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Home BancShares, Inc. Announces 2017 Earnings

1/18/2018

CONWAY, Ark., Jan. 18, 2018 (GLOBE NEWSWIRE) -- Home BancShares, Inc. (NASDAQ:HOMB), parent company of Centennial Bank, today announced net income for the year ended December 31, 2017 of $135.1 million.  Diluted earnings per share for the year ended 2017 was $0.89 per share.  For the fourth quarter of 2017, the Company recorded a profit of $23.3 million.  Diluted earnings per share for the fourth quarter of 2017 was $0.13 per share.    

In addition to merger expenses and acquisition gain from the 2017 acquisitions, the Company’s annual earnings were significantly impacted by Hurricane Irma and the recently enacted “Tax Cuts and Jobs Act” (the “TCJA”).  Excluding the $36.9 million one-time TCJA charge, $33.4 million of hurricane expense, and $25.7 million of merger expenses associated with the 2017 acquisitions offset by $3.8 million of one-time non-taxable gain on acquisition, 2017 annual after-tax earnings excluding non-fundamental items were $204.8 million, an increase of 15.7% from 2016 annual after-tax earnings excluding non-fundamental items of $177.0 million.

Excluding the $36.9 million one-time TCJA charge, after-tax earnings excluding non-fundamental items for the fourth quarter of 2017 were $60.2 million, an increase of 30.6% from the fourth quarter 2016 after-tax earnings excluding non-fundamental items of $46.1 million. 

“Looking back on the last year, we were active in growing and navigating the Company as we crossed over the $10 billion threshold,” said John Allison, Home’s Chairman.  “Home added $3.46 billion in total assets through the completion of three acquisitions and issued $300 million of subordinated debt in an underwritten public offering.  While we experienced challenges through the year that largely impacted our earnings, including Hurricane Irma and the tax reform bill, we achieved milestone earnings excluding non-fundamental items of over $200 million for 2017 and over $60 million for the fourth quarter.  In 2018, we are well-positioned to continue to execute on opportunities to grow our Company with the focus of improving overall shareholder value.”

Tracy French, Centennial Bank President and Chief Executive Officer added, “We have been hard at work in 2017 managing the growth associated with our 2017 acquisitions.  Once we convert the Stonegate core operating systems on February 9, 2018, the Company will be well-positioned to realize the anticipated cost savings, thereby rewarding our shareholders.  Our team is focused on this important task and is working to recognize these enhancements as quickly as possible.”

“Excluding the impact of the tax rate change, we are proud to report outstanding fourth quarter of 2017 earnings of $60.2 million, or $0.35 diluted earnings per share,” said Randy Sims, Home BancShares, Inc. President and Chief Executive Officer.  “The Company was also able to maintain a sub-40 core efficiency ratio, reporting 37.35% for the fourth quarter of 2017, despite adding over $3 billion in assets through its 2017 acquisitions.  With these excellent results, our shareholders can remain confident that our strong metrics will continue to provide them with solid returns.”

Operating Highlights

Accretion yield increased approximately $5.2 million from $7.2 million for the third quarter of 2017 to $12.4 million for fourth quarter of 2017.  Each quarter we perform credit impairment tests on the credit impaired loans acquired in our acquisitions.  During our fourth quarter 2017 impairment testing, several pools were determined to have a projected credit improvement.  This projected credit improvement combined with the added accretion income from the acquisition of Stonegate Bank (“Stonegate”) offset by the expected decline in accretion income from the maturing and reduction of pay-offs in the previously acquired loan portfolios, resulted in a net increase of recognized accretion income when compared to the third quarter of 2017.  The net increase of recognized accretion income when compared to the third quarter of 2017 is primarily due to $5.4 million of accretion income added during the fourth quarter of 2017 as a result of the Stonegate acquisition offset by a slight decline in legacy accretion income during the fourth quarter of 2017. 

Net interest margin, on a fully taxable equivalent basis, was 4.47% for the quarter just ended compared to 4.75% for the same quarter in 2016 and compared to 4.40% for the third quarter of 2017.  The net interest margin, excluding accretion yield, decreased when comparing the third quarter of 2017 to the fourth quarter of 2017 at 4.07% and 4.01%, respectively. 

During the fourth quarter of 2017, the Company recorded a provision for loan loss of $4.9 million compared to $1.7 million in the fourth quarter of 2016.  The Company was able to reduce fourth quarter 2016 provision for loan losses as a result of a significant loan recovery from a borrower which was charged-off in 2010.  The Company estimates that the fourth quarter 2016 provision for loan losses was reduced by $4.5 million as a result of this loan recovery.  For the fourth quarter of 2017, net charge-offs were $6.3 million compared to net recoveries of $1.9 million for the fourth quarter of 2016.

