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HomeTrust Bancshares dives into specialty financing with United Financial deal

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HomeTrust Bancshares dives into specialty financing with United Financial deal

HomeTrust Bancshares Inc., a $2.8 billion-asset bank, is expanding — both in terms of location and lines of business.

The Asheville, N.C.-based company announced Dec. 12 that it has agreed to buy Fletcher, N.C.-based United Financial of North Carolina Inc., a municipal lease finance company that provides financing for fire departments and municipalities across the Carolinas and other southeastern states. The company will be known as United Financial, a division of HomeTrust Bank, beginning Jan. 1.

Keefe Bruyette & Woods analyst Brady Gailey said he expects more and more banks could begin evaluating different asset classes, such as leasing, to get a better yield. He pointed to companies like BankUnited Inc. and State Bank Financial Corp., which he said have each bought leasing companies over the years.

"You are seeing banks that are searching for yield, and they think that they can get it in the leasing space," Gailey said. "They're taking advantage of that."

HomeTrust Bancshares CFO Tony VunCannon said the "Trump bump" and other economic factors did not play a role in the deal. VunCannon said the two companies have worked together for nearly 25 years, with United Financial of North Carolina selling a large portion of its production to the company. He said the deal "just made sense" for the company, but that he would not be surprised if other community banks began to take interest in specialty finance companies.

"We knew the people, we knew the papers and we knew the business," VunCannon said. "I think other people could potentially, once they get comfortable with those factors, you could see more activity there."

United Financial of North Carolina's president and owner, Bill Ammons, will join the company as director of municipal leasing of HomeTrust Bank. United Financial of North Carolina's other employees will join the company, as well. VunCannon said the company plans to add additional resources to support Ammons, which will take over the line of business after his retirement.

"It's just really continuing what we've already done, just under the HomeTrust umbrella," VunCannon said. "They do the origination underwriting, and we've basically been buying those leases and we keep them in our portfolio. We believe that with our capital and financial strength, we'll be able to grow this line of business."

HomeTrust Bancshares, which has a strong presence in the Carolinas, will take the business to Tennessee when it merges with Kingsport, Tenn.-based TriSummit Bancorp Inc. The North Carolina Office of the Commissioner of Banks and the Federal Reserve Bank of Richmond each approved the $31.8 million cash-and-stock deal, and TriSummit Bancorp shareholders voted to approve the merger Dec. 13.

He said the company has a little over $100 million outstanding in municipal leases, and originates $15 million to $20 million each year. He said over the first couple of years, he expects the portfolio to expand by 5% to 10%.

"We're not really buying any portfolios of leases," he said. "Really, they originate and sell, so it's not like we're going to add $50 million to our balance sheet. It really is just buying the expertise and the ability to continue to originate, not any large portfolio."