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Home BancShares, Inc. Is Proud to Announce Record Quarterly Net Income and Record Loan Origination While Overcoming Durbin and “HOMB $2.00” Expenses in Q3


CONWAY, Ark., Oct. 18, 2018 (GLOBE NEWSWIRE) — Home BancShares, Inc. (NASDAQ GS: HOMB), parent company of Centennial Bank, today announced a quarterly profit of $80.3 million for the third quarter of 2018 compared to $14.8 million, a 443% increase for the same quarter in 2017.  Diluted earnings per share for the third quarter of 2018 was $0.46 per share compared to $0.10 per share, for the same period in 2017.


Highlights of the Third Quarter of 2018:

Performance Metric Q3 Q2
Net Income $80.3 million $76.0 million
Total Revenue $205.9 million $194.2 million
Diluted Earnings Per Share $0.46 $0.44
ROA 2.14% 2.13%
ROTCE 24.56% 24.27%
Margin 4.46% 4.47%
Loan Origination $987 million $958 million

The Company’s third quarter 2017 earnings included a hurricane reserve as a result of Hurricane Irma, which made initial landfall in the Florida Keys as a Category 4 hurricane on September 10, 2017.  The Company accrued $33.4 million of pre-tax hurricane expenses in the third quarter of 2017.  Excluding the previously mentioned impact of Hurricane Irma, the $18.2 million of merger expenses associated with the Stonegate acquisition and $20.0 million tax-effect of the adjustments, third quarter 2017 earnings, as adjusted (non-GAAP), were $46.4 million.  As a result, the third quarter 2018 earnings of $80.3 million represent an increase of $33.8 million or 72.8% compared to the third quarter 2017 earnings, as adjusted.

“I am very proud to report that in our first quarter of swimming upstream with Durbin and HOMB $2.00 expenses, HOMB was still able to report record quarterly net income of $80.3 million and record quarterly loan originations of $987 million,” said John Allison, Chairman.

“Our first full quarter with Shore Premier Finance did not create the drag on margin as much as we anticipated, with 4.46% compared to 4.47% in the second quarter, mostly due to the strong contribution by Centennial CFG this quarter,” said Tracy French, Centennial Bank President and Chief Executive Officer, added.

“We are once again proud to report our most profitable quarter in the Company’s history,” said Randy Sims, Home BancShares, Inc. Chief Executive Officer.  “We continue to control expenses and are pleased to report another strong efficiency ratio of 37.23%.”

Operating Highlights

Net interest margin, on a fully taxable equivalent basis, was 4.46% for the quarter just ended compared to 4.40% for the same quarter in 2017.   Net interest margin for the third quarter of 2018 includes accretion income of $10.7 million and average purchase accounting loan discounts of $151.4 million, compared to accretion income of $7.2 million and average purchase accounting loan discounts of $98.0 million for the third quarter of 2017.  Accretion yield remained consistent at $10.7 million for both the second and third quarters of 2018.

During the third quarter of 2018, the Company did not record a provision for loan loss compared to $1.6 million, excluding the $33.4 million of hurricane expense, recorded in the third quarter of 2017.  The Company continues to see improvement in asset quality.  Non-performing loans to total loans was 0.52% as of September 30, 2018 compared to 0.62% as of September 30, 2017, an improvement of 16.2%. Non-performing assets to total assets also improved from 0.60% as of September 30, 2017 to 0.47% as of September 30, 2018, an improvement of 21.5%.  For the third quarter of 2018, net charge-offs were $1.3 million compared to net charge-offs of $3.5 million for the third quarter of 2017.

The Company reported $25.8 million of non-interest income for the third quarter of 2018, compared to $21.5 million for the third quarter of 2017.  The most important components of the third quarter non-interest income were $9.0 million from other service charges and fees, $7.0 million from service charges on deposits accounts, $3.7 million from mortgage lending income, $2.4 million from other income and $1.3 million from dividends from the FHLB, FRB, FNBB & other equity investments.

Non-interest expense for the third quarter of 2018 was $66.1 million compared to $70.8 million for the third quarter of 2017.  Excluding $18.2 million in merger expenses during the third quarter of 2017, non-interest expense increased $13.5 million from $52.6 million for the third quarter of 2017 to $66.1 million for the third quarter of 2018.  This increase excluding merger expenses is primarily the result of $9.3 million growth in salaries and employee benefits expense and $3.3 million growth in other operating expense resulting from the acquisition of Stonegate Bank in the third quarter of 2017.  For the third quarter of 2018, our efficiency ratio improved to 37.23% from the 53.77% reported for the third quarter of 2017.

Financial Condition

Total loans receivable were $10.83 billion at September 30, 2018 compared to $10.33 billion at December 31, 2017.  Total deposits were $10.62 billion at September 30, 2018 compared to $10.39 billion at December 31, 2017.  Total assets were $14.91 billion at September 30, 2018 compared to $14.45 billion at December 31, 2017.