The Company reported $27.3 million of non-interest income for the fourth quarter of 2017, compared to $23.8 million for the fourth quarter of 2016.  The most important components of the fourth quarter non-interest income were $10.1 million from other service charges and fees, $6.6 million from service charges on deposits accounts, $3.6 million from mortgage lending income, $2.9 million from other income and $1.2 million gain on securities, net.  

Non-interest expense for the fourth quarter of 2017 was $63.2 million compared to $47.5 million for the fourth quarter of 2016, an increase of $15.7 million.  This increase is primarily the result of an increase in the costs associated with asset growth from the three acquisitions during 2017 combined with approximately $723,000 of growth in quarterly non-interest expense related to the Centennial Commercial Finance Group (“Centennial CFG”).  For the fourth quarter of 2017, our core efficiency ratio was 37.35% which increased from the 35.97% reported for fourth quarter of 2016. 

Financial Condition

Total loans receivable were $10.33 billion at December 31, 2017 compared to $7.39 billion at December 31, 2016.  Total deposits were $10.39 billion at December 31, 2017 compared to $6.94 billion at December 31, 2016.  Total assets were $14.45 billion at December 31, 2017 compared to $9.81 billion at December 31, 2016.

During 2017, the Company acquired $2.82 billion of loans, net of purchase accounting discounts. As of December 31, 2017, the Company produced approximately $125.2 million of organic loan growth since December 31, 2016.  Centennial CFG produced $295.5 million of net organic loan growth during 2017 while the legacy and Stonegate footprints experienced significant net payoffs during 2017, resulting in a decline of $153.9 million and $16.5 million, respectively.

From September 30, 2017 to December 31, 2017, the Company experienced organic loan growth of approximately $45.0 million.  During the fourth quarter of 2017, Centennial CFG produced $181.8 million of organic loan growth, while the legacy and Stonegate footprints experienced significant net payoffs resulting in a decline of $113.2 million and $23.6 million, respectively.  Centennial CFG had loans of $1.40 billion at December 31, 2017.

Non-performing loans at December 31, 2017 were $15.5 million, $28.2 million, $929,000 and zero in the Arkansas, Florida, Alabama and Centennial CFG markets, respectively, for a total of $44.7 million.  Non-performing loans as a percent of total loans were 0.43% as of December 31, 2017 compared to 0.85% as of December 31, 2016.  Non-performing assets at December 31, 2017 were $25.6 million, $36.4 million, $1.6 million and zero in the Arkansas, Florida and Alabama and Centennial CFG markets, respectively, for a total of $63.6 million.  Non-performing assets as a percent of total assets were 0.44% as of December 31, 2017 compared to 0.81% as of December 31, 2016.  

The Company’s allowance for loan losses was $110.3 million at December 31, 2017, or 1.07% of total loans, compared to $80.0 million, or 1.08% of total loans, at December 31, 2016.  These changes are 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 December 31, 2017 and 2016, the Company’s allowance for loan losses was 247% and 127% of its total non-performing loans, respectively.

Stockholders’ equity was $2.20 billion at December 31, 2017 compared to $1.33 billion at December 31, 2016, an increase of $876.8 million.  The increase in stockholders’ equity is primarily associated with the $77.5 million and $742.3 million of common stock issued to the Giant Holdings, Inc. (“GHI”) and Stonegate shareholders, respectively, plus the $74.7 million increase in retained earnings offset by $3.8 million of comprehensive loss and the repurchase of $20.8 million of our common stock during 2017.  Book value per common share was $12.70 at December 31, 2017 compared to $9.45 at December 31, 2016 for an annualized increase of 34.4%.  

Branches

During the fourth quarter of 2017, the Company closed a branch location in Daphne, Alabama and a branch location in Naples, Florida.  The Company currently has 76 branches in Arkansas, 89 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, January 18, 2018.  We encourage all participants to pre-register for the conference call using the following link:  http://dpregister.com/10115147.  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: 10115147, which will be available until January 28, 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 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.” 

