Home BancShares, Inc. Announces Third Quarter Earnings

10/19/2017

CONWAY, Ark., Oct. 19, 2017 (GLOBE NEWSWIRE) -- Home BancShares, Inc. (NASDAQ:HOMB), parent company of Centennial Bank, today announced a quarterly profit of $14.8 million for the third quarter of 2017 compared to $43.6 million, for the same quarter in 2016.  Diluted earnings per share for the third quarter of 2017 was $0.10 per share compared to $0.31 per share for the same period in 2016.  

The Company’s third quarter earnings were significantly impacted by Hurricane Irma which made initial landfall in the Florida Keys and a second landfall just south of Naples, Florida, as a Category 4 hurricane on September 10, 2017. While the total impact of this hurricane on Home BancShares’s financial condition and results of operation may not be known for some time, the Company has included in third quarter earnings, certain charges, including the establishment of reserves, related to the hurricane.  Based on initial assessments of the potential credit impact and damage, the Company has accrued $33.4 million of pre-tax hurricane expenses.  The $33.4 million of hurricane expenses include the following items: $32.9 million to establish a storm-related provision for loan losses and a $556,000 charge related to direct expenses incurred through September 30, 2017.

Excluding the previously mentioned impact of Hurricane Irma and the $18.2 million of merger expenses associated with the Stonegate acquisition, third quarter 2017 after-tax non-fundamental earnings were $46.4 million, an increase of 1.1%, from third quarter 2016 after-tax non-fundamental earnings.

“We are pleased with the successful completion of our substantial acquisition of Stonegate Bank during the third quarter of 2017,” said John Allison, Chairman.  “Throughout the remainder of the year, we will remain extremely focused on gaining efficiencies from our merger, while strategically investing for growth and building a quality franchise. Despite the challenges that came with the recent hurricane and completing a major acquisition, we achieved diluted earnings per share excluding merger and hurricane expenses of $0.32 per share for the third quarter of 2017.”

“A significant portion of Home BancShares’s South Florida market area and customer base have been adversely impacted by Hurricane Irma,” stated Tracy French, Centennial Bank President and Chief Executive Officer.  “Our sincere sympathy goes out to all affected by this storm.  Home BancShares has been deeply impacted by the storm with many of our customers and employees losing homes and several of our banking facilities damaged or destroyed.  Immediately after the storms passed, we secured our people and their families, ensured a safe working environment for our associates and focused our entire organization on serving our customers’ needs.  Home BancShares is working diligently to assist our customers and communities in the rebuilding process.  We are proud of our associates in the outstanding teamwork and care they have shown during this challenging time.”

Randy Sims, President and CEO of Home BancShares, remarked, “The actions the Company has demonstrated so far this year, especially surrounding the recent hurricane, reflect critical elements of our mission statement and community banking philosophy: a strong sense of community, exceptional customer service, shareholder focus, and high performing growth.”

Operating Highlights

Accretion yield decreased approximately $1.3 million from $8.5 million for the second quarter of 2017 to $7.2 million for third quarter of 2017.  Each quarter we perform credit impairment tests on the loans acquired in our acquisitions.  During our third quarter 2017 impairment testing, several pools were determined to have a material projected credit improvement.  This projected credit improvement offset by the expected decline in accretion income from the maturing and reduction of pay-offs in the acquired loan portfolios, resulted in a net decline of recognized accretion income when compared to the second quarter of 2017.  The net decline of recognized accretion income when compared to the second quarter of 2017 is primarily due to pay-off accretion decreasing from $2.6 million to $1.7 million.

Net interest margin, on a fully taxable equivalent basis, was 4.40% for the quarter just ended compared to 4.86% for the same quarter in 2016 and compared to 4.50% for the second quarter of 2017.  The net interest margin, excluding accretion yield, decreased when comparing the second quarter of 2017 to the third quarter of 2017 at 4.11% and 4.07%, respectively.  The decrease in net interest margin is primarily the result of reduced net interest income.

During the third quarter of 2017, the Company recorded a provision for loan loss of $35.0 million compared to $5.5 million in the third quarter of 2016.  Of the $35.0 million provision for loan loss, $32.9 million is from the previously mentioned storm-related provision for loan losses.

The Company reported $21.5 million of non-interest income for the third quarter of 2017, compared to $22.0 million for the third quarter of 2016.  The most important components of the third quarter non-interest income were $8.5 million from other service charges and fees, $6.4 million from service charges on deposits accounts, $3.2 million from mortgage lending income, $1.9 million from other income and $1.3 million loss on branches, equipment, and other assets, net.

Non-interest expense for the third quarter of 2017 was $70.8 million compared to $51.0 million for the third quarter of 2016.  Non-interest expense excluding merger expenses and FDIC loss share buy-out expense for the third quarter of 2017 was $52.6 million compared to $47.2 million for the third quarter of 2016, an increase of $5.4 million.  This increase excluding merger expenses and FDIC loss share buy-out expense is primarily the result of an increase in the costs associated with asset growth from the acquisitions in the first quarter of 2017 combined with approximately $1.1 million of growth in non-interest expense related to the Centennial Commercial Finance Group (“Centennial CFG”) and $556,000 of hurricane damage expense when compared to the third quarter of 2016.  For the third quarter of 2017, our core efficiency ratio was 39.12% which has increased from the 36.51% reported for third quarter of 2016.