During the third quarter 2018 the Company experienced approximately $67.5 million in organic loan decline.  Centennial CFG experienced $175.1 million of organic loan decline and had loans of $1.47 billion at September 30, 2018.  Our legacy footprint produced approximately $107.6 million in organic loan growth during the quarter.

Non-performing loans at September 30, 2018 were $14.5 million, $40.0 million, $133,000, $1.8 million and zero in the Arkansas, Florida, Alabama, Shore Premier and Centennial CFG markets, respectively, for a total of $56.5 million.  Non-performing assets at September 30, 2018 were $21.1 million, $46.7 million, $774,000, $1.8 million and zero in the Arkansas, Florida, Alabama, Shore Premier and Centennial CFG markets, respectively, for a total of $70.4 million.

The Company’s allowance for loan losses was $110.2 million at September 30, 2018, or 1.02% of total loans, compared to $110.3 million, or 1.07% of total loans, at December 31, 2017. As of September 30, 2018, and December 31, 2017, the Company’s allowance for loan losses was 195% and 247% of its total non-performing loans, respectively.

Stockholders’ equity was $2.34 billion at September 30, 2018 compared to $2.20 billion at December 31, 2017, an increase of $136.7 million. The increase in stockholders’ equity is primarily associated with the $171.2 million increase in retained earnings offset by $27.3 million of comprehensive loss and the repurchase of $43.2 million of our common stock during the first nine months of 2018. Book value per common share was $13.44 at September 30, 2018 compared to $12.70 at December 31, 2017.  Tangible book value per common share (non-GAAP) was $7.68 at September 30, 2018 compared to $7.07 at December 31, 2017, an annualized increase of 11.5%.

Branches

During the fourth quarter of 2018, the Company plans to open a loan production office in Dallas, Texas. The Company currently has 77 branches in Arkansas, 76 branches in Florida, 5 branches in Alabama and one branch in New York City.

Conference Call

Management will conduct a conference call to review this information at 1:00 p.m. CT (2:00 ET) on Thursday, October 18, 2018.  We encourage all participants to pre-register for the conference call using the following link:  http://dpregister.com/10123959.  Callers who pre-register will be given dial-in instructions and a unique PIN to gain immediate access to the live call.  Participants may pre-register now, or at any time prior to the call, and will immediately receive simple instructions via email.  The Home BancShares conference call will also be automatically scheduled as an event in your Outlook calendar.

Those without internet access or unable to pre-register may dial in and listen to the live call by calling 1-877-508-9586 and asking for the Home BancShares conference call.  A replay of the call will be available by calling 1-877-344-7529, Passcode: 10123959, which will be available until October 25, 2018 at 10:59 p.m. CT (11:59 ET).  Internet access to the call will be available live or in recorded version on the Company’s website at www.homebancshares.com under “Investor Relations” for 12 months.

Non-GAAP Financial Measures

This press release contains financial information determined by methods other than in accordance with generally accepted accounting principles (GAAP). The Company’s management uses these non-GAAP financial measures–including earnings, as adjusted; return on average assets excluding intangible amortization; return on average assets, as adjusted; return on average common equity excluding intangible amortization; efficiency ratio, as adjusted; tangible book value per common share; and the tangible common equity to tangible assets ratio–to provide meaningful supplemental information regarding our performance.  These measures typically adjust GAAP performance measures to include the tax benefit associated with revenue items that are tax-exempt, as well as adjust income available to common shareholders for certain significant items or transactions.  Since the presentation of these GAAP performance measures and their impact differ between companies, management believes presentations of these non-GAAP financial measures provide useful supplemental information that is essential to a proper understanding of the operating results of the Company’s business. These non-GAAP disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found in the tables of this release.

General

This release contains forward-looking statements regarding the Company’s plans, expectations, goals and outlook for the future. Statements in this press release that are not historical facts should be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements of this type speak only as of the date of this news release. By nature, forward-looking statements involve inherent risk and uncertainties. Various factors could cause actual results to differ materially from those contemplated by the forward-looking statements.  These factors include, but are not limited to, the following:  economic conditions, credit quality, interest rates, loan demand, the ability to successfully integrate new acquisitions, increased regulatory requirements as a result of our exceeding $10 billion in total assets, legislative and regulatory changes, technological changes and cybersecurity risks, competition from other financial institutions, changes in the assumptions used in making the forward-looking statements, and other factors described in reports we file with the Securities and Exchange Commission (the “SEC”), including those factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2017 filed with the SEC on February 27, 2018.

Home BancShares, Inc. is a bank holding company, headquartered in Conway, Arkansas. Its wholly-owned subsidiary, Centennial Bank, provides a broad range of commercial and retail banking plus related financial services to businesses, real estate developers, investors, individuals and municipalities. Centennial Bank has branch locations in Arkansas, Florida, South Alabama and New York City. The Company’s common stock is traded through the NASDAQ Global Select Market under the symbol “HOMB.”