 Home BancShares, Inc.   
 Consolidated End of Period Balance Sheets   
 (Unaudited)   
               
     Dec. 31,     Sep. 30,     Jun. 30,     Mar. 31,     Dec. 31,     
 (In thousands)     2017     2017     2017     2017     2016     
                                   
ASSETS                                  
                                   
Cash and due from banks   $ 166,915   $ 197,953   $ 147,041   $ 163,662   $ 123,758    
Interest-bearing deposits with other banks       469,018       354,367       313,447       253,427       92,891    
Cash and cash equivalents     635,933     552,320     460,488     417,089     216,649    
Federal funds sold     24,109     4,545     -     1,700     1,550    
Investment securities - available-for-sale     1,663,517     1,575,685     1,400,431     1,250,590     1,072,920    
Investment securities - held-to-maturity     224,756     234,945     254,161     276,599     284,176    
Loans receivable     10,331,188     10,286,193     7,834,475     7,849,645     7,387,699    
Allowance for loan losses       (110,266 )     (111,620 )     (80,138 )     (80,311 )     (80,002 )  
Loans receivable, net     10,220,922     10,174,573     7,754,337     7,769,334     7,307,697    
Bank premises and equipment, net     237,439     239,990     207,071     212,813     205,301    
Foreclosed assets held for sale     18,867     21,701     18,789     17,315     15,951    
Cash value of life insurance     146,866     146,158     97,684     97,223     86,491    
Accrued interest receivable     45,708     41,071     32,445     32,413     30,838    
Deferred tax asset, net       76,564       121,787       68,368       67,063       61,298    
Goodwill       927,949       929,129       420,941       420,941       377,983    
Core deposit and other intangibles       49,351       50,982       21,019       21,885       18,311    
Other assets       177,779       163,081       136,494       132,503       129,300    
Total assets    $   14,449,760   $   14,255,967   $   10,872,228   $   10,717,468   $   9,808,465    
                                   
LIABILITIES AND STOCKHOLDERS' EQUITY                                  
                                   
Liabilities                                  
Deposits:                                  
Demand and non-interest-bearing   $ 2,385,252   $ 2,555,465   $ 1,957,677   $ 1,862,996   $ 1,695,184    
Savings and interest-bearing transaction accounts     6,476,819     6,341,883     4,335,456     4,274,194     3,963,241    
Time deposits       1,526,431       1,551,422       1,474,255       1,430,017       1,284,002    
Total deposits     10,388,502     10,448,770     7,767,388     7,567,207     6,942,427    
Federal funds purchased     -     -     -     -     -    
Securities sold under agreements to repurchase     147,789     149,531     133,741     123,793     121,290    
FHLB and other borrowed funds     1,299,188     1,044,333     1,099,478     1,455,040     1,305,198    
Accrued interest payable and other liabilities     41,959     38,782     37,751     69,125     51,234    
Subordinated debentures       368,031       367,835       357,838       60,735       60,826    
Total liabilities        12,245,469       12,049,251       9,396,196       9,275,900       8,480,975    
                                   
Stockholders' equity                                   
Common stock     1,736     1,737     1,431     1,434     1,405    
Capital surplus     1,675,318     1,674,642     940,821     948,982     869,737    
Retained earnings     530,658     526,448     527,338     490,142     455,948    
Accumulated other comprehensive (loss) income       (3,421 )     3,889       6,442       1,010       400    
Total stockholders' equity        2,204,291       2,206,716       1,476,032       1,441,568       1,327,490    
Total liabilities and stockholders' equity    $   14,449,760   $   14,255,967   $   10,872,228   $   10,717,468   $   9,808,465    
                                   

 

 Home BancShares, Inc.   
 Consolidated Statements of Income   
 (Unaudited)   
                     
     Quarter Ended     Year Ended   
     Dec. 31,       Sep. 30,       Jun. 30,       Mar. 31,       Dec. 31,         Dec. 31,       Dec. 31,     
 (In thousands)       2017       2017       2017       2017       2016         2017       2016     
                                                 
Interest income                                                 
Loans   $ 147,426   $ 113,269   $ 112,732   $ 105,762   $ 103,113     $ 479,189   $ 403,394    
Investment securities                                                
Taxable     7,793     7,071     6,434     5,478     5,068       26,776     21,246    
Tax-exempt     3,025     3,032     2,966     2,944     3,059       11,967     11,417    
Deposits - other banks     736     538     727     308     146       2,309     471    
Federal funds sold       1       3       4       2       2         10       9    
                                                 
Total interest income       158,981       123,913       122,863       114,494       111,388         520,251       436,537    
                                                 
