due after ten years— — 
MBS, residential42,119 43,404 
Total$154,493 $156,459 
The Company had no sales of debt securities available for sale during the three and nine months ended March 31, 2022 and 2021. There were no gross realized gains or losses for the three and nine months ended March 31, 2022 and 2021.

Debt securities available for sale with amortized costs totaling $53,266 and $52,603 and market values of $52,350 and $53,897 at March 31, 2022 and June 30, 2021, respectively, were pledged as collateral to secure various public deposits and other borrowings.
11

HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)
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 March 31, 2022 and June 30, 2021 were as follows:
March 31, 2022
Less than 12 Months12 Months or MoreTotal
Fair
Value
Unrealized
Losses
Fair
Value
Unrealized
Losses
Fair
Value
Unrealized
Losses
U.S. government agencies$14,554 $(446)$— $— $14,554 $(446)
MBS, residential21,093 (546)2,290 (118)23,383 (664)
Corporate bonds23,888 (265)14,309 (691)38,197 (956)
Total$59,535 $(1,257)$16,599 $(809)$76,134 $(2,066)
June 30, 2021
Less than 12 Months12 Months or MoreTotal
Fair
Value
Unrealized
Losses
Fair
Value
Unrealized
Losses
Fair
Value
Unrealized
Losses
U.S. government agencies$14,963 $(37)$— $— $14,963 $(37)
MBS, residential5,212 (28)1,205 (26)6,417 (54)
Corporate bonds19,873 (127)— — 19,873 (127)
Total$40,048 $(192)$1,205 $(26)$41,253 $(218)
The total number of securities with unrealized losses at March 31, 2022 and June 30, 2021 were 124 and 28, 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 March 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 Account Policies" in our 2021 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 allowance for credit losses on accrued interest receivable. As of March 31, 2022, the accrued interest receivable for debt securities available for sale was $353.
4.    Other Investments
Other investments, at cost, consist of the following at the dates indicated:
March 31, 2022June 30, 2021
FHLB of Atlanta stock$3,038 $6,153 
FRB stock7,413 7,386 
SBIC investments12,589 10,171 
Total$23,040 $23,710 
As a requirement for membership, the Bank invests in the stock of both the FHLB of Atlanta and the FRB. No ready market exists for these securities so carrying value, or cost, approximates their fair value based on the redemption provisions of the FHLB of Atlanta and the FRB, respectively. SBIC investments are equity securities without a readily determinable fair value and are recorded at cost.
12

HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)
5.    Loans Held For Sale
Loans held for sale as of the dates indicated consist of the following:
March 31, 2022June 30, 2021
One-to-four family$14,647 $31,873 
SBA8,105 4,160 
HELOCs - originated62,511 57,506 
Total$85,263 $93,539 
6.    Loans and Allowance for Credit Losses on Loans
Loans consist of the following at the dates indicated:
March 31, 2022June 30, 2021
Commercial loans:
Commercial real estate$1,102,184 $1,142,276 
Construction and development251,668 179,427 
Commercial and industrial167,342 141,341 
Equipment finance378,629 317,920 
Municipal finance130,260 140,421 
PPP loans2,756 46,650 
Total commercial loans2,032,839 1,968,035 
Retail consumer loans:
One-to-four family347,945 406,549 
HELOCs - originated128,445 130,225 
HELOCs - purchased26,911 38,976 
Construction and land/lots72,735 66,027 
Indirect auto finance83,903 115,093 
Consumer6,760 8,362 
Total retail consumer loans666,699 765,232 
Total loans, net of deferred loan fees and costs2,699,538 2,733,267 
Allowance for credit losses on loans(31,034)(35,468)
Loans, net$2,668,504 $2,697,799 
_________________________________________________________________
(1) At March 31, 2022 and June 30, 2021 accrued interest receivable of $7,427 and $7,339 was accounted for separately from the amortized cost basis.
All qualifying one-to-four family first mortgage loans, HELOCs, commercial real estate loans, and FHLB of Atlanta stock are pledged as collateral by a blanket pledge to secure any outstanding FHLB advances.

13

HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)
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.
14

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 loans by origination year:
Term Loans By Origination Fiscal Year
March 31, 202220222021202020192018PriorRevolvingTotal
Commercial real estate
Risk rating:
Pass$135,883 $218,034 $162,102 $115,537 $119,739 $293,512 $23,238 $1,068,045 
Special mention730 — 401 432 15,377 13,410 — 30,350 
Substandard— — — — 592 2,800 397 3,789 
Doubtful
— — — — — — — — 
Loss— — — — — — — — 
Total commercial real estate$136,613 $218,034 $162,503 $115,969 $135,708 $309,722 $23,635 $1,102,184 
Construction and development
Risk rating:
Pass$26,859 $15,907 $2,241 $2,687 $4,530 $5,932 $187,373 $245,529 
Special mention— — — — — 186 4,715 4,901 
Substandard906 — — — — 332 — 1,238 
Doubtful— — — — — — — — 
Loss— — — — — — — — 
Total construction and development$27,765 $15,907 $2,241 $2,687 $4,530 $6,450 $192,088 $251,668 
Commercial and industrial
Risk rating:
Pass$43,193 $21,537 $11,960 $11,645 $7,136 $22,202 $43,889 $161,562 
Special mention— 104 — — — 94 97 295 
Substandard— 670 347 860 — 53 3,555 5,485 
Doubtful— — — — — — — — 
Loss— — — — — — — — 
Total commercial and industrial$43,193 $22,311 $12,307 $12,505 $7,136 $22,349 $47,541 $167,342 
Equipment finance
Risk rating:
Pass$142,026 $125,396 $75,126 $32,142 $2,278 $— $— $376,968 
Special mention366 74 572 294 — — — 1,306 
Substandard— — 49 156 — — — 205 
Doubtful— — — 150 — — — 150 
Loss— — — — — — — — 
Total equipment finance$142,392 $125,470 $75,747 $32,742 $2,278 $— $— $378,629 
Municipal leases
Risk rating:
Pass$16,684 $24,550 $9,262 $11,768 $14,370 $42,005 $11,584 $130,223 
Special mention— 37 — — — — — 37 
Substandard— — — — — — — — 
Doubtful— — — — — — — — 
Loss— — — — — — — — 
Total municipal leases$16,684 $24,587 $9,262 $11,768 $14,370 $42,005 $11,584 $130,260 
PPP loans
Risk rating:
Pass$— $2,255 $501 $— $— $— $— $2,756 
Special mention— — — — — — — — 
Substandard— — — — — — — — 
Doubtful— — — — — — — — 
Loss— — — — — — — — 
Total PPP loans$— $2,255 $501 $— $— $— $— $2,756 
Total commercial loans
Risk rating:
Pass$364,645 $407,679 $261,192 $173,779 $148,053 $363,651 $266,084 $1,985,083 
Special mention1,096 215 973 726 15,377 13,690 4,812 36,889 
Substandard906 670 396 1,016 592 3,185 3,952 10,717 
Doubtful— — — 150 — — — 150 
Loss— — — — — — — — 
Total commercial loans$366,647 $408,564 $262,561 $175,671 $164,022 $380,526 $274,848 $2,032,839 
15

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 retail consumer loans by origination year:
Term Loans By Origination Fiscal Year
March 31, 202220222021202020192018PriorRevolvingTotal
One-to-four family
Risk rating:
Pass$40,621 $68,486 $48,195 $31,537 $25,273 $123,383 $2,770 $340,265 
Special mention— — — — — 858 — 858 
Substandard128 — 1,013 540 434 4,243 — 6,358 
Doubtful— — — — — 157 — 157 
Loss— — — — — 307 — 307 
Total one-to-four family$40,749 $68,486 $49,208 $32,077 $25,707 $128,948 $2,770 $347,945 
HELOCs - originated
Risk rating:
Pass$627 $997 $286 $1,229 $227 $7,901 $116,176 $127,443 
Special mention— — — — — — 
Substandard— 16 — — — 927 50 993 
Doubtful— — — — — — — — 
Loss— — — — — — — — 
Total HELOCs - originated$627 $1,013 $286 $1,229 $227 $8,837 $116,226 $128,445 
HELOCs - purchased
Risk rating:
Pass$— $— $— $— $— $— $26,278 $26,278 
Special mention— — — — — — — — 
Substandard— — — — — — 633 633 
Doubtful— — — — — — — — 
Loss— — — — — — — — 
Total HELOCs - purchased$— $— $— $— $— $— $26,911 $26,911 
Construction and land/lots
Risk rating:
Pass$1,373 $13,510 $1,691 $53 $— $1,967 $53,757 $72,351 
Special mention— — — — — — — — 
Substandard— — — — — 384 — 384 
Doubtful— — — — — — — — 
Loss— — — — — — — — 
Total construction and land/lots$1,373 $13,510 $1,691 $53 $— $2,351 $53,757 $72,735 
Indirect auto finance
Risk rating:
Pass$19,476 $22,276 $17,783 $9,522 $10,238 $3,529 $— $82,824 
Special mention— 0— — — — — — — 
Substandard62 195 321 136 250 115 — 1,079 
Doubtful— — — — — — — — 
Loss— — — — — — — — 
Total indirect auto finance$19,538 $22,471 $18,104 $9,658 $10,488 $3,644 $— $83,903 
Consumer
Risk rating:
Pass$572 $954 $653 $4,036 $118 $101 $257 $6,691 
Special mention— — — — — — — — 
Substandard— — 19 10 18 14 69 
Doubtful— — — — — — — — 
Loss— — — — — — — — 
Total consumer$572 $962 $653 $4,055 $128 $119 $271 $6,760 
Total retail consumer loans
Risk rating:
Pass$62,669 $106,223 $68,608 $46,377 $35,856 $136,881 $199,238 $655,852 
Special mention— — — — — 867 — 867 
Substandard190 219 1,334 695 694 5,687 697 9,516 
Doubtful— — — — — 157 — 157 
Loss— — — — — 307 — 307 
Total retail consumer loans$62,859 $106,442 $69,942 $47,072 $36,550 $143,899 $199,935 $666,699 
16