FOR MORE INFORMATION CONTACT:

Donna Townsell
Director of Investor Relations
Home BancShares, Inc.
(501) 328-4625

Home BancShares, Inc.
 Consolidated End of Period Balance Sheets
 (Unaudited)
 Sep. 30,  Jun. 30,  Mar. 31,  Dec. 31,  Sep. 30,
 (In thousands)  2018  2018  2018  2017  2017
ASSETS
 Cash and due from banks $   208,681 $   197,658 $   185,479 $   166,915 $   197,953
 Interest-bearing deposits with other banks   323,376   298,085   325,122   469,018   354,367
  Cash and cash equivalents   532,057   495,743   510,601   635,933   552,320
 Federal funds sold   500   500   1,825   24,109   4,545
 Investment securities – available-for-sale   1,744,430   1,718,704   1,693,018   1,663,517   1,575,685
 Investment securities – held-to-maturity   199,266   204,401   213,731   224,756   234,945
 Loans receivable   10,832,815   10,897,970   10,325,736   10,331,188   10,286,193
 Allowance for loan losses   (110,191 )   (111,516 )   (110,212 )   (110,266 )   (111,620 )
  Loans receivable, net   10,722,624   10,786,454   10,215,524   10,220,922   10,174,573
 Bank premises and equipment, net   233,652   234,634   235,607   237,439   239,990
 Foreclosed assets held for sale   13,507   17,853   20,134   18,867   21,701
 Cash value of life insurance   148,014   147,281   147,424   146,866   146,158
 Accrued interest receivable   48,909   45,682   45,361   45,708   41,071
 Deferred tax asset, net   79,548   78,435   78,328   76,564   121,787
 Goodwill   958,408   956,418   927,949   927,949   929,129
 Core deposit and other intangibles   44,484   46,101   47,726   49,351   50,982
 Other assets   187,339   191,914   186,001   177,779   163,081
  Total assets $   14,912,738 $   14,924,120 $   14,323,229 $   14,449,760 $   14,255,967
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities
 Deposits:
  Demand and non-interest-bearing $   2,482,857 $   2,523,553 $   2,473,602 $   2,385,252 $   2,555,465
  Savings and interest-bearing transaction accounts   6,420,951   6,573,902   6,437,408   6,476,819   6,341,883
  Time deposits   1,720,930   1,638,578   1,485,605   1,526,431   1,551,422
    Total deposits   10,624,738   10,736,033   10,396,615   10,388,502   10,448,770
 Federal funds purchased   –   –   –   –   –
 Securities sold under agreements to repurchase   142,146   139,750   150,315   147,789   149,531
 FHLB and other borrowed funds   1,363,851   1,309,950   1,115,061   1,299,188   1,044,333
 Accrued interest payable and other liabilities   72,381   55,971   54,845   41,959   38,782
 Subordinated debentures   368,596   368,403   368,212   368,031   367,835
  Total liabilities   12,571,712   12,610,107   12,085,048   12,245,469   12,049,251
 Stockholders’ equity
 Common stock   1,741   1,745   1,736   1,736   1,737
 Capital surplus   1,668,106   1,693,337   1,671,141   1,675,318   1,674,642
 Retained earnings   701,900   642,540   585,586   530,658   526,448
 Accumulated other comprehensive (loss) income   (30,721 )   (23,609 )   (20,282 )   (3,421 )   3,889
  Total stockholders’ equity   2,341,026   2,314,013   2,238,181   2,204,291   2,206,716
  Total liabilities and stockholders’ equity $   14,912,738 $   14,924,120 $   14,323,229 $   14,449,760 $   14,255,967
Home BancShares, Inc.
 Consolidated Statements of Income
 (Unaudited)
 Quarter Ended  Nine Months Ended
 Sep. 30,  Jun. 30,  Mar. 31  Dec. 31,  Sep. 30,  Sep. 30,  Sep. 30,
 (In thousands)  2018  2018  2018  2017  2017  2018  2017
 Interest income
  Loans $   166,334 $   152,996 $   148,065 $   147,426 $   113,269 $   467,395 $   331,763
  Investment securities
    Taxable   9,011   8,979   8,970   7,793   7,071   26,960   18,983
    Tax-exempt   3,427   3,368   3,006   3,025   3,032   9,801   8,942
  Deposits – other banks   1,273   1,206   929   736   538   3,408   1,573
  Federal funds sold   6   12   6   1   3   24   9
 Total interest income   180,051   166,561   160,976   158,981   123,913   507,588   361,270
 Interest expense
  Interest on deposits   21,412   18,164   14,806   12,946   8,535   54,382   20,831
  Federal funds purchased   –   –   1   1   –   1   –
  FHLB borrowed funds   7,055   4,245   4,580   3,806   3,408   15,880   10,707
  Securities sold under agreements to repurchase   472   372   376   325   232   1,220   593
  Subordinated debentures   5,202   5,168   5,004   4,934   4,969   15,374   10,203
 Total interest expense   34,141   27,949   24,767   22,012   17,144   86,857   42,334
 Net interest income   145,910   138,612   136,209   136,969   106,769   420,731   318,936