Financial Condition

Total loans receivable were $10.29 billion at September 30, 2017 compared to $7.39 billion at December 31, 2016.  Total deposits were $10.45 billion at September 30, 2017 compared to $6.94 billion at December 31, 2016.  Total assets were $14.26 billion at September 30, 2017 compared to $9.81 billion at December 31, 2016.

During the first nine months of 2017, the Company acquired $2.82 billion of loans, net of purchase accounting discounts. From December 31, 2016 to September 30, 2017, the Company produced approximately $73.8 million of organic loan growth.  Centennial CFG produced $113.7 million of net organic loan growth during the first nine months of 2017 while the legacy footprint experienced significant net payoffs during the first nine months of 2017, resulting in a decline of $39.9 million.

During the third quarter of 2017, the Company acquired $2.37 billion of loans, net of purchase accounting discounts.  From June 30, 2017 to September 30, 2017, the Company experienced organic growth in loans receivable of approximately $73.2 million.  During the third quarter of 2017, Centennial CFG produced $73.4 million of organic loan growth, while the legacy footprint remained relatively unchanged.  Centennial CFG had loans of $1.22 billion at September 30, 2017.

Non-performing loans at September 30, 2017 were $24.3 million, $39.6 million, $83,000 and zero in the Arkansas, Florida, Alabama and Centennial CFG markets, respectively, for a total of $64.0 million.  Non-performing loans as a percent of total loans were 0.62% as of September 30, 2017 compared to 0.85% as of December 31, 2016.  Non-performing assets at September 30, 2017 were $36.4 million, $48.6 million, $724,000 and zero in the Arkansas, Florida and Alabama and Centennial CFG markets, respectively, for a total of $85.7 million.  Non-performing assets as a percent of total assets were 0.60% as of September 30, 2017 compared to 0.81% as of December 31, 2016.

The Company’s allowance for loan losses was $111.6 million at September 30, 2017, or 1.09% of total loans, compared to $80.0 million, or 1.08% of total loans, at December 31, 2016.  This increase is primarily the result of the $32.9 million storm-related provision for loan loss recorded during the third quarter of 2017 offset by acquiring $2.82 billion of loans during 2017 which do not have an associated allowance for loan losses as a result of purchase accounting.  As of September 30, 2017 and December 31, 2016, the Company’s allowance for loan losses was 174% and 127% of its total non-performing loans, respectively.

During the third quarter of 2017, the Company acquired $2.53 billion of deposits, net of purchase accounting discounts.  From June 30, 2017 to September 30, 2017, the Company experienced organic growth in deposits of approximately $155.7 million.

Stockholders’ equity was $2.21 billion at September 30, 2017 compared to $1.33 billion at December 31, 2016, an increase of $879.2 million.  The increase in stockholders’ equity is primarily associated with the $77.5 million and $742.3 million of common stock issued to the GHI and Stonegate shareholders, respectively, plus the $70.5 million increase in retained earnings combined with $3.5 million of comprehensive income offset by the repurchase of $19.5 million of our common stock during the first nine months of 2017.  The annualized improvement in stockholders’ equity for the first nine months of 2017 excluding the $819.8 million of common stock issued to both the GHI and Stonegate shareholders was 6.0%.  Book value per common share was $12.71 at September 30, 2017 compared to $9.45 at December 31, 2016 for an annualized increase of 46.1%.  Tangible book value per common share was $7.06 at September 30, 2017 compared to $6.63 at December 31, 2016 for an annualized increase of 8.7%.

Due to the short time period between the completion of the Stonegate acquisition and September 30, 2017, the purchase price allocation and certain fair value measurements remain preliminary.  The Company will continue to review the estimated fair values of loans, deposits, property and equipment, intangible assets, and other assets and liabilities, and to evaluate the assumed tax positions and contingencies.

Branches

During the fourth quarter of 2017, the Company has plans to close a branch location in Daphne, Alabama.  The Company currently has 76 branches in Arkansas, 89 branches in Florida, 6 branches in Alabama and one branch in New York City.  As a result of Hurricane Irma, our Naples, Florida branch location will remain closed until further notice.

