HomeTrust Bancshares in Asheville, N.C., plans to close nine branches in three states as part of a broader efficiency effort.
The $3.6 billion-asset company said in a press release Tuesday that it will also restructure its balance sheet and bring Small Business Administration loan servicing in-house. The moves are expected to increase annual pretax income by $10.1 million.
HomeTrust said the initiative should also increase return on assets by 20 basis points, return on equity by 200 basis points and diluted earnings per share by about 47 cents.
“We believe these strategic initiatives, along with the continued maturity of our diversified lines of business, will move us forward in achieving higher profitability and creating additional shareholder value in the near term,” Dana Stonestreet, HomeTrust’s chairman, president and CEO, said in the release.
HomeTrust plans to close branches in North Carolina, Tennessee and Virginia, or roughly 22% of its footprint, in September. The company said it plans to incur a $1.5 million pretax charge for costs tied to the closures in the fourth quarter.
The branch closures should save HomeTrust $3.2 million annually.
The company also said it will bring its SBA servicing in-house on July 1, which should bring in $1.2 million in annual income in the form of servicing fees and gains on sale.
HomeTrust also said it will pay off the remaining $275 million of long-term borrowings of Federal Home Loan Bank advances, incurring $19 million in pretax prepayment penalties. But the company said that, including $475 million in long-term debt it had already retired, paying off the advances will reduce interest expense by $5.7 million annually.
“We view today’s announcements favorably and believe HomeTrust has growing scarcity value in its attractive, and now more profitable, mostly North Carolina-based franchise,” Keefe, Bruyette & Woods wrote in a note to clients.