  Provision for loan losses   –   2,722   1,600   4,926   35,023   4,322   39,324
 Net interest income after
  provision for loan losses   145,910   135,890   134,609   132,043   71,746   416,409   279,612
 Non-interest income
  Service charges on deposit accounts   6,992   6,780   6,075   6,566   6,408   19,847   18,356
  Other service charges and fees   9,041   9,797   10,155   10,144   8,490   28,993   25,983
  Trust fees   437   379   446   548   365   1,262   1,130
  Mortgage lending income   3,691   3,477   2,657   3,573   3,172   9,825   9,713
  Insurance commissions   463   526   679   466   472   1,668   1,482
  Increase in cash value of life insurance   735   730   654   738   478   2,119   1,251
  Dividends from FHLB, FRB, FNBB & other   1,288   1,600   877   1,030   834   3,765   2,455
  Gain on acquisitions   –   –   –   –   –   –   3,807
  Gain (loss) on SBA loans   47   262   182   –   163   491   738
  Gain (loss) on branches, equipment and other assets, net   (102 )   –   7   2   (1,337 )   (95 )   (962 )
  Gain (loss) on OREO, net   836   1,046   405   176   335   2,287   849
  Gain (loss) on securities, net   –   –   –   1,193   136   –   939
  Other income   2,419   3,076   3,668   2,856   1,941   9,163   6,603
 Total non-interest income   25,847   27,673   25,805   27,292   21,457   79,325   72,344
 Non-interest expense
  Salaries and employee benefits   37,825   34,476   35,014   35,404   28,510   107,315   83,965
  Occupancy and equipment   8,148   8,519   8,983   9,009   7,887   25,650   21,602
  Data processing expense   3,461   3,339   3,986   3,559   2,853   10,786   8,439
  Other operating expenses   16,689   16,894   15,397   15,246   31,596   48,980   62,984
 Total non-interest expense   66,123   63,228   63,380   63,218   70,846   192,731   176,990
 Income before income taxes    105,634   100,335   97,034   96,117   22,357   303,003   174,966
  Income tax expense   25,350   24,310   23,970   72,808   7,536   73,630   63,192
 Net income $   80,284 $   76,025 $   73,064 $   23,309 $   14,821 $   229,373 $   111,774
Home BancShares, Inc.
 Selected Financial Information
 (Unaudited)
 Quarter Ended  Nine Months Ended
 Sep. 30,  Jun. 30,  Mar. 31  Dec. 31,  Sep. 30,  Sep. 30,  Sep. 30,
 (Dollars and shares in thousands, except per share data)  2018  2018  2018  2017  2017  2018  2017
PER SHARE DATA
Diluted earnings per common share $   0.46 $   0.44 $   0.42 $   0.13 $   0.10 $   1.32 $   0.78
Diluted earnings per common share excluding gain on acquisitions, merger expenses, FDIC loss share buy-out
expense, reduced provision for loan losses as a result of a
significant loan recovery, hurricane expenses & effect of tax
rate change (non-GAAP)(1)
  0.46   0.44   0.42   0.35   0.32   1.32   1.00
Basic earnings per common share   0.46   0.44   0.42   0.13   0.10   1.32   0.78
Dividends per share – common   0.1200   0.1100   0.1100   0.1100   0.1100   0.3400   0.2900
Book value per common share   13.44   13.26   12.89   12.70   12.71   13.44   12.71
Tangible book value per common share (non-GAAP)(1)   7.68   7.52   7.27   7.07   7.06   7.68   7.06
STOCK INFORMATION
Average common shares outstanding   174,440   173,403   173,761   173,641   144,238   173,870   143,111
Average diluted shares outstanding   174,867   173,936   174,383   174,349   144,987   174,394   143,839
End of period common shares outstanding   174,135   174,511   173,603   173,633   173,666   174,135   173,666
ANNUALIZED PERFORMANCE METRICS
Return on average assets 2.14 % 2.13 % 2.08 % 0.66 % 0.54 % 2.12 % 1.41 %
Return on average assets excluding gain on acquisitions, merger expenses, FDIC loss share buy-out expense, reduced provision for loan losses as a result of a significant loan recovery, hurricane expenses & effect of tax rate change (non-GAAP)(1) 2.14 % 2.13 % 2.08 % 1.69 % 1.70 % 2.12 % 1.82 %
Return on average assets excluding intangible amortization (non-GAAP)(1) 2.33 % 2.32 % 2.27 % 0.73 % 0.59 % 2.31 % 1.49 %
Return on average assets excluding intangible amortization,  provision for loan losses, gain on acquisitions, merger expenses, FDIC loss share buy-out expense, hurricane expenses and income taxes (ROA, as adjusted) (non-GAAP)(1) 3.07 % 3.15 % 3.07 % 3.10 % 2.94 % 3.09 % 3.14 %
Return on average common equity 13.74 % 13.54 % 13.38 % 4.17 % 3.88 % 13.56 % 10.33 %
Return on average tangible common equity excluding intangible  amortization (non-GAAP)(1) 24.56 % 24.27 % 24.33 % 7.78 % 5.80 % 24.39 % 15.06 %
Efficiency ratio 37.23 % 36.74 % 37.83 % 37.05 % 53.77 % 37.26 % 43.92 %