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 loans by origination year:
Term Loans By Origination Fiscal Year
June 30, 202120212020201920182017PriorRevolvingTotal
Commercial real estate
Risk rating:
Pass$227,850 $177,691 $142,407 $158,147 $158,525 $220,834 $25,860 $1,111,314 
Special mention— — — 16,951 1,256 3,092 — 21,299 
Substandard— — — 630 4,993 3,642 398 9,663 
Doubtful
— — — — — — — — 
Loss— — — — — — — — 
Total commercial real estate$227,850 $177,691 $142,407 $175,728 $164,774 $227,568 $26,258 $1,142,276 
Construction and development
Risk rating:
Pass18,262 6,523 10,349 6,008 2,693 7,153 123,843 $174,831 
Special mention— — — — — 286 3,827 4,113 
Substandard— — — — — 482 — 482 
Doubtful— — — — — — — — 
Loss— — — — — — 
Total construction and development$18,262 $6,523 $10,349 $6,008 $2,693 $7,922 $127,670 $179,427 
Commercial and industrial
Risk rating:
Pass29,606 14,010 18,826 10,759 15,346 10,589 36,165 $135,301 
Special mention— 21 438 110 32 125 37 763 
Substandard31 33 300 — — 83 4,829 5,276 
Doubtful— — — — — — — — 
Loss— — — — — — 
Total commercial and industrial$29,637 $14,064 $19,564 $10,869 $15,378 $10,798 $41,031 $141,341 
Equipment finance
Risk rating:
Pass154,685 104,681 53,178 4,773 — — — $317,317 
Special mention— — — — — — — — 
Substandard— — 323 — — — — 323 
Doubtful— — 280 — — — — 280 
Loss— — — — — — — — 
Total equipment finance$154,685 $104,681 $53,781 $4,773 $— $— $— $317,920 
Municipal leases
Risk rating:
Pass23,358 19,240 14,005 17,979 9,738 47,144 8,700 $140,164 
Special mention— — — — — 257 — 257 
Substandard— — — — — — — — 
Doubtful— — — — — — — — 
Loss— — — — — — — — 
Total municipal leases$23,358 $19,240 $14,005 $17,979 $9,738 $47,401 $8,700 $140,421 
PPP loans
Risk rating:
Pass29,667 16,983 — — — — — $46,650 
Special mention— — — — — — — — 
Substandard— — — — — — — — 
Doubtful— — — — — — — — 
Loss— — — — — — — — 
Total PPP loans$29,667 $16,983 $— $— $— $— $— $46,650 
Total commercial loans
Risk rating:
Pass$483,428 $339,128 $238,765 $197,666 $186,302 $285,720 $194,568 $1,925,577 
Special mention— 21 438 17,061 1,288 3,760 3,864 26,432 
Substandard31 33 623 630 4,993 4,207 5,227 15,744 
Doubtful— — 280 — — — — 280 
Loss— — — — — — 
Total commercial loans$483,459 $339,182 $240,106 $215,357 $192,583 $293,689 $203,659 $1,968,035 
17

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 retail consumer loans by origination year:
Term Loans By Origination Fiscal Year
June 30, 202120212020201920182017PriorRevolvingTotal
One-to-four family
Risk rating:
Pass$72,723 $52,987 $46,958 $40,461 $37,361 $143,531 $4,345 $398,366 
Special mention— — — — 27 1,084 — 1,111 
Substandard246 981 — 216 86 5,037 — 6,566 
Doubtful— — — — — 191 — 191 
Loss— — — — — 315 — 315 
Total one-to-four family$72,969 $53,968 $46,958 $40,677 $37,474 $150,158 $4,345 $406,549 
HELOCs - originated
Risk rating:
Pass2,767 465 1,294 217 716 9,469 114,048 $128,976 
Special mention— — — — — 12 — 12 
Substandard— — 159 — 38 935 105 1,237 
Doubtful— — — — — — — — 
Loss— — — — — — — — 
Total HELOCs - originated$2,767 $465 $1,453 $217 $754 $10,416 $114,153 $130,225 
HELOCs - purchased
Risk rating:
Pass— — — — — — 38,523 $38,523 
Special mention— — — — — — — — 
Substandard— — — — — — 453 453 
Doubtful— — — — — — — — 
Loss— — — — — — — — 
Total HELOCs - purchased$— $— $— $— $— $— $38,976 $38,976 
Construction and land/lots
Risk rating:
Pass4,244 12,133 2,357 956 — 3,558 42,267 $65,515 
Special mention— — — — — — — — 
Substandard— — — 96 — 416 — 512 
Doubtful— — — — — — — — 
Loss— — — — — — — — 
Total construction and land/lots$4,244 $12,133 $2,357 $1,052 $— $3,974 $42,267 $66,027 
Indirect auto finance
Risk rating:
Pass42,128 27,134 16,224 18,853 7,561 2,061 — $113,961 
Special mention— — — — — — — — 
Substandard29 415 195 273 143 75 — 1,130 
Doubtful— — — — — — — — 
Loss— — — — — — 
Total indirect auto finance$42,159 $27,549 $16,419 $19,126 $7,704 $2,136 $— $115,093 
Consumer
Risk rating:
Pass1,344 1,019 5,204 252 90 91 288 $8,288 
Special mention— — — 14 — — — 14 
Substandard— 19 11 10 11 58 
Doubtful— — — — — — — — 
Loss— — — — — 
Total consumer$1,344 $1,023 $5,224 $277 $94 $101 $299 $8,362 
Total retail consumer loans
Risk rating:
Pass$123,206 $93,738 $72,037 $60,739 $45,728 $158,710 $199,471 $753,629 
Special mention— — — 14 27 1,096 — 1,137 
Substandard275 1,399 373 596 271 6,473 569 9,956 
Doubtful— — — — — 191 — 191 
Loss— — 315 — 319 
Total retail consumer loans$123,483 $95,138 $72,411 $61,349 $46,026 $166,785 $200,040 $765,232 
18

HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)
The following tables present aging analysis of past due loans (includes nonaccrual loans) by segment and class for the periods indicated below:
Past DueTotal
30-89 Days90 Days+TotalCurrentLoans
March 31, 2022
Commercial loans:
Commercial real estate$— $247 $247 $1,101,937 $1,102,184 
Construction and development— 246 246 251,422 251,668 
Commercial and industrial— 67 67 167,275 167,342 
Equipment finance65 33 98 378,531 378,629 
Municipal finance— — — 130,260 130,260 
PPP loans— — — 2,756 2,756 
Retail consumer loans:
One-to-four family347 1,329 1,676 346,269 347,945 
HELOCs - originated28 178 206 128,239 128,445 
HELOCs - purchased142 — 142 26,769 26,911 
Construction and land/lots— 140 140 72,595 72,735 
Indirect auto finance307 156 463 83,440 83,903 
Consumer24 38 62 6,698 6,760 
Total loans$913 $2,434 $3,347 $2,696,191 $2,699,538 
Past DueTotal
30-89 Days90 Days+TotalCurrentLoans
June 30, 2021
Commercial loans:
Commercial real estate$396 $1,680 $2,076 $1,140,200 $1,142,276 
Construction and development— 37 37 179,390 179,427 
Commercial and industrial634 19 653 140,688 141,341 
Equipment finance— 347 347 317,573 317,920 
Municipal finance— — — 140,421 140,421 
PPP loans— — — 46,650 46,650 
Retail consumer loans:
One-to-four family1,112 1,124 2,236 404,313 406,549 
HELOCs - originated290 186 476 129,749 130,225 
HELOCs - purchased198 79 277 38,699 38,976 
Construction and land/lots35 41 65,986 66,027 
Indirect auto finance299 259 558 114,535 115,093 
Consumer378 36 414 7,948 8,362 
Total loans$3,313 $3,802 $7,115 $2,726,152 $2,733,267 

19

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 nine months ended March 31, 2022.
March 31, 2022
 June 30, 2021
90 Days + &
Still Accruing as of March 31, 2022
Nonaccrual With No Allowance as of March 31, 2022
Interest Income Recognized
Commercial loans:
Commercial real estate$1,033 $7,015 $— $284 $28 
Construction and development332 482 — — 
Commercial and industrial919 49 — — 17 
Equipment finance289 630 — — 
Retail consumer loans:
One-to-four family1,687 2,625 — 540 37 
HELOCs - originated207 476 — — 
HELOCs - purchased633 453 — — 19 
Construction and land/lots140 22 — — 
Indirect auto finance505 438 — — 17 
Consumer66 416 — — 
Total loans$5,811 $12,606 $— $824 $139 
The decrease in the nonaccrual balance in the above schedule, compared to June 30, 2021, is mainly due to the payoff of two commercial real estate loan relationships totaling $5.1 million during the nine month period.
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 $10,691 and $11,088 of TDRs that were performing under their restructured payment terms as of March 31, 2022 and June 30, 2021, respectively.
The following table presents a breakdown of the provision (benefit) for credit losses included in our Consolidated Statements of Income:
Three Months EndedNine Months Ended
March 31,March 31,
2022202120222021
Provision (benefit) for credit losses:
Loans$(640)$(3,970)$(4,415)$(6,370)
Off-balance-sheet credit exposure650 (130)415 10 
Commercial paper(55)— (5)180 
Total provision (benefit) for credit losses$(45)$(4,100)$(4,005)$(6,180)
The following tables present analyses of the ACL on loans by segment for the periods indicated below:
Three Months EndedNine Months Ended
March 31, 2022March 31, 2022
CommercialRetail
Consumer
TotalCommercialRetail
Consumer
Total
Balance at beginning of period$22,968 $7,965 $30,933 $24,746 $10,722 $35,468 
Provision (benefit) for credit losses(1,295)655 (640)(2,058)(2,357)(4,415)
Charge-offs(261)(73)(334)(2,011)(179)(2,190)
Recoveries910 165 1,075 1,645 526 2,171 
Net (charge-offs) recoveries649 92 741 (366)347 (19)
Balance at end of period$22,322 $8,712 $31,034 $22,322 $8,712 $31,034 
20

HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)
Three Months EndedNine Months Ended
March 31, 2021March 31, 2021
CommercialRetail
Consumer
TotalCommercialRetail
Consumer
Total
Balance at beginning of period$24,899 $14,945 $39,844 $21,116 $6,956 $28,072 
Impact of adoption ASU 2016-13— — — 4,073 10,736 14,809 
Provision (benefit) for credit losses(1,750)(2,220)(3,970)(1,750)(4,620)(6,370)
Charge-offs(107)(318)(425)(1,510)(1,253)(2,763)
Recoveries356 254 610 1,469 842 2,311 
Net (charge-offs) recoveries249 (64)185 (41)(411)(452)
Balance at end of period$23,398 $12,661 36,059 $23,398 $12,661 $36,059 
The following tables present ending balances of loans and the related ACL, by segment and class for the periods indicated below:
Allowance for Credit LossesTotal Loans Receivable
Loans
Individually
Evaluated
Loans
Collectively
Evaluated
TotalLoans
Individually
Evaluated
Loans
Collectively
Evaluated
Total
March 31, 2022
Commercial loans:
Commercial real estate$— $9,157 $9,157 $284 $1,101,900 $1,102,184 
Construction and development— 3,680 3,680 — 251,668 251,668 
Commercial and industrial1,311 1,593 2,904 2,150 165,192 167,342 
Equipment finance— 6,284 6,284 — 378,629 378,629 
Municipal finance— 297 297 — 130,260 130,260 
PPP loans— — — — 2,756 2,756 
Retail consumer loans:
One-to-four family— 4,400 4,400 2,493 345,452 347,945 
HELOCs - originated— 1,409 1,409 — 128,445 128,445 
HELOCs - purchased— 295 295 — 26,911 26,911 
Construction and land/lots— 903 903 — 72,735 72,735 
Indirect auto finance— 1,586 1,586 — 83,903 83,903 
Consumer— 119 119 — 6,760 6,760 
Total$1,311 $29,723 $31,034 $4,927 $2,694,611 $2,699,538 
21

HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)
Allowance for Loan LossesTotal Loans Receivable
Loans
Individually
Evaluated
Loans
Collectively
Evaluated
TotalLoans
Individually
Evaluated
Loans
Collectively
Evaluated
Total
June 30, 2021
Commercial loans:
Commercial real estate$456 $12,826 $13,282 $5,729 $1,136,547 $1,142,276 
Construction and development— 1,801 1,801 80 179,347 179,427 
Commercial and industrial2,583 2,592 760 140,581 141,341 
Equipment finance— 6,537 6,537 275 317,645 317,920 
Municipal finance— 534 534 — 140,421 140,421 
PPP loans— — — — 46,650 46,650 
Retail consumer loans:
One-to-four family5,407 5,409 1,977 404,572 406,549 
HELOCs - originated— 1,512 1,512 — 130,225 130,225 
HELOCs - purchased— 452 452 — 38,976 38,976 
Construction and land/lots— 812 812 — 66,027 66,027 
Indirect auto finance— 2,367 2,367 — 115,093 115,093 
Consumer— 170 170 — 8,362 8,362 
Total$467 $35,001 $35,468 $8,821 $2,724,446 $2,733,267 
In estimating ECL, ASC 326 prescribes that if foreclosure is probable, a CDA is required to be measured at the fair value of collateral, but as a practical expedient, if foreclosure is not probable, fair value measurement is optional. For those CDA loans measured at the fair value of collateral, a credit loss expense is recorded for loan amounts in excess of fair value. The following tables provide a breakdown between loans identified as CDAs and non-CDAs, by segment and class, and securing collateral, as well as collateral coverage for those loans for the periods indicated below:
Type of Collateral and Extent to Which Collateral Secures Financial Assets
March 31, 2022Residential PropertyInvestment PropertyCommercial PropertyBusiness AssetsFinancial Assets Not Considered Collateral DependentTotal
Commercial loans:
Commercial real estate$— $— $282 $— $1,101,902 $1,102,184 
Construction and development— — — — 251,668 251,668 
Commercial and industrial— — — 1,311 166,031 167,342 
Equipment finance— — — — 378,629 378,629 
Municipal finance— — — — 130,260 130,260 
PPP loans— — — — 2,756 2,756 
Retail consumer loans:
One-to-four family1,347 — — — 346,598 347,945 
HELOCs - originated— — — — 128,445 128,445 
HELOCs - purchased— — — — 26,911 26,911 
Construction and land/lots— — — — 72,735 72,735 
Indirect auto finance— — — — 83,903 83,903 
Consumer— — — — 6,760 6,760 
Total$1,347 $— $282 $1,311 $2,696,598 $2,699,538 
Total Collateral Value$2,285 $— $288 $— 
22

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
June 30, 2021Residential PropertyInvestment PropertyCommercial PropertyBusiness AssetsFinancial Assets Not Considered Collateral DependentTotal
Commercial loans:
Commercial real estate$— $3,421 $2,308 $— $1,136,547 $1,142,276 
Construction and development— 80 — — 179,347 179,427 
Commercial and industrial— — — 25 141,316 141,341 
Equipment finance— — — — 317,920 317,920 
Municipal finance— — — — 140,421 140,421 
PPP loans— — — — 46,650 46,650 
Retail consumer loans:
One-to-four family807 — — — 405,742 406,549 
HELOCs - originated— — — — 130,225 130,225 
HELOCs - purchased— — — — 38,976 38,976 
Construction and land/lots— — — — 66,027 66,027 
Indirect auto finance— — — — 115,093 115,093 
Consumer— — — — 8,362 8,362 
Total$807 $3,501 $2,308 $25 $2,726,626 $2,733,267 
Total Collateral Value$1,160 $3,602 $2,723 $26 
23

HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)

The following table presents a breakdown of the types of concessions made on TDRs by loan class for the period indicated below:
Three Months Ended March 31,
20222021
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
Other TDRs:      
Commercial:
Commercial and industrial$841 $835 — $— $— 
Retail consumer:      
One-to-four family37 37 212 212 
HELOCs - originated— — — 53 74 
Indirect auto finance28 32 
Total$883 $877 $293 $318 
Nine Months Ended March 31,
20222021
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:
Retail consumer:
One-to-four family$124 $121 — $— $— 
Total below market interest rate124 121 — — — 
Extended payment terms:      
Retail consumer:      
One-to-four family35 35 — — — 
HELOCs - originated50 50 — — — 
Total extended payment terms85 85 — — — 
Other TDRs:      
Commercial:
Commercial real estate— — — 4,408 4,407 
Commercial and industrial841 835 — — — 
Retail consumer:      
One-to-four family93 92 269 261 
HELOCs - originated18 18 53 74 
Construction and land/lots— — — 225 219 
Indirect auto finance89 82 11 150 110 
Total other TDRs11 1,041 1,027 19 5,105 5,071 
Total11 $1,250 $1,233 19 $5,105 $5,071 










24

HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)
The following table presents 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 March 31,
20222021
Number of
Loans
Recorded
Investment
Number of
Loans
Recorded
Investment
Other TDRs:    
Retail consumer:    
Indirect auto finance— $— $
Total— $— $
Nine Months Ended March 31,
20222021
Number of
Loans
Recorded
Investment
Number of
Loans
Recorded
Investment
Other TDRs:    
Retail consumer:    
Indirect auto finance$44 $26 
Total$44 $26 
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.

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 March 31, 2022, the allowance for credit losses on off-balance-sheet credit exposures included in other liabilities was $2,738.
Modifications in Response to COVID-19
Beginning in March 2020, the Company began offering short-term loan modifications to assist borrowers during the COVID-19 pandemic. The CARES Act along with a joint agency statement issued by banking agencies and confirmed by FASB staff that short-term modifications made in response to COVID-19 were not considered TDRs; however, the relief offered by the CARES Act ended December 31, 2021.
The Bank offered payment and financial relief programs for borrowers impacted by COVID-19. These programs included loan payment deferrals for up to 90 days (which could be renewed for another 90 days under certain circumstances), waived late fees, and suspension of foreclosure proceedings and repossessions. Since March 2020, the Company received numerous requests from borrowers for some type of payment relief; however, the majority of these payment deferrals have ended and borrowers are again making regular loan payments.
As of March 31, 2022, the Company had no loans with full principal and interest payment deferrals related to COVID-19 which had been granted prior to January 1, 2022, compared to $107 at June 30, 2021. All loans placed on full payment deferral during the pandemic have come out of deferral and borrowers are either making regular loan payments or interest-only payments. As of March 31, 2022, the Company had $9,605 in commercial loan deferrals on interest-only payments compared to $78,850 at June 30, 2021.
25

HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)
7.    Net Income per Share
The following is a reconciliation of the numerator and denominator of basic and diluted net income per share of common stock as of the dates indicated:
Three Months Ended March 31,Nine Months Ended March 31,
2022202120222021
Numerator:
Net income$8,023 $7,869 $29,628 $23,083 
Allocation of earnings to participating securities(69)(72)(254)(209)
Numerator for basic EPS - Net income available to common stockholders$7,954 $7,797 $29,374 $22,874 
Effect of dilutive securities:
Dilutive effect of participating securities— — 
Numerator for diluted EPS $7,954 $7,799 $29,374 $22,876 
Denominator:    
Weighted-average common shares outstanding - basic15,523,813 15,979,590 15,666,093 16,139,059 
Dilutive effect of assumed exercises of stock options269,199 506,128 331,284 200,071 
Weighted-average common shares outstanding - diluted15,793,012 16,485,718 15,997,377 16,339,130 
Net income per share - basic$0.51 $0.49 $1.87 $1.42 
Net income per share - diluted$0.51 $0.48 $1.84 $1.40 
Potential dilutive shares are excluded from the computation of earnings per share if their effect is anti-dilutive. There were 47,850 and 95,350 stock options that were anti-dilutive for the three and nine months ended March 31, 2022, respectively. There were 524,850 stock options that were anti-dilutive for each of the three and nine months ended March 31, 2021.
8.    Equity Incentive Plan
The Company provides stock-based awards through the 2013 Omnibus Incentive Plan, which provides 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. The cost of equity-based awards under the 2013 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. Shares of common stock issued under the plan would 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 three and nine months ended March 31, 2022 and 2021, respectively:
Three Months Ended March 31,Nine Months Ended March 31,
2022202120222021
Share-based compensation expense$507 $489 $1,407 $1,449 
Tax benefit120 115 332 341 
26

HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)
The table below presents stock option activity and related information for the nine months ended March 31, 2022 and 2021:
OptionsWeighted-
Average
Exercise
Price
Remaining
Contractual
Life
(Years)
Aggregate
Intrinsic
Value
Options outstanding at June 30, 20201,615,500 $18.12 4.4$1,711 
Granted44,750 22.92 — — 
Exercised(172,866)14.40 — — 
Forfeited(26,900)25.77 — — 
Options outstanding at March 31, 20211,460,484 $18.57 3.9$9,268 
Exercisable at March 31, 20211,220,734 $17.24 3.2$9,152 
Non-vested at March 31, 2021239,750 $25.31 7.7$116 
Options outstanding at June 30, 20211,319,456 $19.07 3.9$11,657 
Granted42,850 31.35 — — 
Exercised(413,636)14.70 — — 
Forfeited(20,800)23.17 — — 
Options outstanding at March 31, 2022927,870 $21.49 4.3$7,541 
Exercisable at March 31, 2022756,720 $20.24 3.5$7,028 
Non-vested at March 31, 2022171,150 $26.99 7.7$513 
Assumptions used in estimating the fair value of options granted during the nine months ended March 31, 2022 and 2021 are presented below:
March 31, 2022
March 31, 2021
Weighted-average volatility28.02 %28.30 %
Expected dividend yield1.12 %1.35 %
Risk-free interest rate1.90 %0.72 %
Expected life (years)6.56.5
Weighted-average fair value of options granted$8.68 $5.61 
At March 31, 2022, the Company had $1,076 of unrecognized compensation expense related to 171,150 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 1.8 years at March 31, 2022. At March 31, 2021, the Company had $1,460 of unrecognized compensation expense related to 239,750 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 2.0 years at March 31, 2021.
The table below presents restricted stock award activity and related information:
Restricted
Stock Awards
Weighted-
Average Grant
Date Fair Value
Aggregate
Intrinsic
Value
Non-vested at June 30, 2020144,046 $25.89 $2,305 
Granted56,547 22.92 — 
Vested(45,296)25.17 — 
Forfeited(7,650)25.65 — 
Non-vested at March 31, 2021147,647 $24.98 $2,119 
Non-vested at June 30, 2021151,575 $25.06 $4,229 
Granted49,679 31.35 — 
Vested(53,744)25.22 — 
Forfeited(12,000)24.90 — 
Non-vested at March 31, 2022135,510 $27.41 $2,817 
The table above includes non-vested performance-based restricted stock units totaling 33,218 and 28,852 at March 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.
27

HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)
At March 31, 2022, unrecognized compensation expense was $3,137 related to 135,510 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 1.9 years at March 31, 2022. At March 31, 2021, unrecognized compensation expense was $3,196 related to 147,647 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 1.9 years at March 31, 2021.
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 March 31, 2022 and June 30, 2021, respectively, loan commitments (excluding $290,532 and $277,600 of undisbursed portions of construction loans) totaled $95,848 and $123,463 of which $29,156 and $45,270 were variable rate commitments and $66,692 and $78,193 were fixed rate commitments. The fixed rate loans had interest rates ranging from 1.08% to 8.65% at March 31, 2022 and 2.50% to 8.36% at June 30, 2021, 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 $498,315 and $530,505 at March 31, 2022 and June 30, 2021, 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. The fair value of these interest rate lock commitments was not material at March 31, 2022 or June 30, 2021.
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 and South 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 March 31, 2022 and June 30, 2021 were $17,492 and $8,681, respectively. There was no liability recorded for these letters of credit at March 31, 2022 or June 30, 2021, respectively.
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
The Company utilizes fair value measurements to record fair value adjustments to certain assets and to determine fair value disclosures. Debt securities available for sale are recorded at fair value on a recurring basis. Additionally, from time to time, the Company may be required to record at fair value other assets on a nonrecurring basis, such as impaired loans. These nonrecurring fair value adjustments typically involve application of lower of cost or market accounting or write-downs of individual assets. The Company measures the fair value of loans receivable under the exit price notion. The fair value of nonperforming loans is based on the underlying value of the collateral.
Fair Value Hierarchy
The Company groups assets at fair value in three levels, based on the markets in which the assets are traded and the reliability of the assumptions used to determine fair value. These levels are:
Level 1:    Valuation is based upon quoted prices for identical instruments traded in active markets.
Level 2:    Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market.
Level 3:    Valuation is generated from model-based techniques that use at least one significant assumption not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset. Valuation techniques include use of option pricing models, discounted cash flow models and similar techniques.
28

HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)
The methods of determining the fair value of assets and liabilities presented in this note are consistent with the methodologies disclosed in Note 20 of the 2021 Form 10-K.
Financial Assets Recorded at Fair Value
The following table presents financial assets measured at fair value on a recurring basis at the dates indicated:
March 31, 2022
TotalLevel 1Level 2Level 3
U.S government agencies$18,576 $— $18,576 $— 
MBS, residential34,063 — 34,063 — 
Municipal bonds5,667 — 5,667 — 
Corporate bonds48,009 — 48,009 — 
Total$106,315 $— $106,315 $— 
June 30, 2021
TotalLevel 1Level 2Level 3
U.S government agencies$19,073 $— $19,073 $— 
MBS, residential43,404 — 43,404 — 
Municipal bonds9,551 — 9,551 — 
Corporate bonds84,431 — 84,431 — 
Total$156,459 $— $156,459 $— 
There were no transfers between levels during the nine months ended March 31, 2022 and 2021.
The following table presents financial assets measured at fair value on a non-recurring basis at the dates indicated:
March 31, 2022
TotalLevel 1Level 2Level 3
Collateral dependent loans:
Commercial real estate$— $— $— $— 
Commercial and industrial164 — — 164 
Total$164 $— $— $164 
June 30, 2021
TotalLevel 1Level 2Level 3
Collateral dependent loans:
Commercial real estate$4,841 $— $— $4,841 
Equipment finance275 — — 275 
Total$5,116 $— $— $5,116 
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.

29

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 March 31, 2022 and June 30, 2021, are summarized below:
 March 31, 2022
Carrying
Value
Fair
Value
Level 1Level 2Level 3
Assets:
Cash and cash equivalents$52,050 $52,050 $52,050 $— $— 
Commercial paper
312,918 312,918 312,918 — — 
Certificates of deposit in other banks
28,125 28,125 — 28,125 — 
Debt securities available for sale106,315 106,315 — 106,315 — 
Loans held for sale
85,263 86,338 — — 86,338 
Loans, net
2,668,504 2,620,750 — — 2,620,750 
FHLB stock
3,038 N/AN/AN/AN/A
FRB stock
7,413 N/AN/AN/AN/A
SBIC investments
12,589 12,589 — — 12,589 
Accrued interest receivable
7,980 7,980 — 553 7,427 
Liabilities:
Noninterest-bearing and NOW accounts1,356,921 1,356,921 — 1,356,921 — 
Money market accounts
1,026,595 1,026,595 — 1,026,595 — 
Savings accounts
232,831 232,831 — 232,831 — 
Certificates of deposit
442,810 439,407 — 439,407 — 
Borrowings
30,000 29,997 — 29,997 — 
Accrued interest payable
45 45 — 45 — 
 June 30, 2021
Carrying
Value
Fair
Value
Level 1Level 2Level 3
Assets:
Cash and cash equivalents$50,990 $50,990 $50,990 $— $— 
Commercial paper
189,596 189,596 189,596 — — 
Certificates of deposit in other banks
40,122 40,122 — 40,122 — 
Debt securities available for sale156,459 156,459 — 156,459 — 
Loans held for sale
93,539 94,779 — — 94,779 
Loans, net
2,697,799 2,668,570 — — 2,668,570 
FHLB stock
6,153 N/AN/AN/AN/A
FRB stock
7,386 N/AN/AN/AN/A
SBIC investments
10,171 10,171 — — 10,171 
Accrued interest receivable
7,933 7,933 52 542 7,339 
Liabilities:
Noninterest-bearing and NOW accounts1,281,372 1,281,372 — 1,281,372 — 
Money market accounts
975,001 975,001 — 975,001 — 
Savings accounts
226,391 226,391 — 226,391 — 
Certificates of deposit
472,777 474,397 — 474,397 — 
Borrowings
115,000 115,000 — 115,000 — 
Accrued interest payable
52 52 — 52 — 
The Company had off-balance sheet financial commitments, which included approximately $902,187 and $940,249 of commitments to originate loans, undisbursed portions of construction loans, unused lines of credit, and standby letters of credit at March 31, 2022 and June 30, 2021, respectively (see "Note 9 – Commitments and Contingencies"). Since these commitments are based on current rates, the carrying amount approximates the fair value.

30

HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)
11.    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:
March 31, 2022June 30, 2021
ROU assets$6,172 $5,498 
Lease liabilities6,961 5,926 
Weighted-average remaining lease terms (years)10.789.49
Weighted-average discount rate2.89 %3.18 %
The following schedule summarizes aggregate future minimum lease payments under these operating leases at March 31, 2022:
Fiscal year ending June 30:
Remaining 2022$1,573 
20231,293 
2024847 
2025541 
2026414 
Thereafter3,653 
Total undiscounted minimum lease payments8,321 
Less: amount representing interest(1,360)
Total lease liability$6,961 
The following table presents components of operating lease expense for the three and nine months ended March 31, 2022 and 2021:
Three Months Ended March 31,Nine Months Ended March 31,
2022202120222021
Operating lease cost (included in occupancy expense, net)$347 $398 $1,215 $1,192 
Variable lease cost (included in occupancy expense, net)13 18 
Sublease income (included in other, noninterest income)(60)(33)(154)(147)
Total operating lease expense, net$294 $371 $1,074 $1,063 
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 March 31, 2022 and June 30, 2021 and is included in other assets. The corresponding lease liability totaled $1,773 and $1,804 at March 31, 2022 and June 30, 2021, respectively, and is included in other liabilities. For the three and nine months ended March 31, 2022, interest expense on the lease liability totaled $23 and $70, respectively. The finance lease has a maturity date of July 2028 and a discount rate of 5.18%.
31

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 March 31, 2022:
Fiscal year ending June 30:
Remaining 2022$33 
2023134 
2024145 
2025146 
2026146 
Thereafter1,702 
Total undiscounted minimum lease payments2,306 
Less: amount representing interest(533)
Total lease liability$1,773 
Supplemental lease cash flow information for the nine months ended March 31, 2022 and 2021:
Nine Months Ended March 31,
2022
2021
ROU assets - noncash additions (operating leases)$1,186 $599 
Cash paid for amounts included in the measurement of lease liabilities (operating leases)1,281 1,632 
Cash paid for amounts included in the measurement of lease liabilities (finance leases)100 100 
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, medical, 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 $21,117 and $25,932 with a residual value of $12,941 and $15,330 as of March 31, 2022 and June 30, 2021, respectively.
The following table presents total equipment finance operating lease income and depreciation expense for the three and nine months ended March 31, 2022 and 2021:
Three Months Ended March 31,Nine Months Ended March 31,
2022
2021
2022
2021
Operating lease income$1,661 $1,432 $4,920 $4,107 
Depreciation expense1,339 1,417 4,221 4,371 
The following schedule summarizes aggregate future minimum lease payments to be received at March 31, 2022:
Fiscal year ending June 30:
Remaining 2022$1,436 
20234,989 
20242,895 
2025889 
2026246 
Thereafter13 
Total of future minimum lease payments$10,468 

32

HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)
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 March 31, 2022 and 2021, total interest income on equipment finance leases totaled $763 and $638, respectively. For the nine months ended March 31, 2022 and 2021, total interest income on equipment finance leases totaled $2,275 and $1,736, respectively.
The lease receivable component of finance lease net investment included within equipment finance class of financing receivables was $62.6 million and $63.3 million at March 31, 2022 and June 30, 2021, respectively.