Conference Call

Management will conduct a conference call to review this information at 1:00 p.m. CT (2:00 ET) on Thursday, October 19, 2017.  We encourage all participants to pre-register for the conference call using the following link:  http://dpregister.com/10112266.  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: 10112266, which will be available until October 26, 2017 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 excluding non-fundamental items, return on average assets excluding intangible amortization, return on average assets excluding non-fundamental items, return on average common equity excluding intangible amortization, core efficiency ratio, non-GAAP net interest margin, 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 non-fundamental items or non-recurring 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 core 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: the effects of future local, regional, national and international economic conditions, including inflation or a decrease in commercial real estate and residential housing values; changes in the level of nonperforming assets and charge-offs, and credit risk generally; the risks of changes in interest rates or the level and composition of deposits, loan demand and the values of loan collateral, securities and interest-sensitive assets and liabilities; the effect of any mergers, acquisitions or other transactions to which we or our bank subsidiary may from time to time be a party, including our ability to successfully integrate any businesses that we acquire; the risk that expected cost savings and other benefits from acquisitions may not be fully realized or may take longer to realize than expected; the possibility that an acquisition does not close when expected or at all because required regulatory, shareholder or other approvals and other conditions to closing are not received or satisfied on a timely basis or at all; the reaction to a proposed acquisition transaction of the respective companies’ customers, employees and counterparties; diversion of management time on acquisition-related issues; the ability to enter into and/or close additional acquisitions; the availability of and access to capital on terms acceptable to us; increased regulatory requirements and supervision that will apply as a result of our exceeding $10 billion in total assets; legislation and regulation affecting the financial services industry as a whole, and the Company and its subsidiaries in particular, including the effects resulting from the reforms enacted by the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) and the adoption of regulations by regulatory bodies under the Dodd-Frank Act; governmental monetary and fiscal policies, as well as legislative and regulatory changes, including as a result of initiatives of the newly elected administration of President Donald J. Trump; the effects of terrorism and efforts to combat it; political instability; the ability to keep pace with technological changes, including changes regarding cybersecurity; an increase in the incidence or severity of fraud, illegal payments, security breaches or other illegal acts impacting our bank subsidiary or our customers; the effects of competition from other commercial banks, thrifts, mortgage banking firms, consumer finance companies, credit unions, securities brokerage firms, insurance companies, money market and other mutual funds and other financial institutions operating in our market area and elsewhere, including institutions operating regionally, nationally and internationally, together with competitors offering banking products and services by mail, telephone and the Internet; the effect of changes in accounting policies and practices and auditing requirements, as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board, and other accounting standard setters; higher defaults on our loan portfolio than we expect; and the failure of assumptions underlying the establishment of our allowance for loan losses or changes in our estimate of the adequacy of the allowance for loan losses.  Additional information on factors that might affect Home BancShares, Inc.'s financial results is included in its Annual Report on Form 10-K for the year ended December 31, 2016 filed with the Securities and Exchange Commission (the “SEC”) on February 28, 2017.

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:

Jennifer C. Floyd
Chief Accounting Officer &
Investor Relations Officer
Home BancShares, Inc.
(501) 339-2929

 Home BancShares, Inc.   
 Consolidated End of Period Balance Sheets   
 (Unaudited)   
               
     Sep. 30,   Jun. 30,   Mar. 31,   Dec. 31,   Sep. 30,   
 (In thousands)       2017         2017         2017         2016         2016     
                                           
ASSETS                                          
                                           
 Cash and due from banks    $   197,953     $   147,041     $   163,662     $   123,758     $   123,126    
 Interest-bearing deposits with other banks        354,367         313,447         253,427         92,891         173,034    
  Cash and cash equivalents        552,320         460,488         417,089         216,649         296,160    
 Federal funds sold        4,545       -         1,700         1,550         1,850    
 Investment securities - available-for-sale        1,575,685         1,400,431         1,250,590         1,072,920         1,233,269    
 Investment securities - held-to-maturity        234,945         254,161         276,599         284,176         275,544    
 Loans receivable        10,286,193         7,834,475         7,849,645         7,387,699         7,112,291    
 Allowance for loan losses        (111,620 )       (80,138 )       (80,311 )       (80,002 )       (76,370 )  
  Loans receivable, net        10,174,573         7,754,337         7,769,334         7,307,697         7,035,921    
 Bank premises and equipment, net        239,990         207,071         212,813         205,301         208,137    
 Foreclosed assets held for sale        21,701         18,789         17,315         15,951         17,053    
 Cash value of life insurance        146,158         97,684         97,223         86,491         86,230    
 Accrued interest receivable        41,071         32,445         32,413         30,838         29,398    
 Deferred tax asset, net        121,787         68,368         67,063         61,298         56,435    
 Goodwill        929,129         420,941         420,941         377,983         377,983    
 Core deposit and other intangibles        50,982         21,019         21,885         18,311         19,073    
 Other assets        163,081         136,494         132,503         129,300         127,185    
  Total assets    $   14,255,967     $   10,872,228     $   10,717,468     $   9,808,465     $   9,764,238    
               
LIABILITIES AND STOCKHOLDERS' EQUITY              
               
Liabilities              
 Deposits:               
  Demand and non-interest-bearing    $   2,555,465     $   1,957,677     $   1,862,996     $   1,695,184     $   1,717,467    
  Savings and interest-bearing transaction accounts        6,341,883         4,335,456         4,274,194         3,963,241         3,792,229    
  Time deposits        1,551,422         1,474,255         1,430,017         1,284,002         1,330,597    
  Total deposits        10,448,770         7,767,388         7,567,207         6,942,427         6,840,293    
 Federal funds purchased      -       -       -       -       -    
 Securities sold under agreements to repurchase        149,531         133,741         123,793         121,290         109,350    
 FHLB and other borrowed funds        1,044,333         1,099,478         1,455,040         1,305,198         1,420,369    
 Accrued interest payable and other liabilities        38,782         37,751         69,125         51,234         37,382    
 Subordinated debentures        367,835         357,838         60,735         60,826         60,826    
  Total liabilities        12,049,251         9,396,196         9,275,900         8,480,975         8,468,220    
               
 Stockholders' equity               
 Common stock        1,737         1,431         1,434         1,405         1,405    
 Capital surplus        1,674,642         940,821         948,982         869,737         866,310    
 Retained earnings        526,448         527,338         490,142         455,948         419,999    
 Accumulated other comprehensive income        3,889         6,442         1,010         400         8,304    
  Total stockholders' equity        2,206,716         1,476,032         1,441,568         1,327,490         1,296,018    
  Total liabilities and stockholders' equity    $   14,255,967     $   10,872,228     $   10,717,468     $   9,808,465     $   9,764,238    
               

