Merger with Quantum

9 Months Ended

Mar. 31, 2023

Business Combination and Asset Acquisition [Abstract]

On February 12, 2023, the Company merged with Quantum which operated two locations in the Atlanta metro area. The aggregate amount of consideration to be paid per the purchase agreement of approximately $70.8 million, inclusive of consideration of common stock, other cash consideration, and cash in lieu of fractional shares, included $15.9 million of cash consideration already paid by Quantum to its stockholders in advance of the closing date as is further described below. These distributions reduced Quantum's stockholders' equity by an equal amount prior to the transaction closing date.

The following table provides a summary of the assets acquired, liabilities assumed, associated preliminary fair value adjustments, and provisional period adjustments by the Company as of the merger date. As provided for under US GAAP, management has up to 12 months following the date of merger to finalize the fair value adjustments.


	Quantum		Fair Value Adjustments		Provisional Period Adjustments		As Recorded by HomeTrust
Assets acquired
Cash and cash equivalents	$	47,769	$	—	$	—	$	47,769
Debt securities available for sale	10,608		—		—		10,608
FHLB and FRB stock	1,125		—		—		1,125
Loans(1)	567,140		(5,207)		—		561,933
Premises and equipment	4,415		4,668		—		9,083
Accrued interest receivable	1,706		—		—		1,706

BOLI	9,066		—		—		9,066

Core deposit intangibles	—		12,210		—		12,210
Other assets	2,727		569		—		3,296
Total assets acquired	$	644,556	$	12,240	$	—	$	656,796
Liabilities assumed
Deposits	$	570,419	$	183	$	—	$	570,602
Junior subordinated debt	11,341		(1,408)		—		9,933
Other borrowings	24,728		—		—		24,728
Deferred income taxes	—		1,341		—		1,341
Other liabilities	3,334		—		—		3,334
Total liabilities assumed	$	609,822	$	116	$	—	$	609,938

Net assets acquired							$	46,858

(1)Adjustments to Quantum's total loans include the elimination of Quantum's existing allowance for loan losses of $6.0 million, the recognition of an ACL at close on PCD loans of $0.4 million, and adjustments to reflect the estimated credit fair value mark on the non-PCD loan portfolio of $3.0 million and the estimated interest rate fair value adjustment on the loan portfolio as a whole (non-PCD and PCD) of $7.9 million.


	Quantum	Fair Value Adjustments	Provisional Period Adjustments	As Recorded by HomeTrust
Consideration paid
Common stock consideration
Shares of Quantum				574,157
Exchange ratio				2.3942
HomeTrust common stock issued				1,374,647
Price per share of HomeTrust common stock on February 10, 2023				$	27.45
HomeTrust common stock consideration				$	37,734
Cash consideration(2)				17,168
Total consideration				$	54,902

Goodwill				$	8,044

(2)As indicated in the Current Report on Form 8-K/A filed with the SEC on March 30, 2023, the amount of cash consideration paid at closing differs from the $57.54 per share, or $33.0 million, reported in the Current Report on Form 8-K filed on February 13, 2023, which announced the closing of the merger. Consistent with the merger agreement, between the execution of the merger agreement and the transaction closing date, Quantum's principal stockholders had the option to withdraw some or all of the amount of cash consideration to eventually be paid at closing in advance of the closing date. The amount of cash consideration paid at closing was reduced by the amount withdrawn during this time period.

Goodwill of $8,044 arising from the merger consisted largely of synergies and the cost saves resulting from the combining of operations of the companies, and is not expected to be deductible for income tax purposes.

The following table provides a summary of PCD loans purchased as part of the Quantum merger as of the merger date:


	Commercial Real Estate		Commercial		Residential Real Estate		Consumer		Total
Unpaid principal balance	$	4,472	$	9,631	$	393	$	—	$	14,496
ACL	(292)		(72)		(5)		—		(369)
Non-credit premium (discount)	(1,448)		(190)		4		—		(1,634)
Fair value of PCD loans at merger date	$	2,732	$	9,369	$	392	$	—	$	12,493

The following unaudited pro forma combined condensed consolidated financial information presents the results of operations of the Company, including the effects of purchase accounting adjustments and acquisition expenses, had the merger taken place at July 1, 2021. The schedule excludes merger-related credit loss and merger-related expenses.


	(Unaudited)
	Three Months Ended				Nine Months Ended
	March 31,				March 31,
	2023		2022		2023		2022
Interest and dividend income	$	56,512	$	36,480	$	154,621	$	112,282
Interest expense	10,201		1,514		17,606		5,021
Net interest income	46,311		34,966		137,015		107,261
Provision (benefit) for credit losses	3,490		(45)		9,717		(4,490)
Net interest income after provision (benefit) for credit losses	42,821		35,011		127,298		111,751
Noninterest income	8,835		9,399		26,068		34,055
Noninterest expense	30,296		30,293		89,928		91,715
Net income before income taxes	21,360		14,117		63,438		54,091
Income tax expense	4,470		3,103		14,026		11,823
Net income	$	16,890	$	11,014	$	49,412	$	42,268
Per share data
Net income per common share
Basic	$	0.96	$	0.65	$	2.93	$	2.46
Diluted	$	0.96	$	0.64	$	2.91	$	2.41
Average shares outstanding
Basic	17,396,640		16,898,459		16,715,868		17,040,739
Diluted	17,451,762		17,167,658		16,823,706		17,372,023