The following schedule summarizes aggregate future minimum finance lease payments to be received at March 31, 2022:
Fiscal year ending June 30:
Remaining 2022$5,853 
202321,226 
202418,262 
202513,038 
20268,405 
Thereafter4,299 
Total undiscounted minimum lease payments71,083 
Less: amount representing interest(8,476)
Total lease receivable$62,607 

33


Item 2.    Management's Discussion and Analysis of Financial Condition and Results of Operations
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 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 duration of the impact on public health, the U.S. and global economies, and consumer and corporate customers, including economic activity, employment levels and market liquidity;
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;
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 Board of Governors of the Federal Reserve System (“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;
34


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 Financial Accounting Standards Board;
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 our 2021 Form 10-K.
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" and the "Company" refer to HomeTrust Bancshares, Inc. and its consolidated subsidiary, HomeTrust Bank (the "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 (the “Conversion”). As a bank holding company and financial holding company, we are regulated by the Federal Reserve. 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 12 regional banks in the FHLB System. Our headquarters is located in Asheville, North Carolina.
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 loans, construction and land/lot loans, indirect automobile loans, 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. Deposits and borrowings are our primary source of funds for our lending and investing activities.
We are significantly affected by prevailing economic conditions, as well as government policies and regulations concerning, among other things, monetary and fiscal affairs, housing and financial institutions. Deposit flows are influenced by a number of factors, including interest rates paid on competing time deposits, other investments, account maturities, and the overall level of personal income and savings. Lending activities are influenced by the demand for funds, the number and quality of lenders, and regional economic cycles.
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 is paid 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, lease income, gain on the sale of loans held for sale, and gains and losses from sales of debt securities.
An offset to net interest income is the provision for credit losses which is required to establish and maintain the ACL. All financial assets measured at amortized cost and off balance sheet credit exposures, including loans, investment securities and unfunded commitments are evaluated for credit losses. See "Note 1 – Summary of Significant Accounting Policies" in Item 1 of our 2021 Form 10-K for further discussion.
Our noninterest expenses consist primarily of salaries and employee benefits, occupancy expense, and computer services. 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.
Our geographic footprint includes seven markets obtained through numerous strategic acquisitions as well as two de novo commercial loan offices. Looking forward, we believe opportunities currently exist within our market areas and in surrounding market areas to grow our franchise. While COVID-19 has dampened our growth activities, we believe as the local and global economies return to normalcy the Company remains in a position to create growth. We may also seek to expand our franchise through the selective acquisition of individual branches, loan purchases and, to a lesser degree, whole bank transactions that meet our investment and market objectives. We will continue to be disciplined as it pertains to future expansion focusing primarily on growth in our current and surrounding market areas.
At March 31, 2022, we had over 30 locations in North Carolina (including the Asheville metropolitan area, the "Piedmont" region, Charlotte, and Raleigh/Cary), Upstate South Carolina (Greenville), East Tennessee (including Kingsport/Johnson City, Knoxville, and Morristown) and
35


Southwest Virginia (including the Roanoke Valley). During the quarter ended September 30, 2021, we closed nine branches located in North Carolina, Tennessee, and Virginia.
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.
Non-GAAP Financial Measures

In addition to results presented in accordance with GAAP, this report contains certain non-GAAP financial measures, which include: tangible book value, tangible book value per share and tangible equity to tangible assets ratio. Management has presented the non-GAAP financial measures in this discussion and analysis because it believes including these items provides useful and comparative information to assess trends in our core operations while facilitating the comparison of the quality and composition of our earnings over time and in comparison to our competitors. However, these non-GAAP financial measures are supplemental, are not audited and are not a substitute for operating results or any analysis determined in accordance with GAAP. Where applicable, we have also presented comparable earnings information using GAAP financial measures. Because not all companies use the same calculations, our presentation may not be comparable to other similarly titled measures as calculated by other companies. See “Comparison of Results of Operations" for more detailed information about our financial performance for the three and nine months ended March 31, 2022 and 2021.

Set forth below is a reconciliation to GAAP of tangible book value and tangible book value per share:
As of
(Dollars in thousands, except per share data)March 31,June 30,March 31,
202220212021
Total stockholders' equity$395,131 $396,519 $406,452 
Less: goodwill, core deposit intangibles, net of taxes25,742 25,902 26,002 
Tangible book value$369,389 $370,617 $380,450 
Common shares outstanding15,978,262 16,636,483 16,655,347 
Tangible book value per share$23.12 $22.28 $22.84 
Book value per share$24.73 $23.83 $24.40 

Set forth below is a reconciliation to GAAP of tangible equity to tangible assets:
As of
(Dollars in thousands)March 31,June 30,March 31,
202220212021
Tangible equity (1)
$369,389 $370,617 $380,450 
Total assets3,541,785 3,524,723 3,648,613 
Less: goodwill, core deposit intangibles, net of taxes25,742 25,902 26,002 
Total tangible assets$3,516,043 $3,498,821 $3,622,611 
Tangible equity to tangible assets10.51 %10.59 %10.50 %
_________________________________________________________________
(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.

36


Comparison of Financial Condition at March 31, 2022 and June 30, 2021
General.  Total assets and liabilities increased by $17.1 million and $18.5 million to $3.5 billion and $3.1 billion, respectively, at March 31, 2022 as compared to June 30, 2021. Deposits increased by $103.6 million, or 3.5%, which were used to continue paying down borrowings during the period. In addition, excess liquidity from a $50.1 million, or 32.0%, decrease in debt securities available for sale, a $33.7 million, or 1.2%, decrease in loans receivable, a $12.0 million, or 29.9%, decrease in certificates of deposit in other banks, and a $8.3 million, or 8.8% decrease in loans held for sale was invested in commercial paper which increased by $123.3 million, or 65.0%, during the period.
Cash and cash equivalents and commercial paper.  Total cash and cash equivalents increased $1.1 million, or 2.1%, to $52.1 million at March 31, 2022 from $51.0 million at June 30, 2021. Commercial paper increased $123.3 million, or 65.0%, to $312.9 million at March 31, 2022 from $189.6 million at June 30, 2021.
Debt securities available for sale and other investments.  Debt securities available for sale decreased $50.1 million, or 32.0%, to $106.3 million at March 31, 2022 from $156.5 million at June 30, 2021. At March 31, 2022, certificates of deposit in other banks decreased $12.0 million, or 29.9%, to $28.1 million compared to $40.1 million at June 30, 2021. The decrease in certificates of deposit in other banks was due to $13.0 million in maturities partially offset by $1.0 million in purchases. All certificates of deposit in other banks are fully insured by the FDIC. Other investments at cost decreased $670,000, or 2.8%, to $23.0 million at March 31, 2022 from $23.7 million at June 30, 2021. Other investments at cost included SBIC investments, FRB stock, and FHLB stock totaling $12.6 million, $7.4 million, and $3.0 million, respectively. The overall decrease was driven by a $3.1 million, or 50.6%, reduction in FHLB stock as a result of the paydowns in borrowings.
Loans held for sale. Loans held for sale decreased $8.2 million, or 8.8%, to $85.3 million at March 31, 2022 from $93.5 million at June 30, 2021. The decrease was primarily driven by a $17.2 million, or 39.7%, decrease in mortgage loans held for sale, offset by a $5.0 million, or 8.7%, increase in HELOCs originated for sale and a $4.0 million, or 94.8%, increase in SBA loans held for sale.
Loans, net of deferred loan fees and costs.  Total loans decreased $33.7 million, or 1.2%, to $2.7 billion at March 31, 2022 from the balance at June 30, 2021. The decrease in loans was driven by PPP forgiveness of $43.9 million and a $98.5 million, or 12.9%, decrease in retail consumer loans primarily within the one-to-four family loans and indirect auto loan portfolios. This decrease was partially offset by a $108.7 million, or 5.7%, increase in commercial loans (excluding PPP loans) as the Company continues its focus on the growth of the commercial loan segment.
Commercial and retail consumer loans consist of the following at the dates indicated:
As ofPercent of total
(Dollars in thousands)March 31,June 30,ChangeMarch 31,June 30,
20222021$%20222021
Commercial loans:
Commercial real estate$1,102,184 $1,142,276 $(40,092)(3.5)%40.8 %41.8 %
Construction and development251,668 179,427 72,241 40.3 9.3 6.6 
Commercial and industrial167,342 141,341 26,001 18.4 6.2 5.2 
Equipment finance378,629 317,920 60,709 19.1 14.0 11.6 
Municipal leases130,260 140,421 (10,161)(7.2)4.8 5.1 
PPP loans2,756 46,650 (43,894)(94.1)0.1 1.7 
Total commercial loans2,032,839 1,968,035 64,804 3.3 75.3 72.0 
Retail consumer loans:
One-to-four family347,945 406,549 (58,604)(14.4)12.9 14.9 
HELOCs - originated128,445 130,225 (1,780)(1.4)4.8 4.8 
HELOCs - purchased26,911 38,976 (12,065)(31.0)1.0 1.4 
Construction and land/lots72,735 66,027 6,708 10.2 2.7 2.4 
Indirect auto finance83,903 115,093 (31,190)(27.1)3.1 4.2 
Consumer6,760 8,362 (1,602)(19.2)0.3 0.3 
Total retail consumer loans666,699 765,232 (98,533)(12.9)24.7 28.0 
Total loans$2,699,538 $2,733,267 $(33,729)(1.2)%100.0 %100.0 %
Asset quality. Nonperforming assets decreased by $7.0 million, or 54.6%, to $5.8 million, or 0.16%, of total assets at March 31, 2022 compared to $12.8 million, or 0.36% of total assets at June 30, 2021. The significant decrease from June 30, 2021 was primarily a result of the payoff of two commercial real estate loan relationships totaling $5.1 million during the nine month period. Nonperforming assets included $5.8 million in nonaccruing loans and no REO at March 31, 2022, compared to $12.6 million and $188,000 in nonaccruing loans and REO, respectively, at June 30, 2021. Nonperforming loans to total loans was 0.22% at March 31, 2022 and 0.46% at June 30, 2021.
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As of March 31, 2022, we had no loans with full principal and interest payment deferrals related to COVID-19 which had been granted prior to January 1, 2022, compared to $107,000 at June 30, 2021. All loans placed on full payment deferral during the pandemic have come out of deferral and borrowers are either making regular loan payments or interest-only payments. As of March 31, 2022, the Company had $9.6 million in commercial loan deferrals on interest-only payments compared to $78.9 million at June 30, 2021.
The ratio of classified assets to total assets decreased to 0.61% at March 31, 2022 from 0.76% at June 30, 2021. Classified assets decreased $5.0 million, or 18.5%, to $21.7 million at March 31, 2022 compared to $26.7 million at June 30, 2021 primarily due to the payoff of two commercial real estate loan relationships discussed above.
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 March 31, 2022, there were $4.9 million in loans individually evaluated. For more information on these individually evaluated loans, see "Note 6 - 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 $31.0 million, or 1.15%, of total loans at March 31, 2022 compared to $35.5 million, or 1.30%, of total loans at June 30, 2021. The overall decrease was driven by lower expected credit losses estimated by management based on an improving economic outlook.
There was a net benefit for credit losses of $4.0 million for the nine months ended March 31, 2022, compared to a $6.2 million net benefit for the corresponding period in fiscal year 2021. Net loan charge-offs totaled $19,000 for the nine months ended March 31, 2022, compared to net charge-offs of $452,000 for the same period last year. Net charge-offs as a percentage of average loans was 0.00% for the nine months ended March 31, 2022 compared to net charge-offs of 0.02% for the corresponding period last year.
The allowance as a percentage of nonperforming loans increased to 534.06% at March 31, 2022 from 281.38% at June 30, 2021.
Deferred income taxes. Deferred income taxes decreased $4.4 million, or 26.1%, to $12.5 million at March 31, 2022 from $16.9 million at June 30, 2021. The decrease was primarily a result of a release and reduction of the ACL, depreciation on new equipment finance leases, and bonus tax depreciation on new premises.
Other assets. Other assets decreased $2.5 million, or 4.4%, to $55.0 million at March 31, 2022 from $57.5 million at June 30, 2021. The decrease was primarily driven by lower net operated lease assets and current taxes receivable, offset by a reclassification of assets held for sale from premises and equipment related to the nine branch closures.
Deposits.  Deposits increased $103.6 million, or 3.5%, during the nine months ended March 31, 2022 to $3.1 billion, driven by our successful efforts to increase core deposits which increased $133.6 million, or 5.4%. Partially offsetting this deposit increase was a decrease of $30.0 million, or 6.3%, in certificates of deposit as part of our managed runoff of the portfolio.
The following table sets forth our deposits by type of deposit account as of the dates indicated:
As ofPercent of total
(Dollars in thousands)March 31,June 30,ChangeMarch 31,June 30,
20222021$%20222021
Core deposits:
     Noninterest-bearing accounts$704,344 $636,414 $67,930 10.7 %23.0 %21.5 %
     NOW accounts652,577 644,958 7,619 1.2 21.3 21.8 
     Money market accounts1,026,595 975,001 51,594 5.3 33.6 33.0 
     Savings accounts232,831 226,391 6,440 2.8 7.6 7.7 
Core deposits2,616,347 2,482,764 133,583 5.4 85.5 84.0 
Certificates of deposit442,810 472,777 (29,967)(6.3)14.5 16.0 
Total$3,059,157 $2,955,541 $103,616 3.5 %100.0 %100.0 %
Borrowings.  Borrowings decreased $85.0 million, or 73.9%, to $30.0 million at March 31, 2022 compared to $115.0 million at June 30, 2021 as excess liquidity was used to pay down borrowings.
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Average Balances, Interest and Average Yield/Cost
Our operating results depend primarily on our net interest income, which is the difference between interest income on interest-earning assets, including loans and securities, and interest expense incurred on interest-bearing liabilities, including deposits and other borrowed funds. Interest rate fluctuations, as well as changes in the amount and type of interest-earning assets and interest-bearing liabilities, combine to affect net interest income. Our net interest income is affected by changes in the amount and mix of interest-earning assets and interest-bearing liabilities, referred to as a "volume change". It is also affected by changes in yields earned on interest-earning assets and rates paid on interest-bearing liabilities, referred to as a "rate change".
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.