 

 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)       2017         2017       2017         2016         2016           2017         2016     
                                                           
 Interest income                                                           
  Loans    $   113,269     $   112,732   $   105,762     $   103,113     $   102,953       $   331,763     $   300,281    
  Investment securities                     
  Taxable        7,071         6,434       5,478         5,068         5,583           18,983         16,178    
  Tax-exempt        3,032         2,966       2,944         3,059         2,720           8,942         8,358    
  Deposits - other banks        538         727       308         146         117           1,573         325    
  Federal funds sold        3         4       2         2         2           9         7    
                     
 Total interest income        123,913         122,863       114,494         111,388         111,375           361,270         325,149    
                     
 Interest expense                     
  Interest on deposits        8,535         6,810       5,486         4,398         4,040           20,831         11,528    
  Federal funds purchased      -       -     -       -       -         -         2    
  FHLB borrowed funds        3,408         3,710       3,589         3,201         3,139           10,707         9,283    
  Securities sold under agreements to repurchase        232         196       165         153         142           593         421    
  Subordinated debentures        4,969         4,795       439         429         401           10,203         1,164    
                     
 Total interest expense        17,144         15,511       9,679         8,181         7,722           42,334         22,398    
                     
 Net interest income        106,769         107,352       104,815         103,207         103,653           318,936         302,751    
  Provision for loan losses        35,023         387       3,914         1,703         5,536           39,324         16,905    
 Net interest income after                     
  provision for loan losses        71,746         106,965       100,901         101,504         98,117           279,612         285,846    
                     
 Non-interest income                     
  Service charges on deposit accounts        6,408         5,966       5,982         6,442         6,527           18,356         18,607    
  Other service charges and fees        8,490         8,576       8,917         7,611         7,504           25,983         22,589    
  Trust fees        365         309       456         329         365           1,130         1,128    
  Mortgage lending income        3,172         3,750       2,791         4,123         3,932           9,713         10,276    
  Insurance commissions        472         465       545         488         534           1,482         1,808    
  Increase in cash value of life insurance        478         463       310         320         344           1,251         1,092    
  Dividends from FHLB, FRB, Bankers' Bank & other        834         472       1,149         944         808           2,455         2,147    
  Gain on acquisitions        -          -        3,807         -          -            3,807         -     
  Gain (loss) on SBA loans        163         387       188         645         364           738         443    
  Gain (loss) on branches, equipment and
  other assets, net 
      (1,337 )       431       (56 )       (1 )       (86 )         (962 )       701    
  Gain (loss) on OREO, net        335         393       121         159         132           849         (713 )  
  Gain (loss) on securities, net        136         380       423         644       -           939         25    
  FDIC indemnification accretion/(amortization), net      -       -     -       -       -         -         (772 )  
  Other income        1,941         2,825       1,837         2,124         1,590           6,603         5,892    
                     
 Total non-interest income        21,457         24,417       26,470         23,828         22,014           72,344         63,223    
                     
 Non-interest expense                     
  Salaries and employee benefits        28,510         28,034       27,421         26,944         25,623           83,965         75,018    
  Occupancy and equipment        7,887         7,034       6,681         6,281         6,668           21,602         19,848    
  Data processing expense        2,853         2,863       2,723         2,278         2,791           8,439         8,221    
  Other operating expenses        31,596         13,072       18,316         11,991         15,944           62,984         41,174    
                     
 Total non-interest expense        70,846         51,003       55,141         47,494         51,026           176,990         144,261    
                     
 Income before income taxes        22,357         80,379       72,230         77,838         69,105           174,966         204,808    
  Income tax expense        7,536         30,282       25,374         29,248         25,485           63,192         76,252    
 Net income    $   14,821     $   50,097   $   46,856     $   48,590     $   43,620       $   111,774     $   128,556    
                     

 

 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)       2017         2017         2017         2016         2016           2017         2016     
                                                             
PER SHARE DATA                                                            
                                                             
Diluted earnings per common share   $   0.10     $   0.35     $   0.33     $   0.35     $   0.31       $   0.78     $   0.91    
Diluted earnings per common share excluding gain on
  acquisitions, merger expenses, reduced provision for loan
  losses as a result of a significant loan recovery & FDIC loss
  share buy-out expense (non-GAAP)(1)
      0.32         0.35         0.33         0.33         0.33           1.00         0.93    
Basic earnings per common share       0.10         0.35         0.33         0.35         0.31           0.78         0.92    
Dividends per share - common       0.1100         0.0900         0.0900         0.0900         0.0900           0.2900         0.2525    
Book value per common share       12.71         10.32         10.05         9.45         9.22           12.71         9.22    
Tangible book value per common share (non-GAAP)(1)       7.06         7.23         6.96         6.63         6.40           7.06         6.40    
                     
                     
STOCK INFORMATION                    
                     
Average common shares outstanding       144,238         143,282         141,785         140,465         140,436           143,111         140,403    
Average diluted shares outstanding       144,987         144,116         142,492         140,781         140,703           143,839         140,685    
End of period common shares outstanding       173,666         143,071         143,442         140,472         140,490           173,666         140,490    
                     