Efficiency ratio, as adjusted (non-GAAP)(1) 37.40 % 37.03 % 37.97 % 37.35 % 39.12 % 37.46 % 37.79 %
Net interest margin – FTE 4.46 % 4.47 % 4.46 % 4.47 % 4.40 % 4.46 % 4.53 %
Fully taxable equivalent adjustment $   1,489 $   1,403 $   1,209 $   1,983 $   1,846 $   4,101 $   5,873
Total revenue   205,898   194,234   186,781   186,273   145,370   586,913   433,614
Total purchase accounting accretion   10,744   10,669   10,608   12,397   7,174   32,021   23,319
Average purchase accounting loan discounts   151,377   153,624   164,122   178,027   97,978   156,855   97,158
OTHER OPERATING EXPENSES
Advertising $   1,154 $   1,142 $   962 $   898 $   795 $   3,258 $   2,305
Merger and acquisition expenses   –   –   –   –   18,227   –   25,743
Amortization of intangibles   1,617   1,624   1,626   1,631   906   4,867   2,576
Electronic banking expense   1,947   1,828   1,878   1,777   1,712   5,653   4,885
Directors’ fees   314   318   330   313   309   962   946
Due from bank service charges   253   242   219   254   472   714   1,348
FDIC and state assessment   2,293   2,788   1,608   1,476   1,293   6,689   3,763
Insurance   762   714   887   814   577   2,363   1,698
Legal and accounting   761   858   778   1,194   698   2,397   1,799
Other professional fees   1,748   1,601   1,639   1,537   1,436   4,988   3,822
Operating supplies   510   602   600   602   432   1,712   1,376
Postage   311   323   344   323   280   978   861
Telephone   337   371   373   347   305   1,081   1,027
Other expense   4,682   4,483   4,153   4,080   4,154   13,318   10,835
  Total other operating expenses $   16,689 $   16,894 $   15,397 $   15,246 $   31,596 $   48,980 $   62,984
 (1)  Calculation of this metric and the reconciliation to GAAP is included in the schedules accompanying this release.
Home BancShares, Inc.
 Selected Financial Information
 (Unaudited)
 Sep. 30,   June. 30,   Mar. 31,   Dec. 31,   Sep. 30, 
 (Dollars in thousands)  2018  2018  2018  2017  2017
BALANCE SHEET RATIOS
Total loans to total deposits 101.96 % 101.51 % 99.32 % 99.45 % 98.44 %
Common equity to assets 15.70 % 15.51 % 15.63 % 15.25 % 15.48 %
Tangible common equity to tangible assets (non-GAAP)(1) 9.62 % 9.42 % 9.46 % 9.11 % 9.24 %
LOANS RECEIVABLE
Real estate
  Commercial real estate loans
    Non-farm/non-residential $   4,685,827 $   4,734,315 $   4,658,209 $   4,600,117 $   4,532,402
    Construction/land development   1,550,910   1,662,199   1,641,834   1,700,491   1,648,923
    Agricultural   72,930   77,053   81,151   82,229   88,295
  Residential real estate loans
    Residential 1-4 family   1,982,666   1,960,841   1,915,346   1,970,311   1,968,688
    Multifamily residential   608,608   540,526   464,194   441,303   497,910
Total real estate   8,900,941   8,974,934   8,760,734   8,794,451   8,736,218
Consumer   428,192   417,499   40,842   46,148   51,515
Commercial and industrial   1,303,841   1,287,637   1,324,173   1,297,397   1,296,485
Agricultural   58,644   55,768   50,770   49,815   57,489
Other   141,197   162,132   149,217   143,377   144,486
  Loans receivable $   10,832,815 $   10,897,970 $   10,325,736 $   10,331,188 $   10,286,193
Discount for credit losses on purchased loans $   120,849 $   129,903 $   137,404 $   146,557 $   158,001
Purchased loans, net of discount for credit losses on purchased loans   3,081,695   3,522,753   3,232,004   3,464,990   3,653,079
ALLOWANCE FOR LOAN LOSSES
Balance, beginning of period $   111,516 $   110,212 $   110,266 $   111,620 $   80,138
Loans charged off   2,501   2,132   2,540   6,936   4,424
Recoveries of loans previously charged off   1,176   714   886   656   883
  Net loans (recovered)/charged off   1,325   1,418   1,654   6,280   3,541
Provision for loan losses   –   2,722   1,600   4,926   35,023
Balance, end of period $   110,191 $   111,516 $   110,212 $   110,266 $   111,620
Net (recoveries) charge-offs to average total loans 0.05 % 0.05 % 0.06 % 0.24 % 0.18 %
Allowance for loan losses to total loans 1.02 % 1.02 % 1.07 % 1.07 % 1.09 %
NON-PERFORMING ASSETS
Non-performing loans
  Non-accrual loans $   36,198 $   37,082 $   36,266 $   34,032 $   34,794
  Loans past due 90 days or more   20,267   19,696   13,223   10,665   29,183
    Total non-performing loans   56,465   56,778   49,489   44,697   63,977
Other non-performing assets
  Foreclosed assets held for sale, net   13,507   17,853   20,134   18,867   21,701
  Other non-performing assets   405   3   3   3   3
    Total other non-performing assets   13,912   17,856   20,137   18,870   21,704