Interest expense                                                 
Interest on deposits     12,946     8,535     6,810     5,486     4,398       33,777     15,926    
Federal funds purchased     1     -     -     -     -       1     2    
FHLB borrowed funds     3,806     3,408     3,710     3,589     3,201       14,513     12,484    
Securities sold under agreements to repurchase     325     232     196     165     153       918     574    
Subordinated debentures       4,934       4,969       4,795       439       429         15,137       1,593    
                                                 
Total interest expense     22,012     17,144     15,511     9,679     8,181       64,346     30,579    
                                                 
Net interest income      136,969     106,769     107,352     104,815     103,207       455,905     405,958    
Provision for loan losses     4,926     35,023     387     3,914     1,703       44,250     18,608    
Net interest income after                                                 
  provision for loan losses      132,043     71,746     106,965     100,901     101,504       411,655     387,350    
                                                 
Non-interest income                                                 
Service charges on deposit accounts     6,566     6,408     5,966     5,982     6,442       24,922     25,049    
Other service charges and fees     10,144     8,490     8,576     8,917     7,611       36,127     30,200    
Trust fees     548     365     309     456     329       1,678     1,457    
Mortgage lending income     3,573     3,172     3,750     2,791     4,123       13,286     14,399    
Insurance commissions     466     472     465     545     488       1,948     2,296    
Increase in cash value of life insurance     738     478     463     310     320       1,989     1,412    
Dividends from FHLB, FRB, Bankers' Bank & other     1,030     834     472     1,149     944       3,485     3,091    
Gain on acquisitions     -     -     -     3,807     -       3,807     -    
Gain (loss) on SBA loans     -     163     387     188     645       738     1,088    
Gain (loss) on branches, equipment and 
  other assets, net
    2     (1,337 )   431     (56 )   (1 )     (960 )   700    
Gain (loss) on OREO, net     176     335     393     121     159       1,025     (554 )  
Gain (loss) on securities, net     1,193     136     380     423     644       2,132     669    
FDIC indemnification accretion/(amortization), net     -     -     -     -     -       -     (772 )  
Other income     2,856     1,941     2,825     1,837     2,124       9,459     8,016    
                                                 
Total non-interest income     27,292     21,457     24,417     26,470     23,828       99,636     87,051    
                                                 
Non-interest expense                                                 
Salaries and employee benefits     35,404     28,510     28,034     27,421     26,944       119,369     101,962    
Occupancy and equipment     9,009     7,887     7,034     6,681     6,281       30,611     26,129    
Data processing expense     3,559     2,853     2,863     2,723     2,278       11,998     10,499    
Other operating expenses     15,246     31,596     13,072     18,316     11,991       78,230     53,165    
                                                 
Total non-interest expense     63,218     70,846     51,003     55,141     47,494       240,208     191,755    
                                                 
Income before income taxes      96,117     22,357     80,379     72,230     77,838       271,083     282,646    
Income tax expense     72,808     7,536     30,282     25,374     29,248       136,000     105,500    
Net income    $ 23,309   $ 14,821   $ 50,097   $ 46,856   $ 48,590     $ 135,083   $ 177,146    
                                                 

 

 Home BancShares, Inc.   
 Selected Financial Information   
 (Unaudited)   
                   
   Quarter Ended     Year Ended   
     Dec. 31,     Sep. 30,     Jun. 30,     Mar. 31,     Dec. 31,       Dec. 31,     Dec. 31,     
 (Dollars and shares in thousands, except per share data)     2017       2017       2017       2017       2016         2017       2016     
                                               
PER SHARE DATA                                              
                                               
Diluted earnings per common share $ 0.13   $ 0.10   $ 0.35   $ 0.33   $ 0.35     $ 0.89   $ 1.26    
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)
  0.35     0.32     0.35     0.33     0.33       1.35     1.26    
Basic earnings per common share   0.13     0.10     0.35     0.33     0.35       0.90     1.26    
Dividends per share - common   0.1100     0.1100     0.0900     0.0900     0.0900       0.4000     0.3425    
Book value per common share   12.70     12.71     10.32     10.05     9.45       12.70     9.45    
Tangible book value per common share (non-GAAP)(1)   7.07     7.06     7.23     6.96     6.63       7.07     6.63    
                                               
                                               
STOCK INFORMATION                                              
                                               
Average common shares outstanding   173,641     144,238     143,282     141,785     140,465       150,806     140,418    
Average diluted shares outstanding   174,349     144,987     144,116     142,492     140,781       151,528     140,713    
End of period common shares outstanding   173,633     173,666     143,071     143,442     140,472       173,633     140,472    
                   