                     
ANNUALIZED PERFORMANCE METRICS                    
                     
Return on average assets     0.54 %     1.86 %     1.86 %     1.98 %     1.81 %       1.41 %     1.81 %  
Return on average assets excluding merger expenses, gain on
  acquisitions, reduced provision for loan losses as a result of a
  significant loan recovery, loss on FDIC loss share buyout and
  hurricane expenses (non-GAAP)(1)
    1.70 %     1.88 %     1.88 %     1.88 %     1.90 %       1.82 %     1.84 %  
Return on average assets excluding intangible
  amortization (non-GAAP)(1)
    0.59 %     1.96 %     1.96 %     2.08 %     1.91 %       1.49 %     1.91 %  
Return on average assets excluding intangible amortization,
  provision for loan losses, merger expenses, gain on
  acquisitions, reduced provision for loan losses as a result of a
  significant loan recovery, loss on FDIC loss share buyout and
  income taxes (Core ROA) (non-GAAP)(1)
    2.94 %     3.19 %     3.31 %     3.23 %     3.43 %       3.14 %     3.35 %  
Return on average common equity     3.88 %     13.83 %     13.85 %     14.79 %     13.62 %       10.33 %     13.83 %  
Return on average tangible common equity excluding
  intangible amortization (non-GAAP)(1)
    5.80 %     20.09 %     20.08 %     21.45 %     20.01 %       15.06 %     20.59 %  
Efficiency ratio     53.77 %     37.48 %     40.76 %     36.19 %     39.41 %       43.92 %     38.16 %  
Core efficiency ratio (non-GAAP)(1)     39.12 %     37.29 %     36.96 %     35.97 %     36.51 %       37.79 %     36.75 %  
Net interest margin - FTE     4.40 %     4.50 %     4.70 %     4.75 %     4.86 %       4.53 %     4.83 %  
Fully taxable equivalent adjustment   $   1,846     $   2,016     $ 2,011     $   2,108     $   1,869       $   5,873     $   5,816    
Total revenue       145,370         147,280         140,964         135,216         133,389           433,614         388,372    
                     
                     
OTHER OPERATING EXPENSES                    
                     
Advertising   $   795     $   812     $   698     $   910     $   866       $   2,305     $   2,422    
Merger and acquisition expenses       18,227         789         6,727         433       -           25,743       -    
FDIC loss share buy-out expense     -       -       -       -         3,849         -         3,849    
Amortization of intangibles       906         866         804         762         762           2,576         2,370    
Electronic banking expense       1,712         1,654         1,519         1,621         1,428           4,885         4,121    
Directors' fees       309         324         313         294         292           946         856    
Due from bank service charges       472         456         420         393         319           1,348         961    
FDIC and state assessment       1,293         1,182         1,288         1,097         1,502           3,763         4,394    
Insurance       577         543         578         563         553           1,698         1,630    
Legal and accounting       698         474         627         442         583           1,799         1,764    
Other professional fees       1,436         1,233         1,153         943         1,137           3,822         3,106    
Operating supplies       432         477         467         466         437           1,376         1,292    
Postage       280         295         286         269         269           861         815    
Telephone       305         398         324         360         449           1,027         1,391    
Other expense       4,154         3,569         3,112         3,438         3,498           10,835         12,203    
                     
  Total other operating expenses    $   31,596     $   13,072     $   18,316     $   11,991     $   15,944       $   62,984     $   41,174    
                     
                     
 (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,         Jun. 30,         Mar. 31,         Dec. 31,         Sep. 30,       
 (Dollars in thousands)       2017         2017         2017         2016         2016       
                                             
BALANCE SHEET RATIOS                                            
                 
Total loans to total deposits     98.44 %     100.86 %     103.73 %     106.41 %     103.98 %    
Common equity to assets     15.48 %     13.58 %     13.45 %     13.53 %     13.27 %    
Tangible common equity to tangible assets (non-GAAP)(1)     9.24 %     9.91 %     9.72 %     9.89 %     9.60 %    
                 
                 
LOANS RECEIVABLE                
                 
Real estate                
  Commercial real estate loans                
  Non-farm/non-residential   $   4,532,402     $   3,368,663     $   3,462,773     $   3,153,121     $   2,954,618      
  Construction/land development       1,648,923         1,315,309         1,217,519         1,135,843         1,065,204      
  Agricultural       88,295         78,260         79,940         77,736         77,556      
  Residential real estate loans                
  Residential 1-4 family       1,968,688         1,513,888         1,493,133         1,356,136         1,264,384      
  Multifamily residential       497,910         398,781         404,815         340,926         328,089      
Total real estate       8,736,218         6,674,901         6,658,180         6,063,762         5,689,851      
Consumer       51,515         38,424         41,893         41,745         42,487      
Commercial and industrial       1,296,485         994,827         1,013,403         1,123,213         1,225,043      
Agricultural       57,489         69,697         69,307         74,673         73,413      
Other       144,486         56,626         66,862         84,306         81,497      
  Loans receivable   $   10,286,193     $   7,834,475     $   7,849,645     $   7,387,699     $   7,112,291      
                                             
Discount for credit losses on purchased loans   $   158,001     $   95,627     $   104,464     $   100,148     $   108,017      
Purchased loans, net of discount for credit losses
  on purchased loans
      3,653,079         1,355,922         1,375,210         1,125,599         1,368,305      
                 