39


The following table presents the distribution of average assets, liabilities and equity, as well as interest income and fees on average interest-earning assets and interest expense and interest-bearing liabilities:
For the Three Months Ended March 31,
20222021
(Dollars in thousands)Average
Balance
Outstanding
Interest
Earned/
Paid
Yield/
Rate
Average
Balance
Outstanding
Interest
Earned/
Paid
Yield/
Rate
Assets:
Interest-earning assets:
Loans receivable(1)(2)
$2,791,650 $26,936 3.91 %$2,779,094 $27,955 4.08 %
Commercial paper and deposits in other banks342,878 563 0.67 522,256 611 0.47 
Debt securities available for sale111,874 384 1.39 153,871 496 1.31 
Other interest-earning assets(3)
22,614 632 11.33 39,184 585 6.05 
Total interest-earning assets3,269,016 28,515 3.54 3,494,405 29,647 3.44 
Other assets258,126 258,858 
Total assets$3,527,142 $3,753,263 
Liabilities and equity:
Interest-bearing deposits:
Interest-bearing checking accounts$650,072 $310 0.19 %$637,381 $391 0.25 %
Money market accounts1,020,734 340 0.14 907,228 373 0.17 
Savings accounts227,936 40 0.07 212,809 39 0.08 
Certificate accounts441,314 461 0.42 516,221 1,193 0.94 
Total interest-bearing deposits2,340,056 1,151 0.20 2,273,639 1,996 0.36 
Borrowings33,599 0.05 465,111 1,632 1.42 
  Total interest-bearing liabilities2,373,655 1,155 0.20 2,738,750 3,628 0.54 
Noninterest-bearing deposits714,753 553,045 
Other liabilities39,374 56,655 
Total liabilities3,127,782 3,348,450 
Stockholders' equity399,360 404,813 
Total liabilities and stockholders' equity$3,527,142 $3,753,263 
Net earning assets$895,361  $755,655 
Average interest-earning assets to
average interest-bearing liabilities137.72 %127.59 %
Tax-equivalent:
Net interest income$27,360 $26,019 
Interest rate spread3.34 %2.90 %
Net interest margin(4)
3.39 %3.02 %
Non-tax-equivalent:
Net interest income$27,040 $25,693 
Interest rate spread3.30 %2.87 %
Net interest margin(4)
3.35 %2.98 %
_________________________________________________________________
(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 $320 and $326 for the three months ended March 31, 2022 and 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, and SBIC investments.
(4)Net interest income divided by average interest-earning assets.
40


For the Nine Months Ended March 31,
20222021
(Dollars in thousands)Average
Balance
Outstanding
Interest
Earned/
Paid
Yield/
Rate
Average
Balance
Outstanding
Interest
Earned/
Paid
Yield/
Rate
Assets:
Interest-earning assets:
Loans receivable(1)(2)
$2,810,205 $82,377 3.90 %$2,826,886 $85,505 4.03 %
Commercial paper and deposits in other banks311,457 1,362 0.58 454,609 2,106 0.62 
Debt securities available for sale124,053 1,319 1.42 131,332 1,528 1.55 
Other interest-earning assets(3)
22,218 1,867 11.19 39,140 1,729 5.88 
Total interest-earning assets3,267,933 86,925 3.54 3,451,967 90,868 3.51 
Other assets259,570 256,026 
Total assets$3,527,503 $3,707,993 
Liabilities and equity:
Interest-bearing liabilities:
Interest-bearing checking accounts$640,194 1,038 0.22 %$593,815 1,142 0.26 %
Money market accounts1,002,542 1,056 0.14 860,170 1,337 0.21 
Savings accounts224,664 120 0.07 206,478 114 0.07 
Certificate accounts447,623 1,814 0.54 594,565 5,003 1.12 
Total interest-bearing deposits2,315,023 4,028 0.23 2,255,028 7,596 0.45 
Borrowings48,894 45 0.12 471,716 5,007 1.41 
Total interest-bearing liabilities2,363,917 4,073 0.23 2,726,744 12,603 0.62 
Noninterest-bearing deposits719,872 522,406 
Other liabilities45,443 56,141 
Total liabilities3,129,232 3,305,291 
Stockholders' equity398,271 402,702 
Total liabilities and stockholders' equity$3,527,503 $3,707,993 
Net earning assets$904,016 $725,223 
Average interest-earning assets to
average interest-bearing liabilities138.24 %126.60 %
Tax-equivalent:
Net interest income$82,852 $78,265 
Interest rate spread3.31 %2.89 %
Net interest margin(4)
3.38 %3.02 %
Non-tax-equivalent:
Net interest income$81,915 $77,323 
Interest rate spread 3.28 %2.85 %
Net interest margin(4)
3.34 %2.98 %
_________________________________________________________________
(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 $937 and $942 for the nine months ended March 31, 2022 and 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, and SBIC investments.
(4)Net interest income divided by average interest-earning assets.
41


Rate/Volume Analysis
The following table shows the effects that changes in average balances (volume) and average interest rates (rate) had on the interest earned on our interest-earning assets and interest-bearing liabilities:
Three Months Ended March 31, 2022
Compared to
Three Months Ended March 31, 2021
(Dollars in thousands)Increase/
(Decrease)
due to
Total
Increase/(Decrease)
VolumeRate
Interest-earning assets:
Loans receivable(1)
$126 $(1,145)$(1,019)
Commercial paper and deposits in other banks(210)162 (48)
Debt securities available for sale(135)23 (112)
Other interest-earning assets(247)294 47 
    Total interest-earning assets(466)(666)(1,132)
Interest-bearing liabilities:
Interest-bearing checking accounts(89)(81)
Money market accounts47 (80)(33)
Savings accounts 
(2)
Certificate accounts(174)(558)(732)
 Total interest-bearing deposits(116)(729)(845)
Borrowings(1,514)(114)(1,628)
    Total interest-bearing liabilities(1,630)(843)(2,473)
Net increase (decrease) in tax equivalent interest income$1,164 $177 $1,341 

Nine Months Ended March 31, 2022
Compared to
Nine Months Ended March 31, 2021
(Dollars in thousands)Increase/
(Decrease)
due to
Total
Increase/(Decrease)
VolumeRate
Interest-earning assets:
Loans receivable(1)
$(504)$(2,624)$(3,128)
Commercial paper and deposits in other banks(664)(80)(744)
Debt securities available for sale(85)(124)(209)
Other interest-earning assets(747)885 138 
    Total interest-earning assets(2,000)(1,943)(3,943)
Interest-bearing liabilities:
Interest-bearing checking accounts 89 (193)(104)
Money market accounts221 (502)(281)
Savings accounts10 (4)
Certificate accounts(1,236)(1,953)(3,189)
 Total interest-bearing deposits(916)(2,652)(3,568)
Borrowings(4,488)(474)(4,962)
    Total interest-bearing liabilities(5,404)(3,126)(8,530)
Net increase (decrease) in tax equivalent interest income$3,404 $1,183 $4,587 
_________________________________________________________________
(1) Interest income used in the average interest earned and yield calculation includes the tax equivalent adjustment of $320 and $326 for the three months ended March 31, 2022 and 2021, respectively, calculated based on a combined federal and state income tax rate of 24%. Interest income used in the average interest earned and yield calculation includes the tax equivalent adjustment of $937 and $942 for the nine months ended March 31, 2022 and 2021, respectively, calculated based on a combined federal and state income tax rate of 24%.
42