                   
ANNUALIZED PERFORMANCE METRICS                  
                   
Return on average assets   0.66%     0.54%     1.86%     1.86%     1.98%       1.17%     1.85%    
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)
  1.69%     1.70%     1.88%     1.88%     1.88%       1.78%     1.85%    
Return on average assets excluding intangible 
  amortization (non-GAAP)(1)
  0.73%     0.59%     1.96%     1.96%     2.08%       1.26%     1.95%    
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 (Core ROA) 
  (non-GAAP)(1)
  3.10%     2.94%     3.19%     3.31%     3.23%       3.13%     3.32%    
Return on average common equity   4.17%     3.88%     13.83%     13.85%     14.79%       8.23%     14.08%    
Return on average tangible common equity excluding 
  intangible amortization (non-GAAP)(1)
  7.78%     5.80%     20.09%     20.08%     21.45%       12.92%     20.82%    
Efficiency ratio   37.05%     53.77%     37.48%     40.76%     36.19%       41.89%     37.65%    
Core efficiency ratio (non-GAAP)(1)   37.35%     39.12%     37.29%     36.96%     35.97%       37.66%     36.55%    
Net interest margin - FTE   4.47%     4.40%     4.50%     4.70%     4.75%       4.51%     4.81%    
Fully taxable equivalent adjustment $ 1,983   $ 1,846   $ 2,016   $ 2,011   $ 2,108     $ 7,856   $ 7,924    
Total revenue   186,273     145,370     147,280     140,964     135,216       619,887     523,588    
                   
                   
OTHER OPERATING EXPENSES                  
                   
Advertising $ 898   $ 795   $ 812   $ 698   $ 910     $ 3,203   $ 3,332    
Merger and acquisition expenses   -     18,227     789     6,727     433       25,743     433    
FDIC loss share buy-out expense   -     -     -     -     -       -     3,849    
Amortization of intangibles   1,631     906     866     804     762       4,207     3,132    
Electronic banking expense   1,777     1,712     1,654     1,519     1,621       6,662     5,742    
Directors' fees   313     309     324     313     294       1,259     1,150    
Due from bank service charges   254     472     456     420     393       1,602     1,354    
FDIC and state assessment   1,476     1,293     1,182     1,288     1,097       5,239     5,491    
Insurance   814     577     543     578     563       2,512     2,193    
Legal and accounting   1,194     698     474     627     442       2,993     2,206    
Other professional fees   1,537     1,436     1,233     1,153     943       5,359     4,049    
Operating supplies   602     432     477     467     466       1,978     1,758    
Postage   323     280     295     286     269       1,184     1,084    
Telephone   347     305     398     324     360       1,374     1,751    
Other expense   4,080     4,154     3,569     3,112     3,438       14,915     15,641    
                                               
Total other operating expenses $ 15,246   $ 31,596   $ 13,072   $ 18,316   $ 11,991     $ 78,230   $ 53,165    
                                               
                                               
(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)     
                 
     Dec. 31,   Sep. 30,   Jun. 30,   Mar. 31,   Dec. 31,       
 (Dollars in thousands)       2017       2017       2017       2017       2016       
                                     
BALANCE SHEET RATIOS                                    
                                     
Total loans to total deposits     99.45%     98.44%     100.86%     103.73%     106.41%      
Common equity to assets     15.25%     15.48%     13.58%     13.45%     13.53%      
Tangible common equity to tangible assets (non-GAAP)(1)     9.11%     9.24%     9.91%     9.72%     9.89%      
                                     
                                     
LOANS RECEIVABLE                                    
                                     
Real estate                                    
Commercial real estate loans                                    
Non-farm/non-residential   $ 4,600,117   $ 4,532,402   $ 3,368,663   $ 3,462,773   $ 3,153,121      
Construction/land development     1,700,491     1,648,923     1,315,309     1,217,519     1,135,843      
Agricultural     82,229     88,295     78,260     79,940     77,736      
Residential real estate loans                                    
Residential 1-4 family     1,970,311     1,968,688     1,513,888     1,493,133     1,356,136      
Multifamily residential       441,303       497,910       398,781       404,815       340,926      
Total real estate     8,794,451     8,736,218     6,674,901     6,658,180     6,063,762      
Consumer     46,148     51,515     38,424     41,893     41,745      
Commercial and industrial     1,297,397     1,296,485     994,827     1,013,403     1,123,213      
Agricultural     49,815     57,489     69,697     69,307     74,673      
Other       143,377       144,486       56,626       66,862       84,306      
Loans receivable   $   10,331,188   $   10,286,193   $   7,834,475   $   7,849,645   $   7,387,699      
                                     