                 
ALLOWANCE FOR LOAN LOSSES                
                 
Balance, beginning of period   $   80,138     $   80,311     $   80,002     $   76,370     $   74,341      
Loans charged off       4,424         1,405         4,706         4,836         4,351      
Recoveries of loans previously charged off       883         845         1,101         6,765         844      
  Net loans (recovered)/charged off       3,541         560         3,605         (1,929 )       3,507      
Provision for loan losses       35,023         387         3,914         1,703         5,536      
Balance, end of period   $   111,620     $   80,138     $   80,311     $   80,002     $   76,370      
                                             
Net (recoveries) charge-offs to average total loans     0.18 %     0.03 %     0.19 %     -0.11 %     0.20 %    
Allowance for loan losses to total loans     1.09 %     1.02 %     1.02 %     1.08 %     1.07 %    
                 
                 
NON-PERFORMING ASSETS                
                 
Non-performing loans                
  Non-accrual loans   $   34,794     $   32,426     $   43,810     $   47,182     $   39,353      
  Loans past due 90 days or more       29,183         14,442         15,388         15,942         20,737      
  Total non-performing loans       63,977         46,868         59,198         63,124         60,090      
Other non-performing assets                
  Foreclosed assets held for sale, net       21,701         18,789         17,315         15,951         17,053      
  Other non-performing assets       3         3         3         3         -       
  Total other non-performing assets       21,704         18,792         17,318         15,954         17,053      
  Total non-performing assets   $   85,681     $   65,660     $   76,516     $   79,078     $   77,143      
                 
Allowance for loan losses for loans to non-performing loans     174.47 %     170.99 %     135.67 %     126.74 %     127.09 %    
Non-performing loans to total loans     0.62 %     0.60 %     0.75 %     0.85 %     0.84 %    
Non-performing assets to total assets     0.60 %     0.60 %     0.71 %     0.81 %     0.79 %    
                 
                 
 (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, 2017     June 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    $   180,368     $   538       1.18 %   $   303,997     $   727       0.96 %
  Federal funds sold        878         3       1.36 %       1,427         4       1.12 %
  Investment securities - taxable        1,326,117         7,071       2.12 %       1,256,202         6,434       2.05 %
  Investment securities - non-taxable - FTE        348,920         4,908       5.58 %       346,708         4,812       5.57 %
  Loans receivable - FTE        7,938,716         113,239       5.66 %       7,829,615         112,902       5.78 %
  Total interest-earning assets        9,794,999         125,759       5.09 %       9,737,949         124,879       5.14 %
  Non-earning assets        1,058,560                         1,055,821                  
  Total assets    $  10,853,559                     $  10,793,770                  
                             
LIABILITIES AND SHAREHOLDERS' EQUITY                
 Liabilities                 
  Interest-bearing liabilities                 
  Savings and interest-bearing transaction accounts    $   4,512,785     $   5,755       0.51 %   $   4,292,389     $   4,313       0.40 %
  Time deposits        1,444,662         2,780       0.76 %       1,443,228         2,497       0.69 %
  Total interest-bearing deposits        5,957,447         8,535       0.57 %       5,735,617         6,810       0.48 %
  Federal funds purchased      -       -       0.00 %     -       -       0.00 %
  Securities sold under agreement to repurchase        135,855         232       0.68 %       128,661         196       0.61 %
  FHLB borrowed funds        920,754         3,408       1.47 %       1,177,510         3,710       1.26 %
  Subordinated debentures        358,347         4,969       5.50 %       351,659         4,795       5.47 %
  Total interest-bearing liabilities        7,372,403         17,144       0.92 %       7,393,447         15,511       0.84 %
  Non-interest bearing liabilities                                 
  Non-interest bearing deposits       1,924,933           1,899,865    
  Other liabilities        42,394                         47,359                  
  Total liabilities        9,339,730                         9,340,671                  
 Shareholders' equity        1,513,829                         1,453,099                  
  Total liabilities and shareholders' equity    $  10,853,559             $  10,793,770          
 Net interest spread                    4.17 %                   4.30 %
 Net interest income and margin - FTE          $   108,615       4.40 %         $   109,368       4.50 %

 

 Home BancShares, Inc.   
 Consolidated Net Interest Margin   
 (Unaudited)   
                   
     Nine Months Ended   
     September 30, 2017     September 30, 2016   
     Average         Income/         Yield/        Average         Income/         Yield/     
 (Dollars in thousands)     Balance        Expense        Rate        Balance        Expense        Rate     
                                                   
ASSETS                  
 Earning assets                   
  Interest-bearing balances due from banks    $   218,324     $   1,573       0.96 %   $   110,893     $   325       0.39 %  
  Federal funds sold        1,161         9       1.04 %       1,895         7       0.49 %  
  Investment securities - taxable        1,231,619         18,983       2.06 %       1,174,998         16,178       1.84 %  
  Investment securities - non-taxable - FTE        347,578         14,506       5.58 %       333,336         13,616       5.46 %  
  Loans receivable - FTE        7,785,925         332,072       5.70 %       6,909,240         300,839       5.82 %  
  Total interest-earning assets        9,584,607         367,143       5.12 %       8,530,362         330,965       5.18 %  
  Non-earning assets        1,033,310                         968,553                    
  Total assets    $  10,617,917                     $   9,498,915                    
                               