    Total non-performing assets $   70,377 $   74,634 $   69,626 $   63,567 $   85,681
Allowance for loan losses for loans to non-performing loans 195.15 % 196.41 % 222.70 % 246.70 % 174.47 %
Non-performing loans to total loans 0.52 % 0.52 % 0.48 % 0.43 % 0.62 %
Non-performing assets to total assets 0.47 % 0.50 % 0.49 % 0.44 % 0.60 %
 (1)  Calculation of this metric and the reconciliation to GAAP is included in the schedules accompanying this release.
Home BancShares, Inc.
 Consolidated Net Interest Margin
 (Unaudited)
 Three Months Ended
 September 30, 2018  June 30, 2018
 Average  Income/  Yield/  Average  Income/  Yield/
 (Dollars in thousands)  Balance  Expense  Rate  Balance  Expense  Rate
ASSETS
 Earning assets
  Interest-bearing balances due from banks $   281,115 $   1,273 1.80 % $   288,643 $   1,206 1.68 %
  Federal funds sold   524   6 4.54 %   679   12 7.09 %
  Investment securities – taxable   1,526,455   9,011 2.34 %   1,528,613   8,979 2.36 %
  Investment securities – non-taxable – FTE   402,355   4,507 4.44 %   398,067   4,476 4.51 %
  Loans receivable – FTE   10,909,646   166,743 6.06 %   10,345,846   153,291 5.94 %
    Total interest-earning assets   13,120,095   181,540 5.49 %   12,561,848   167,964 5.36 %
  Non-earning assets   1,760,836   1,742,635
    Total assets $  14,880,931 $  14,304,483
LIABILITIES AND SHAREHOLDERS’ EQUITY
 Liabilities
  Interest-bearing liabilities
    Savings and interest-bearing transaction accounts $   6,406,711 $   15,596 0.97 % $   6,451,204 $   13,489 0.84 %
    Time deposits   1,661,129   5,816 1.39 %   1,611,353   4,675 1.16 %
      Total interest-bearing deposits   8,067,840   21,412 1.05 %   8,062,557   18,164 0.90 %
  Federal funds purchased   –   – 0.00 %   46   – 0.00 %
  Securities sold under agreement to repurchase   148,791   472 1.26 %   143,952   372 1.04 %
  FHLB borrowed funds   1,398,738   7,055 2.00 %   928,357   4,245 1.83 %
  Subordinated debentures   368,501   5,202 5.60 %   368,309   5,168 5.63 %
      Total interest-bearing liabilities   9,983,870   34,141 1.36 %   9,503,221   27,949 1.18 %
  Non-interest bearing liabilities
    Non-interest bearing deposits   2,512,690   2,496,701
    Other liabilities   66,441   53,149
      Total liabilities   12,563,001   12,053,071
 Shareholders’ equity   2,317,930   2,251,412
    Total liabilities and shareholders’ equity $  14,880,931 $  14,304,483
 Net interest spread 4.13 % 4.18 %
 Net interest income and margin – FTE $   147,399 4.46 % $   140,015 4.47 %
Home BancShares, Inc.
 Consolidated Net Interest Margin
 (Unaudited)
 Nine Months Ended
 September 30, 2018  September 30, 2017
 Average  Income/  Yield/  Average  Income/  Yield/
 (Dollars in thousands)   Balance   Expense  Rate   Balance   Expense  Rate
ASSETS
 Earning assets
  Interest-bearing balances due from banks $   271,987 $   3,408 1.68 % $   218,324 $   1,573 0.96 %
  Federal funds sold   3,595   24 0.89 %   1,161   9 1.04 %
  Investment securities – taxable   1,538,387   26,960 2.34 %   1,231,619   18,983 2.06 %
  Investment securities – non-taxable – FTE   382,088   12,981 4.54 %   347,578   14,506 5.58 %
  Loans receivable – FTE   10,529,117   468,316 5.95 %   7,785,925   332,072 5.70 %
    Total interest-earning assets   12,725,174   511,689 5.38 %   9,584,607   367,143 5.12 %
  Non-earning assets   1,750,456   1,033,310
    Total assets $  14,475,630 $  10,617,917
LIABILITIES AND SHAREHOLDERS’ EQUITY
 Liabilities
  Interest-bearing liabilities
    Savings and interest-bearing transaction accounts $   6,422,489 $   40,327 0.84 % $   4,316,032 $   13,445 0.42 %
    Time deposits   1,595,985   14,055 1.18 %   1,415,383   7,386 0.70 %
      Total interest-bearing deposits   8,018,474   54,382 0.91 %   5,731,415   20,831 0.49 %
  Federal funds purchased   41   1 3.26 %   –   – 0.00 %
  Securities sold under agreement to repurchase   148,472   1,220 1.10 %   129,580   593 0.61 %
  FHLB borrowed funds   1,159,973   15,880 1.83 %   1,155,503   10,707 1.24 %
  Subordinated debentures   368,313   15,374 5.58 %   258,032   10,203 5.29 %
    Total interest-bearing liabilities   9,695,273   86,857 1.20 %   7,274,530   42,334 0.78 %
  Non-interest bearing liabilities
    Non-interest bearing deposits   2,464,032   1,847,843
    Other liabilities   54,731   48,804
      Total liabilities   12,214,036   9,171,177
 Shareholders’ equity   2,261,594   1,446,740
    Total liabilities and shareholders’ equity $  14,475,630 $  10,617,917
 Net interest spread 4.18 % 4.34 %
 Net interest income and margin – FTE $   424,832 4.46 % $   324,809 4.53 %

