Get Started for Free Contexxia identifies hard-to-find pieces of information in SEC filings. No more highlighters, no more redlining, no more poring over huge documents. HomeTrust Bancshares, Inc. (1538263) 10-Q published on May 09, 2019 at 4:06 pm
Reporting Period: Mar 30, 2019
In March 2019, the FASB issued ASU 2019-01, "Leases (Topic 842): Codification Improvements." The amendments in this update include the following items: i) determining the fair value of the underlying asset by lessors that are not manufacturers or dealers; ii) requiring cash received from lessors from sales-type and direct financing leases to be presented in the cash flow statement within investing activities; and iii) clarifying interim disclosure requirements. The effective date and transition requirements for the first and second items of this ASU are effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2019 and early adoption is permitted..The effective date and transition requirements for the third item of this ASU is the same as ASU 2016-02. The adoption of ASU No. 2019-01 is not expected to have a material impact on the Company's Consolidated Financial Statements.
Asset Quality. Our overall asset quality metrics continue to demonstrate our commitment to growing and maintaining a loan portfolio with a moderate risk profile. However, at the end of the current quarter, the Company became aware that a commercial borrower operating as a heavy equipment contractor with $6.0 million of outstanding borrowings from the Bank had unexpectedly ceased operations. Based on further investigation and certain actions taken by the principal of the borrower subsequent to quarter end, the Company believes that the Bank’s collateral, consisting primarily of accounts receivable, has substantially deteriorated. As a result of this investigation and further subsequent developments, based on the estimated value of the remaining collateral, the Company recorded a $2.6 million loan charge-off and a $3.4 million specific reserve in the allowance for loan losses related to this lending relationship. The Company is taking action to enforce its rights against the borrower, guarantors and its collateral, including to preserve and recover the borrower’s assets, where appropriate.
There was a $5.5 million provision for loan losses for the three and nine months ended March 31, 2019 compared to no provision for the corresponding periods in fiscal 2018. This provision for loan losses relates to a $3.4 million specific reserve and a $2.6 million loan charge-off related to the $6.0 million commercial lending relationship discussed above. Net loan charge-offs totaled $2.5 million and $2.1 million for the three and nine months ended March 31, 2019, respectively, compared to net loan recoveries of $382,000 and $321,000 for the same periods in fiscal 2018, respectively. Net charge-offs as a percentage of average loans increased to 0.38% and 0.11% for the three and nine months ended March 31, 2019, respectively, from net recoveries of (0.06%) and (0.02)% for the same periods last year, respectively.
General. During the three months ended March 31, 2019, we had net income of $3.3 million compared to $6.1 million for the three months ended March 31, 2018. The Company's diluted earnings per share was $0.18 for the three months ended March 31, 2019 compared to $0.32 for the same period in fiscal 2018. Net income during the three months ended March 31, 2019 were negatively impacted by a significant charge-off and specific reserve related to the previously discussed $6.0 million commercial lending relationship, which resulted in a $5.5 million provision for loan losses.
General. During the nine months ended March 31, 2019, we had net income of $19.1 million compared to $1.0 million for the nine months ended March 31, 2018. Diluted earnings per share was $1.02 for the first nine months of fiscal year 2019, compared to $0.06 in the same period in fiscal 2018. Net income for the nine months ended March 31, 2019 was negatively affected by the $5.5 million provision for loan losses related to the previously discussed commercial lending relationship. In addition, net income for the nine months ended March 31, 2018 included an $18.0 million write-down of deferred tax assets following a deferred tax revaluation resulting from enactment of the Tax Act with no comparable charge in the current nine-month period.