LIABILITIES AND SHAREHOLDERS' EQUITY                  
 Liabilities                   
  Interest-bearing liabilities                   
  Savings and interest-bearing transaction accounts    $   4,316,032     $   13,445       0.42 %   $   3,664,401     $   6,426       0.23 %  
  Time deposits        1,415,383         7,386       0.70 %       1,382,657         5,102       0.49 %  
  Total interest-bearing deposits        5,731,415         20,831       0.49 %       5,047,058         11,528       0.31 %  
  Federal funds purchased      -       -       0.00 %       312         2       0.86 %  
  Securities sold under agreement to repurchase        129,580         593       0.61 %       120,966         421       0.46 %  
  FHLB borrowed funds        1,155,503         10,707       1.24 %       1,376,145         9,283       0.90 %  
  Subordinated debentures        258,032         10,203       5.29 %       60,826         1,164       2.56 %  
  Total interest-bearing liabilities        7,274,530         42,334       0.78 %       6,605,307         22,398       0.45 %  
  Non-interest bearing liabilities                                   
  Non-interest bearing deposits       1,847,843                         1,596,603                    
  Other liabilities        48,804                         55,411                    
  Total liabilities        9,171,177                         8,257,321                    
 Shareholders' equity        1,446,740                         1,241,594                    
  Total liabilities and shareholders' equity    $  10,617,917                     $   9,498,915                    
 Net interest spread                    4.34 %                   4.73 %  
 Net interest income and margin - FTE          $   324,809       4.53 %         $   308,567       4.83 %  

 

 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)       2017         2017         2017         2016         2016           2017         2016     
                                                             
EARNINGS EXCLUDING NON-FUNDAMENTAL ITEMS                                                            
                                                             
GAAP net income available to common shareholders (A)   $   14,821     $   50,097     $   46,856     $   48,590     $   43,620       $   111,774     $   128,556    
Non-fundamental items                                                            
Gain on acquisitions     -       -         (3,807 )     -       -           (3,807 )     -    
Merger and acquisition expenses       18,227         789         6,727         433       -           25,743       -    
FDIC loss share buy-out expense     -       -       -       -         3,849         -         3,849    
Reduced provision for loan losses as a result of a
  significant loan recovery
    -       -           (4,457 )     -         -       -    
Hurricane expenses(2)       33,445       -       -       -       -           33,445       -    
Total non-fundamental items       51,672         789         2,920         (4,024 )       3,849           55,381         3,849    
Tax-effect of non-fundamental items(3)       20,045         199         2,382         (1,578 )       1,510           22,626         1,510    
Non-fundamental items after-tax (B)       31,627         590         538         (2,446 )       2,339           32,755         2,339    
Earnings excluding non-fundamental items (C)   $   46,448     $   50,687     $   47,394     $   46,144     $   45,959       $   144,529     $   130,895    
                     
Average diluted shares outstanding (D)       144,987         144,116         142,492         140,781         140,703           143,839         140,685    
     
GAAP diluted earnings per share: A/D   $   0.10     $   0.35     $   0.33     $   0.35     $   0.31       $   0.78     $   0.91    
Non-fundamental items after-tax: B/D       0.22       -       -         (0.02 )       0.02           0.22         0.02    
Diluted earnings per common share excluding gain on
  acquisitions, merger expenses, reduced provision for loan
  losses as a result of a significant loan recovery, FDIC loss
  share buy-out expense & hurricane expenses: C/D
  $   0.32     $   0.35     $   0.33     $   0.33     $   0.33       $   1.00     $   0.93    
                                                             
                                                             
ANNUALIZED RETURN ON AVERAGE ASSETS                                                            
                     
 Return on average assets: A/H      0.54 %     1.86 %     1.86 %     1.98 %     1.81 %       1.41 %     1.81 %  
 Return on average assets excluding merger expenses, gain on
  acquisitions, reduced provision for loan losses as a result of a
  significant loan recovery, loss on FDIC loss share buyout and
  hurricane expenses: (A+F)/H 
    1.70 %     1.88 %     1.88 %     1.88 %     1.90 %       1.82 %     1.84 %  
 Return on average assets excluding intangible
  amortization: (A+C)/(H-I) 
    0.59 %     1.96 %     1.96 %     2.08 %     1.91 %       1.49 %     1.91 %  
Return on average assets excluding intangible amortization,
  provision for loan losses, merger expenses, gain on
  acquisitions, reduced provision for loan losses as a result of a
  significant loan recovery, loss on FDIC loss share buyout,
  hurricane expenses and income taxes (Core ROA):
  (A+B+D+E+G)/(H-I)
    2.94 %     3.19 %     3.31 %     3.23 %     3.43 %       3.14 %     3.35 %  
                     
 GAAP net income available to common shareholders (A)    $   14,821     $   50,097     $   46,856     $   48,590     $   43,620       $   111,774     $   128,556    
 Amortization of intangibles (B)        906         866         804         762         762           2,576         2,370    
 Amortization of intangibles after-tax (C)        551         526         489         463         463           1,566         1,440    
 Provision for loan losses excluding hurricane provision (D)        2,134         387         3,914         1,703         5,536           6,435         16,905    
 Total non-fundamental items (E)        51,672         789         2,920         (4,024 )       3,849           55,381         3,849    
 Non-fundamental items after-tax (F)        31,627         590         538         (2,446 )       2,339           32,755         2,339    
 Income tax expense (G)        7,536         30,282         25,374         29,248         25,485           63,192         76,252    
 Average assets (H)        10,853,559         10,793,770         10,198,844         9,777,148         9,602,363           10,617,917         9,498,915    
 Average goodwill, core deposits & other intangible assets (I)        462,799         442,380         415,699         396,662         397,429           440,465         398,195    
                     