Comparison of Results of Operations for the Three Months Ended March 31, 2022 and 2021
General.  During the three months ended March 31, 2022, net income increased $154,000, or 2.0% to $8.0 million compared to $7.9 million for the three months ended March 31, 2021, while our diluted earnings per share increased to $0.51 compared to $0.48 for the same period in fiscal 2021. Third quarter of fiscal 2022 earnings were positively impacted by a $1.3 million, or 5.2%, increase in net interest income driven by lower borrowing costs, and a $4.7 million, or 15.4%, decrease in noninterest expense.
Net Interest Income. Net interest income increased by $1.3 million, or 5.2%, to $27.0 million for the quarter ended March 31, 2022, compared to $25.7 million for the comparative quarter in fiscal 2021. Interest and dividend income decreased by $1.1 million, or 3.8%, primarily driven by lower average balances on interest-earning assets combined with lower loan yields. This decrease was offset by a $2.5 million, or 68.2% decrease in interest expense.
Average interest-earning assets decreased $225.4 million, or 6.4%, to $3.3 billion for the quarter ended March 31, 2022. The main drivers of the change were decreases of $179.4 million, or 34.3%, in the average balance of commercial paper and deposits in other banks and $42.0 million, or 27.3%, in debt securities available for sale as the Company used excess liquidity to reduce borrowings, which declined by $431.5 million, or 92.8%, when compared to the prior period. Net interest margin (on a fully taxable-equivalent basis) for the three months ended March 31, 2022 increased to 3.39% from 3.02% for the same period a year ago as all higher rate long-term borrowings were repaid during the quarter ended June 30, 2021.
Total interest and dividend income decreased $1.1 million, or 3.8%, for the quarter ended March 31, 2022 as compared to the same quarter last year, which was primarily a result of a $1.0 million, or 3.7%, decrease in loan interest income. The lower loan interest income was driven by a decline in the average yield on loans of 17 basis points, from 4.08% to 3.91%. Loan interest income for the quarter included the amortization of $265,000 of PPP loan origination fees, a decline of $349,000 when compared to the $614,000 recognized in the prior period. The overall average yield on interest-earning assets increased 10 basis points to 3.54% for the current quarter compared to 3.44% in the same quarter last year primarily due to the change in the mix of interest-earning assets.
Total interest expense decreased $2.5 million, or 68.2%, for the quarter ended March 31, 2022 compared to the same period last year. The decrease was driven by a $1.6 million, or 99.8%, decrease in interest expense on borrowings as discussed above and a $845,000, or 42.3%, decrease in interest expense on deposits. The average balance of total deposits increased by $228.1 million, or 8.1%, with noninterest-bearing deposits and interest-bearing deposits increasing $161.7 million and $66.4 million, respectively. The increase in interest-bearing deposits was driven by a $113.5 million, or 12.5% increase in money market accounts, partially offset by a $74.9 million, or 14.5%, decrease in certificates of deposit. As stated above, average borrowings for the quarter ended March 31, 2022 decreased $431.5 million, or 92.8%, along with a 137 basis point decrease in the average cost of borrowings compared to the same period last year. The decrease in the average cost of borrowings was primarily driven by the early retirement of long-term borrowings reducing the average balance and partially driven by a shift to short-term borrowings at lower rates. The overall average cost of funds decreased 34 basis points to 0.20% for the current quarter compared to 0.54% in the same quarter last year.
Provision (Benefit) for Credit Losses. During the three months ended March 31, 2022, there was a $45,000 net benefit for credit losses compared to a $4.1 million net benefit for the corresponding quarter of fiscal 2021. Net loan recoveries totaled $741,000 for the three months ended March 31, 2022, compared to net recoveries of $185,000 for the same period last year. Annualized net recoveries as a percentage of average loans were 0.11% for the quarter ended March 31, 2022 compared to 0.03% for the corresponding quarter last year. See "Comparison of Financial Condition - Asset Quality" for additional details.
Noninterest Income. Noninterest income decreased $1.7 million, or 16.2%, to $8.9 million for the quarter ended March 31, 2022 from $10.7 million for the same period in the previous year. This change was primarily due to a $1.9 million, or 39.2%, decrease in gain on sale of loans, partially offset by a $229,000, or 16.0%, increase in operating lease income. The decrease in gain on sale of loans was driven by decreases in loan principal sold across all portfolios. During the quarter ended March 31, 2022, $53.4 million of residential mortgage loans originated for sale were sold with gains of $1.3 million compared to $106.5 million sold and gains of $2.7 million in the corresponding period in the prior year. There were $16.5 million of sales of the guaranteed portion of SBA commercial loans with gains of $1.5 million in the current quarter compared to $20.2 million sold and gains of $1.8 million for the same period last year. The Company sold $25.0 million of HELOCs during the quarter for a gain of $156,000 compared to $43.8 million sold and gains of $301,000 in the corresponding period last year.
Noninterest Expense.  Noninterest expense decreased $4.7 million, or 15.4%, for the quarter ended March 31, 2022 as compared to the same period last year, which was primarily a result of a decrease of $3.7 million in prepayment penalties on long-term borrowings, and a $1.1 million, or 6.7%, decrease in salaries and benefits expense due to branch closures and lower mortgage banking incentive pay in the period.
Income Taxes. Our income tax expense for the three months ended March 31, 2022 increased $114,000, or 5.4%, to $2.2 million from $2.1 million for the three months ended March 31, 2021 primarily as a result of higher taxable income. The effective tax rates for the quarters ended March 31, 2022 and 2021 were 21.6% and 21.0%, respectively.
Comparison of Results of Operations for the Nine Months Ended March 31, 2022 and 2021
General.  During the nine months ended March 31, 2022, net income increased by $6.5 million, or 28.4%, to $29.6 million from $23.1 million for the nine months ended March 31, 2021, while our diluted earnings per share increased to $1.84 for the nine months ended March 31, 2022 compared to $1.40 in the same period in fiscal 2021. Year-to-date earnings were positively impacted by a $5.2 million, or 6.3%, decrease in noninterest expense and a $4.6 million, or 5.9%, increase in net interest margin.
43


Net Interest Income. Net interest income increased by $4.6 million, or 5.9%, to $81.9 million for the nine months ended March 31, 2022, compared to the same period last year. Interest and dividend income decreased by $3.9 million, or 4.4%, primarily driven by lower average balances on interest-earning assets. This decrease was offset by a $8.5 million, or 67.7%, decrease in interest expense.
Average interest-earning assets decreased $184.0 million, or 5.3%, to $3.3 billion for the nine months ended March 31, 2022. The biggest reason for the change was a decrease of $143.2 million, or 31.5%, in commercial paper and deposits in other banks, as the Company used excess liquidity to reduce borrowings, where the average balance declined from $471.7 million to $48.9 million. Net interest margin (on a fully taxable-equivalent basis) for the nine months ended March 31, 2022 increased to 3.38% from 3.02% for the same period a year ago as all higher rate long-term borrowings were repaid during the quarter ended June 30, 2021.
Total interest and dividend income decreased $3.9 million, or 4.4%, for the nine months ended March 31, 2022 as compared to the same period last year, which was primarily a result of a $3.1 million, or 3.7%, decrease in loan interest income and a $744,000, or 35.3%, decrease in interest income on commercial paper and deposits in other banks. The lower interest income in each category was driven by the combined effect of a decrease in average balances, as discussed above, and a decline in average loan yields which decreased 13 basis points to 3.90%, and average yields on debt securities available for sale which decreased 13 basis points to 1.42%. Loan interest income for the nine months included the amortization of $975,000 of PPP loan origination fees, a decline of $381,000 when compared to the $1.4 million recognized in the prior period. The overall average yield on interest-earning assets increased three basis points to 3.54% for the nine months compared to 3.51% in the same period last year as a result of a shift to higher yielding assets.
Total interest expense decreased $8.5 million, or 67.7%, for the nine months ended March 31, 2022 compared to the same period last year. The decrease was driven by a $5.0 million, or 99.1%, decrease in interest expense on borrowings as discussed above and a $3.6 million, or 47.0%, decrease in interest expense on deposits. The average balance of total deposits increased by $257.5 million, or 9.3%, with noninterest-bearing deposits and interest-bearing deposits increasing $197.5 million and $60.0 million, respectively. The increase in interest-bearing deposits was driven by a $142.4 million, or 16.6%, increase in money market accounts and $46.4 million, or 7.8%, increase in interest-bearing checking accounts, partially offset by a $146.9 million, or 24.7%, decrease in certificates of deposit. As stated above average borrowings for the nine months ended March 31, 2022 decreased $422.8 million, or 89.6%, along with a 129 basis point decrease in the average cost of borrowings compared to the same period last year. The increase in average deposits (interest and noninterest-bearing) was due to successful deposit gathering campaigns and the effect of government stimulus in prior periods. The decrease in the average cost of borrowings was primarily driven by the early retirement of long-term borrowings reducing the average balance and partially driven by a shift to short-term borrowings at lower rates. The overall average cost of funds decreased 39 basis points to 0.23% for the nine months compared to 0.62% in the same period last year.
Provision (Benefit) for Loan Losses.  During the nine months ended March 31, 2022 there was a $4.0 million net benefit for credit losses compared to a $6.2 million net benefit for credit losses for the corresponding period of fiscal 2021. Net loan charge-offs totaled $19,000 for the nine months ended March 31, 2022, compared to net loan charge-offs of $452,000 for the same period last year. Net charge-offs as a percentage of average loans was 0.00% for the nine months ended March 31, 2022 compared to net charge-offs of 0.02% for the corresponding period last year. See "Comparison of Financial Condition - Asset Quality" for additional details.
Noninterest Income.  Noninterest income increased $819,000, or 2.9%, to $29.5 million for the nine months ended March 31, 2022 from $28.7 million for the same period in the previous year. This change was due to an $857,000, or 51.0%, increase in loan income and fees, an $813,000, or 19.8% increase in operating lease income, a $394,000, or 5.9% increase in service charges and fees on deposit accounts, partially offset by a $1.0 million, or 8.4%, decrease in gain on sale of loans. The increase in loan income and fees was primarily a result of $924,000 in additional loan servicing fees as a result of bringing the Company's SBA loan servicing process in-house, which began July 1, 2021. The increase in operating lease income was primarily driven by increases in loan originations and higher outstanding lease balances during the period, while the increase in service charges on deposit accounts was the result of a $234,000 increase in interchange income driven by higher debit card usage. During the nine months ended March 31, 2022, $204.1 million of residential mortgage loans originated for sale were sold with gains of $5.6 million compared to $297.2 million sold and gains of $7.7 million in the corresponding period in the prior year. There were $43.5 million of sales of the guaranteed portion of SBA commercial loans with gains of $4.5 million in the nine months compared to $44.6 million sold and gains of $3.7 million for the same period last year. The Company sold $97.2 million of HELOCs during the nine months ended March 31, 2022 for a gain of $581,000 compared to $85.9 million sold and gains of $559,000 in the corresponding period last year. Lastly, $11.5 million of indirect auto finance loans were sold out of the held for investment portfolio during the current period for a gain of $205,000. No such sales occurred in the same period in the prior year.
Noninterest Expense.  Noninterest expense decreased $5.2 million, or 6.3%, for the nine months ended March 31, 2022 as compared to the same period last year, which was primarily a result of a decrease of $3.7 million in prepayment penalties on borrowings, a $1.8 million, or 3.9%, decrease in salaries and benefits expense due to branch closures and lower mortgage banking incentive pay in the period, and a reduction of core deposit amortization expense of $397,000, or 65.6%, partially offset by an increase of $1.1 million, or 117.2%, in marketing and advertising expense driven by reduced media advertising in prior periods as a result of the pandemic as well as current year advertising for newly opened locations.
Income Taxes.  For the nine months ended March 31, 2022, the Company's income tax expense increased $1.9 million, or 31.2%, to $8.0 million from $6.1 million primarily as a result of higher taxable income. The effective tax rates for the nine months ended March 31, 2022 and 2021 were 21.4% and 21.0%, respectively.
44


