Safe and Sound

HomeTrust Bank

Asheville, NC
3
Star Rating
Started in 1926, HomeTrust Bank is an FDIC-insured bank headquartered in Asheville, NC. Regulatory filings show the bank having equity of $359.3 million on assets of $3.24 billion, as of December 31, 2017.

With 481 full-time employees in 41 offices in multiple states, the bank currently holds loans and leases worth $2.40 billion, including real estate loans of $2.03 billion. U.S. bank customers currently have $2.14 billion in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, HomeTrust Bank exhibited a generally satisfactory condition, earning 3 out of 5 stars for safety and soundness. Keep reading for a breakdown of how the bank fared on the three important criteria Bankrate used to score American banks.

WHAT IS
SAFE AND SOUND?

Find out

THE INSTITUTION'S SCORE

Capital Score

Capital acts as a cushion against losses and affords protection for depositors when a bank is experiencing financial trouble. It follows then that a bank's level of capital is a crucial measurement of an institution's financial resilience. When looking at safety and soundness, the more capital, the better.

HomeTrust Bank received a score of 12 out of a possible 30 points on our test to measure the adequacy of a bank's capital, lower than the national average of 13.13.

One widely used measure of this buffer is a bank's Tier 1 capital ratio. HomeTrust Bank's Tier 1 capital ratio was 11.73 percent, higher than the 6 percent level regulators consider adequate, but less than the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to weather financial challenges.

Overall, HomeTrust Bank held equity amounting to 11.08 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

This test's purpose is to estimate how the bank's capitalization and allocated loan loss reserves could be affected by problem assets, such as unpaid loans.

A bank with extensive holdings of these types of assets may eventually have to use capital to cover losses, shrinking its buffer of equity. Many of those assets are also likely to be in non-accrual status and no longer earning interest for the bank, decreasing earnings and elevating the chances of a failure in the future.

On Bankrate's asset quality test, HomeTrust Bank scored 40 out of a possible 40 points, above the national average of 37.49 points.

The percentage of problem assets a bank holds compared to its total assets is a widely used indicator of asset quality.As of December 31, 2017, 0.64 percent of HomeTrust Bank's loans were noncurrent -- in other words, they were more than 90 days past due or were in non-accrual status. That's below the national average of 1.01 percent.

Banks keep a reserve to deal with troubled assets known as an "allowance for loan and lease losses." The size of that reserve can be a helpful indicator when evaluating a bank's ability to manage problem assets, especially when compared to the total amount of at-risk loans. Unfortunately, the FDIC did not provide information on HomeTrust Bank's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is affects its safety and soundness. A bank can retain its earnings, boosting its capital buffer, or use them to address problematic loans, likely making the bank better prepared to withstand economic shocks. Conversely, losses reduce a bank's ability to do those things.

On Bankrate's test of earnings, HomeTrust Bank scored 2 out of a possible 30, coming in below the national average of 15.12.

Return on equity, calculated by dividing net income (profit, basically) by the total amount of equity, is one important measure of a bank's earnings. The most recent annualized quarterly return on equity for HomeTrust Bank was 0.03 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank recorded net income of $97,000 on total equity of $359.3 million. The bank had an annualized return on average assets, or ROA, of 0.00 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.

WHAT IS SAFE & SOUND?

Bankrate.com's Safe & Sound Ratings provide a star rating system to evaluate the current financial status of financial institutions. The information gathered about banks, credit unions and thrifts is updated as set forth in the Terms of Use of Safe & Sound Ratings and Reports. The Safe & Sound Ratings information is grouped by categories of banks, thrifts and credit unions.

Scoring methodology

Bankrate.com evaluates the financial condition of institutions and assigns a one- to five-star rating for each with five stars representing the highest rating. Institutions with satisfactory performance will generally receive a rating of three or more stars. The majority of institutions fall into the three- to four-star range. An institution with an "NR" rating may be too new to rate or may have limited the publicly available information in their regulatory filings. The "NR" is not an indication of financial strength or weakness. The Safe & Sound rating is believed to be reliable, but the information is not guaranteed. In addition, events since the information was collected may have altered the institution's financial condition.