                     
ANNUALIZED RETURN ON AVERAGE COMMON EQUITY                    
                     
 Return on average common equity: A/C      3.88 %     13.83 %     13.85 %     14.79 %     13.62 %       10.33 %     13.83 %  
 Return on average tangible common equity
  excluding intangible amortization: (A+B)/(C-D) 
    5.80 %     20.09 %     20.08 %     21.45 %     20.01 %       15.06 %     20.59 %  
                     
                     
 GAAP net income available to common shareholders (A)    $   14,821     $   50,097     $   46,856     $   48,590     $   43,620       $   111,774     $   128,556    
 Amortization of intangibles after-tax (B)        551         526         489         463         463           1,566         1,440    
 Average common equity (C)        1,513,829         1,453,099         1,371,730         1,306,571         1,274,077           1,446,740         1,241,594    
 Average goodwill, core deposits & other intangible assets (D)        462,799         442,380         415,699         396,662         397,429           440,465         398,195    
                     
                     
 (2)  Hurricane expenses includes $32,889 of provision for loan losses and $556 of damage expense related to Hurricane Irma.   
 (3)  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)       2017         2017         2017         2016         2016           2017         2016       
                       
EFFICIENCY RATIO                      
                       
 Efficiency ratio:  ((C-E)/(A+B+D))      53.77 %     37.48 %     40.76 %     36.19 %     39.41 %       43.92 %     38.16 %    
 Core efficiency ratio:  ((C-E-G)/(A+B+D-F))      39.12 %     37.29 %     36.96 %     35.97 %     36.51 %       37.79 %     36.75 %    
                                                               
 Net interest income (A)    $   106,769     $   107,352     $   104,815     $   103,207     $   103,653       $   318,936     $   302,751      
 Non-interest income (B)        21,457         24,417         26,470         23,828         22,014           72,344         63,223      
 Non-interest expense (C)        70,846         51,003         55,141         47,494         51,026           176,990         144,261      
 Fully taxable equivalent adjustment (D)        1,846         2,016         2,011         2,108         1,869           5,873         5,816      
 Amortization of intangibles (E)        906         866         804         762         762           2,576         2,370      
                       
 Non-fundamental items:                       
 Non-interest income:                       
 Gain on acquisition    $ -     $ -     $ 3,807     $ -     $ -       $ 3,807     $ -      
 Gain (loss) on OREO        335         393         121         159         132           849         (713 )    
 Gain (loss) on SBA loans        163         387         188         645         364           738         443      
 Gain (loss) on branches, equipment and other assets, net        (1,337 )       431         (56 )       (1 )       (86 )         (962 )       701      
 Gain (loss) on securities        136         380         423         644       -           939         25      
 Recoveries on historic losses      -       -       -       -       -         -         925      
Total non-fundamental non-interest income (F)   $   (703 )   $   1,591     $   4,483     $   1,447     $   410       $   5,371     $   1,381      
                       
 Non-interest expense:                       
 Merger Expenses    $   18,227     $   789     $   6,727     $   433     $ -       $   25,743     $ -      
 FDIC loss share buy-out      -       -       -       -         3,849         -         3,849      
 Hurricane damage expense        556       -       -       -       -           556       -      
 Vacant properties write-downs      -       47       -       369       -           47         1,914      
Total non-fundamental non-interest expense (G)   $   18,783     $   836     $   6,727     $   802     $   3,849       $   26,346     $   5,763      
                       
                       
ANNUALIZED NET INTEREST MARGIN                      
                       
 Net interest margin: A/C      4.40 %     4.50 %     4.70 %     4.75 %     4.86 %       4.53 %     4.83 %    
 Net interest margin (non-GAAP): B/D      4.07 %     4.11 %     4.32 %     4.31 %     4.25 %       4.16 %     4.24 %    
                       
 Net interest income - FTE (A)    $   108,615     $   109,368     $   106,826     $   105,315     $   105,522       $   324,809     $   308,567      
 Total purchase accounting accretion        7,174         8,497         7,652         8,659         11,937           23,319         33,684      
 Net interest income - FTE (non-GAAP) (B)    $   101,441     $   100,871     $   99,174     $   96,656     $   93,585       $   301,490     $   274,883      
                       
 Average interest-earning assets (C)    $   9,794,999     $   9,737,949     $   9,214,498     $   8,824,468     $   8,646,026       $   9,584,607     $   8,530,362      
 Average purchase accounting loan discounts        97,978         104,384         102,906         104,783         115,766           97,158         131,506      
 Average interest-earning assets (non-GAAP) (D)    $   9,892,977     $   9,842,333     $   9,317,404     $   8,929,251     $   8,761,792       $   9,681,765     $   8,661,868      
                       

 

 Home BancShares, Inc. 
 Non-GAAP Reconciliations 
 (Unaudited) 
             
       Sep. 30,         Jun. 30,         Mar. 31,         Dec. 31,         Sep. 30,   
 (Dollars in thousands)       2017         2017         2017         2016         2016   
                                         
TANGIBLE BOOK VALUE PER COMMON SHARE                                        
             
 Book value per common share: A/B    $   12.71     $   10.32     $   10.05     $   9.45     $   9.22  
 Tangible book value per common share: (A-C-D)/B        7.06 &nb