Liquidity
Management maintains a liquidity position that it believes will adequately provide funding for 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, cash flows from loan payments, commercial paper, 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 March 31, 2022, the Bank had an available borrowing capacity of $255.7 million with the FHLB of Atlanta, a $72.1 million line of credit with the FRB and a line of credit with three unaffiliated banks totaling $125.0 million. At March 31, 2022, we had $30.0 million in FHLB advances outstanding, nothing in FRB borrowings outstanding, and nothing outstanding under our other lines of credit. 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. We have historically sold longer term 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 may 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 March 31, 2022 brokered deposits totaled $2.3 million, or 0.1%, of total deposits, compared to $4.3 million, or 0.2%, of total deposits, at June 30, 2021.
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, federal funds, and commercial paper. On a longer term basis, we maintain a strategy of investing in various lending products and investment securities, including MBS. HomeTrust Bancshares on a stand-alone basis is a separate legal entity from the Bank and must provide for its own liquidity and payment of its own operating expenses. It has the ability to receive dividends or capital distributions from the Bank, although there are regulatory restrictions on the ability of the Bank to pay dividends. At March 31, 2022, HomeTrust Bancshares on a stand-alone basis had liquid assets of $8.5 million.
We use our sources of funds primarily to meet our ongoing commitments, pay maturing deposits and fund withdrawals, and to fund loan commitments. At March 31, 2022, the total approved loan commitments and unused lines of credit outstanding amounted to $386.4 million and $498.3 million, respectively, as compared to $401.1 million and $530.5 million, respectively, as of June 30, 2021. Certificates of deposit scheduled to mature in one year or less at March 31, 2022 totaled $389.4 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 continue to remain with us.
During the first nine months of fiscal 2022, cash and cash equivalents increased $1.1 million, or 2.1%, to $52.1 million as of March 31, 2022 from $51.0 million as of June 30, 2021.
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. These transactions involve varying degrees of off-balance sheet credit, interest rate and liquidity risks. These transactions are used primarily to manage customers' requests for funding and take the form of loan commitments and lines of credit. For the nine months ended March 31, 2022, we did not engage in any off-balance sheet transactions likely to have a material effect on our financial condition, results of operations or cash flows.
A summary of our off-balance sheet commitments to extend credit at March 31, 2022, is as follows:
(Dollars in thousands)
Undisbursed portion of construction loans$290,532 
Commitments to originate loans95,848 
Unused lines of credit498,315 
Standby letters of credit17,492 
Total loan commitments$902,187 
Capital Resources
At March 31, 2022, stockholders' equity totaled $395.1 million. HomeTrust Bancshares, Inc. is a bank holding company and a financial 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, is supervised and regulated by the Federal Reserve 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.
45


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.
HomeTrust Bancshares, Inc. and the Bank each exceeded all regulatory capital requirements as of March 31, 2022. 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 March 31, 2022 under applicable regulatory requirements.
HomeTrust Bancshares, Inc. and the Bank's actual and required minimum capital amounts and ratios are as follows:
 Regulatory Requirements
(Dollars in thousands)ActualMinimum for Capital
Adequacy Purposes
Minimum to Be
Well Capitalized
AmountRatioAmountRatioAmountRatio
HomeTrust Bancshares, Inc.
March 31, 2022
CET1 Capital (to risk-weighted assets)$376,838 10.83 %$156,538 4.50 %$226,110 6.50 %
Tier I Capital (to total adjusted assets)376,838 10.74 %140,287 4.00 %175,359 5.00 %
Tier I Capital (to risk-weighted assets)376,838 10.83 %208,717 6.00 %278,289 8.00 %
Total Risk-based Capital (to risk-weighted assets)396,908 11.41 %278,289 8.00 %347,861 10.00 %
June 30, 2021      
CET1 Capital (to risk-weighted assets)$375,320 11.26 %$149,943 4.50 %$216,584 6.50 %
Tier I Capital (to total adjusted assets)375,320 10.29 %145,915 4.00 %182,393 5.00 %
Tier I Capital (to risk-weighted assets)375,320 11.26 %199,924 6.00 %266,565 8.00 %
Total Risk-based Capital (to risk-weighted assets)398,408 11.96 %266,565 8.00 %333,206 10.00 %
HomeTrust Bank:      
March 31, 2022      
CET1 Capital (to risk-weighted assets)$368,478 10.59 %$156,536 4.50 %$226,107 6.50 %
Tier I Capital (to total adjusted assets)368,478 10.51 %140,244 4.00 %175,305 5.00 %
Tier I Capital (to risk-weighted assets)368,478 10.59 %208,714 6.00 %278,286 8.00 %
Total Risk-based Capital (to risk-weighted assets)388,548 11.17 %278,286 8.00 %347,857 10.00 %
June 30, 2021      
CET1 Capital (to risk-weighted assets)$357,767 10.74 %$149,936 4.50 %$216,575 6.50 %
Tier I Capital (to total adjusted assets)357,767 9.81 %145,933 4.00 %182,417 5.00 %
Tier I Capital (to risk-weighted assets)357,767 10.74 %199,915 6.00 %266,553 8.00 %
Total Risk-based Capital (to risk-weighted assets)380,855 11.43 %266,553 8.00 %333,192 10.00 %
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 2.5% 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. At March 31, 2022, the conservation buffer was 3.41% and 3.17% for HomeTrust Bancshares, Inc. and the Bank, respectively.
Impact of Inflation
The effects of price changes and inflation can vary substantially for most financial institutions. While management believes that inflation affects the growth of total assets, it believes that it is difficult to assess the overall impact. Management believes this to be the case due to the fact that generally neither the timing nor the magnitude of the inflationary changes in the CPI coincides with changes in interest rates. The price of one or more of the components of the CPI may fluctuate considerably and thereby influence the overall CPI without having a corresponding effect on interest rates or upon the cost of those goods and services normally purchased by us. In years of high inflation and
46


high interest rates, intermediate and long-term interest rates tend to increase, thereby adversely impacting the market values of investment securities, mortgage loans and other long-term fixed rate loans. In addition, higher short-term interest rates caused by inflation tend to increase the cost of funds. In other years, the opposite may occur.
Item 3.      Quantitative and Qualitative Disclosure About Market Risk
There has not been any material change in the market risk disclosures contained in our 2021 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 March 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 March 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 2021 Form 10-K.
Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds
(a) Not applicable
(b) Not applicable
(c) Not applicable
Total Number
Of Shares Purchased
Average
Price Paid per Share
Total Number Of Shares Purchased as Part of Publicly Announced PlansMaximum
Number of
Shares that May
Yet Be Purchased Under Publicly Announced Plans
January 1 - January 31, 202257,394 $31.46 57,394 210,372 
February 1 - February 28, 2022210,372 31.07 210,372 806,000 
March 1 - March 31, 2022152,165 30.07 152,165 653,835 
Total419,931 $30.76 419,931 653,835 
On April 2, 2020, the Company's Board of Directors authorized the repurchase of up to 851,004 shares of the Company's common stock, representing 5% of its outstanding shares at the time of the announcement. This repurchase plan was completed on July 26, 2021. On July 28, 2021, 825,941 shares of common stock were authorized for repurchase representing 5% of the Company's outstanding shares at the time of the announcement. This repurchase plan was completed on February 28, 2022. Also on February 28, 2022, an additional 806,000 shares of
47


common stock were authorized for repurchase representing approximately 5% of the Company's outstanding shares at the time of the announcement. For the nine months ended March 31, 2022, 1,095,763 shares were repurchased at an average price of $29.50 per share. The shares may be purchased in the open market or in privately negotiated transactions, from time to time depending upon market conditions and other factors.
Item 3.     Defaults Upon Senior Securities
Nothing to report.
Item 4.     Mine Safety Disclosures
Not applicable.
Item 5.     Other Information
Nothing to report.
Item 6.     Exhibits
Regulation S-K Exhibit NumberDocumentReference to Prior Filing or Exhibit Number Attached Hereto
  
3.1(a)
3.2(b)
3.3(f)
4.1(b)
4.2(d)
4.3

(e)
10.1(p)
10.2(g)
10.3(g)
10.3A(h)
10.3B(i)
10.3C(c)
10.4(g)
10.5(a)
10.610.6
10.7(q)
10.7A(a)
10.7B(a)
10.7C(a)
10.7D(a)
10.7E(a)
10.7F(a)
48


10.7G(a)
10.7H(a)
10.7I(j)
10.8(a)
10.8A(a)
10.8B(a)
10.8C(a)
10.8D(a)
10.8E(a)
10.8F(a)
10.8G(a)
10.9(a)
10.9A10.9A
10.9B10.9B
10.10(a)
10.10A10.10A
10.11(a)
10.11A10.11A
10.12(k)
10.13(l)
10.14(l)
10.15(l)
10.16(l)
10.17(l)
10.18(f)
10.19(m)
10.20(n)
10.21(g)
10.22(o)
31.131.1
31.231.2
32.032.0
101The following materials from HomeTrust Bancshares' Quarterly Report on Form 10-Q for the quarter ended March 31, 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 Registration Statement on Form S-1 (File No. 333-178817) filed on December 29, 2011.
(b)Filed as an exhibit to HomeTrust Bancshares's Current Report on Form 8-K filed on September 25, 2012 (File No. 001-35593).
(c)Filed as an exhibit to HomeTrust Bancshares's Current Report on Form 8-K filed on July 26, 2021 (File No. 001-35593).
(d)Filed as an exhibit to HomeTrust Bancshares's Current Report on Form 8-K filed on August 31, 2015 (File No. 001-35593).
(e)Filed as an exhibit to HomeTrust Bancshares's Current Report on Form 8-K filed on August 21, 2018 (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 September 25, 2018 (File No. 001-35593.
(i)Filed as an exhibit to HomeTrust Bancshares's Current Report on Form 8-K filed on October 28, 2020 (File No. 001-35593).
49


(j)Filed as an exhibit to Amendment No. One to HomeTrust Bancshares's Registration Statement on Form S-1 (File No. 333-178817) filed on March 9, 2012.
(k)Attached as Appendix A to HomeTrust Bancshares's definitive proxy statement filed on December 5, 2012 (File No. 001-35593).
(l)Filed as an exhibit to HomeTrust Bancshares's Registration Statement on Form S-8 (File No. 333-186666) filed on February 13, 2013.
(m)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).
(n)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).
(o)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).
(p)Filed as an exhibit to HomeTrust Bancshares's Quarterly Report on Form 10-Q for the quarter ended September 30, 2021 (File No. 001-35593).
(q)Filed as an exhibit to HomeTrust Bancshares's Current Report on Form 8-K filed on February 15, 2022 (File No. 001-35593).

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: May 9, 2022By:/s/ Dana L. Stonestreet
Dana L. Stonestreet
Chairman and CEO
(Duly Authorized Officer)
Date: May 9, 2022By:/s/ Tony J. VunCannon
Tony J. VunCannon
Executive Vice President, CFO, Corporate Secretary and Treasurer
(Principal Financial and Accounting Officer)

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