 

Home BancShares, Inc.
 Non-GAAP Reconciliations
 (Unaudited)
 Quarter Ended  Nine Months Ended
 (Dollars and shares in thousands,  Sep. 30,  Jun. 30,  Mar. 31  Dec. 31,  Sep. 30,  Sep. 30,  Sep. 30,
 except per share data)  2018  2018  2018  2017  2017  2018  2017
EARNINGS, AS ADJUSTED
GAAP net income available to common shareholders (A) $   80,284 $   76,025 $   73,064 $   23,309 $   14,821 $   229,373 $   111,774
Adjustments
Gain on acquisitions   –   –   –   –   –   –   (3,807 )
Merger and acquisition expenses   –   –   –   –   18,227   –   25,743
Hurricane expenses(1)   –   –   –   –   33,445   –   33,445
Effect of tax rate change   –   –   –   36,935   –   –   –
Total adjustments   –   –   –   36,935   51,672   –   55,381
Tax-effect of adjustments(2)   –   –   –   –   20,045   –   22,626
Adjustments after-tax (B)   –   –   –   36,935   31,627   –   32,755
Earnings, as adjusted (C) $   80,284 $   76,025 $   73,064 $   60,244 $   46,448 $   229,373 $   144,529
Average diluted shares outstanding (D)   174,867   173,936   174,383   174,349   144,987   174,394   143,839
GAAP diluted earnings per share: A/D $   0.46 $   0.44 $   0.42 $   0.13 $   0.10 $   1.32 $   0.78
Adjustments after-tax: B/D   –   –   –   0.22   0.22   –   0.22
Diluted earnings per common share excluding gain on acquisitions, merger expenses,  hurricane expenses & effect of tax rate change: C/D $   0.46 $   0.44 $   0.42 $   0.35 $   0.32 $   1.32 $   1.00
ANNUALIZED RETURN ON AVERAGE ASSETS
Return on average assets: A/H 2.14 % 2.13 % 2.08 % 0.66 % 0.54 % 2.12 % 1.41 %
Return on average assets excluding gain on acquisitions, merger expenses, hurricane expenses & effect of tax rate change: (A+F)/H 2.14 % 2.13 % 2.08 % 1.69 % 1.70 % 2.12 % 1.82 %
Return on average assets excluding intangible amortization:  (A+C)/(H-I) 2.33 % 2.32 % 2.27 % 0.73 % 0.59 % 2.31 % 1.49 %
Return on average assets excluding intangible amortization, provision for loan losses, gain on acquisitions, merger expenses, hurricane expenses and income taxes (ROA, as adjusted): (A+B+D+E+G)/(H-I) 3.07 % 3.15 % 3.07 % 3.10 % 2.94 % 3.09 % 3.14 %
GAAP net income available to common shareholders (A) $   80,284 $   76,025 $   73,064 $   23,309 $   14,821 $   229,373 $   111,774
Amortization of intangibles (B)   1,617   1,624   1,626   1,631   906   4,867   2,576
Amortization of intangibles after-tax (C)   1,194   1,200   1,201   991   551   3,595   1,566
Provision for loan losses excluding hurricane provision (D)   –   2,722   1,600   4,926   2,134   4,322   6,435
Total adjustments (E)   –   –   –   36,935   51,672   –   55,381
Adjustments after-tax (F)   –   –   –   36,935   31,627   –   32,755
Income tax expense excluding effect of tax rate change (G)   25,350   24,310   23,970   35,873   7,536   73,630   63,192
Average assets (H) 14,880,931 14,304,483 14,234,369 14,113,936 10,853,559 14,475,630 10,617,917
Average goodwill, core deposits & other intangible assets (I)   1,001,843   975,345   976,451   979,209   462,799   984,639   440,465
 (1)  Hurricane expenses include $32,889 of provision for loan losses and $556 of damage expense related to Hurricane Irma.
 (2)  Effective tax rate of 39.225%, adjusted for non-taxable gain on acquisition and non-deductible merger-related costs.
Home BancShares, Inc.
 Non-GAAP Reconciliations
 (Unaudited)
 Quarter Ended  Nine Months Ended
 (Dollars and shares in thousands,  Sep. 30,  Jun. 30,  Mar. 31  Dec. 31,  Sep. 30,  Sep. 30,  Sep. 30,
 except per share data)  2018  2018  2018  2017  2017  2018  2017
ANNUALIZED RETURN ON AVERAGE COMMON EQUITY
Return on average common equity: A/C 13.74 % 13.54 % 13.38 % 4.17 % 3.88 % 13.56 % 10.33 %
Return on average tangible common equity excluding intangible  amortization: (A+B)/(C-D) 24.56 % 24.27 % 24.33 % 7.78 % 5.80 % 24.39 % 15.06 %
GAAP net income available to common shareholders (A) $   80,284 $   76,025 $   73,064 $   23,309 $   14,821 $   229,373 $   111,774
Amortization of intangibles after-tax (B)   1,194   1,200   1,201   991   551   3,595   1,566
Average common equity (C)   2,317,930   2,251,412   2,214,302   2,218,549   1,513,829   2,261,594   1,446,740
Average goodwill, core deposits & other intangible assets (D)   1,001,843   975,345   976,451   979,209   462,799   984,639   440,465
EFFICIENCY RATIO
 Efficiency ratio:  ((C-E)/(A+B+D)) 37.23 % 36.74 % 37.83 % 37.05 % 53.77 % 37.26 % 43.92 %
 Efficiency ratio, as adjusted:  ((C-E-G)/(A+B+D-F)) 37.40 % 37.03 % 37.97 % 37.35 % 39.12 % 37.46 % 37.79 %
 Net interest income (A) $   145,910 $   138,612 $   136,209 $   136,969 $   106,769 $   420,731 $   318,936
 Non-interest income (B)   25,847   27,673   25,805   27,292   21,457   79,325   72,344
 Non-interest expense (C)   66,123   63,228   63,380   63,218   70,846   192,731   176,990
 Fully taxable equivalent adjustment (D)   1,489   1,403   1,209   1,983   1,846   4,101   5,873
 Amortization of intangibles (E)   1,617   1,624   1,626   1,631   906   4,867   2,576
 Adjustments:
 Non-interest income:
 Gain on acquisition $   – $   – $   – $   – $   – $   – $   3,807
 Gain (loss) on OREO   836   1,046   405   176   335   2,287   849
 Gain (loss) on SBA loans   47   262   182   –   163   491   738
 Gain (loss) on branches, equipment and other   assets, net   (102 )   –   7   2   (1,337 )   (95 )   (962 )
 Gain (loss) on securities   –   –   –   1,193   136   –   939
 Recoveries on historic losses   –   –   –   –   –   –   –
  Total non-interest income adjustments (F) $   781 $   1,308 $   594 $   1,371 $   (703 ) $   2,683 $   5,371
 Non-interest expense:
 Merger Expenses $   – $   – $   – $   – $   18,227 $   – $   25,743
 Hurricane damage expense   –   –   –   –   556   –   556
 Vacant properties write-downs   –   –   –   –   –   –   47
  Total non-interest expense adjustments (G) $   – $   – $   – $   – $   18,783 $   – $   26,346
Home BancShares, Inc.
 Non-GAAP Reconciliations
 (Unaudited)
 Sep. 30,  Jun. 30,  Mar. 31,  Dec. 31,  Sep. 30, 
 (Dollars in thousands)  2018  2018  2018  2017  2017
TANGIBLE BOOK VALUE PER COMMON SHARE
 Book value per common share: A/B $   13.44 $   13.26 $   12.89 $   12.70 $   12.71
 Tangible book value per common share: (A-C-D)/B   7.68   7.52   7.27   7.07   7.06
 Total stockholders’ equity (A) $   2,341,026 $   2,314,013 $   2,238,181 $   2,204,291 $   2,206,716
 End of period common shares outstanding (B)   174,135   174,511   173,603   173,633   173,666
 Goodwill (C) $   958,408 $   956,418 $   927,949 $   927,949 $   929,129
 Core deposit and other intangibles (D)   44,484   46,101   47,726   49,351   50,982
TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS
 Equity to assets: B/A 15.70 % 15.51 % 15.63 % 15.25 % 15.48 %
 Tangible common equity to tangible assets: (B-C-D)/(A-C-D) 9.62 % 9.42 % 9.46 % 9.11 % 9.24 %
 Total assets (A) $   14,912,738 $   14,924,120 $   14,323,229 $   14,449,760 $   14,255,967
 Total stockholders’ equity (B)   2,341,026   2,314,013   2,238,181   2,204,291   2,206,716
 Goodwill (C)   958,408   956,418   927,949   927,949   929,129
 Core deposit and other intangibles (D)   44,484   46,101   47,726   49,351   50,982

Source: Home BancShares, Inc.

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