Discount for credit losses on purchased loans   $ 146,557   $ 158,001   $ 95,627   $ 104,464   $ 100,148      
Purchased loans, net of discount for credit losses 
  on purchased loans
    3,464,990     3,653,079     1,355,922     1,375,210     1,125,599      
                 
                 
ALLOWANCE FOR LOAN LOSSES                
                 
Balance, beginning of period   $ 111,620   $ 80,138   $ 80,311   $ 80,002   $ 76,370      
Loans charged off     6,936     4,424     1,405     4,706     4,836      
Recoveries of loans previously charged off       656       883       845       1,101       6,765      
Net loans (recovered)/charged off     6,280     3,541     560     3,605     (1,929 )    
Provision for loan losses       4,926       35,023       387       3,914       1,703      
Balance, end of period   $   110,266   $   111,620   $   80,138   $   80,311   $   80,002      
      -     -     -     -     -      
Net (recoveries) charge-offs to average total loans     0.24%     0.18%     0.03%     0.19%     -0.11%      
Allowance for loan losses to total loans     1.07%     1.09%     1.02%     1.02%     1.08%      
                                     
                                     
NON-PERFORMING ASSETS                                    
                                     
Non-performing loans                                    
Non-accrual loans   $ 34,032   $ 34,794   $ 32,426   $ 43,810   $ 47,182      
Loans past due 90 days or more       10,665       29,183       14,442       15,388       15,942      
Total non-performing loans       44,697       63,977       46,868       59,198       63,124      
Other non-performing assets                                    
Foreclosed assets held for sale, net     18,867     21,701     18,789     17,315     15,951      
Other non-performing assets       3       3       3       3       3      
Total other non-performing assets       18,870       21,704       18,792       17,318       15,954      
Total non-performing assets   $   63,567   $   85,681   $   65,660   $   76,516   $   79,078      
                                     
Allowance for loan losses for loans to non-performing loans     246.70%     174.47%     170.99%     135.67%     126.74%      
Non-performing loans to total loans     0.43%     0.62%     0.60%     0.75%     0.85%      
Non-performing assets to total assets     0.44%     0.60%     0.60%     0.71%     0.81%      
                                     
                                     
(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 
     December 31, 2017     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   $   225,889   $   736   1.29 %   $   180,368   $   538   1.18 %
Federal funds sold       21,580       1   0.02 %       878       3   1.36 %
Investment securities - taxable       1,504,433       7,793   2.06 %       1,326,117       7,071   2.12 %
Investment securities - non-taxable - FTE       352,690       4,905   5.52 %       348,920       4,908   5.58 %
Loans receivable - FTE       10,234,713       147,529   5.72 %       7,938,716       113,239   5.66 %
Total interest-earning assets       12,339,305       160,964   5.18 %       9,794,999       125,759   5.09 %
Non-earning assets       1,774,631                   1,058,560            
Total assets   $  14,113,936               $  10,853,559            
                                     
LIABILITIES AND SHAREHOLDERS' EQUITY                                    
Liabilities                                    
Interest-bearing liabilities                                    
Savings and interest-bearing transaction accounts   $   6,329,858   $   9,732   0.61 %   $   4,512,785   $   5,755   0.51 %
Time deposits       1,532,201       3,214   0.83 %       1,444,662       2,780   0.76 %
Total interest-bearing deposits       7,862,059       12,946   0.65 %       5,957,447       8,535   0.57 %
Federal funds purchased       304       1   1.31 %       -        -    0.00 %
Securities sold under agreement to repurchase       149,849       325   0.86 %       135,855       232   0.68 %
FHLB borrowed funds       1,005,989       3,806   1.50 %       920,754       3,408   1.47 %
Subordinated debentures       367,935       4,934   5.32 %       358,347       4,969   5.50 %
Total interest-bearing liabilities       9,386,136       22,012   0.93 %       7,372,403       17,144   0.92 %
Non-interest bearing liabilities                                    
Non-interest bearing deposits       2,473,853           1,924,933    
Other liabilities       35,398           42,394    
Total liabilities       11,895,387           9,339,730    
Shareholders' equity       2,218,549           1,513,829    
Total liabilities and shareholders' equity   $  14,113,936       $  10,853,559    
Net interest spread       4.25 %         4.17 %
Net interest income and margin - FTE       $   138,952   4.47 %       $   108,615   4.40 %
                                 

 

 Home BancShares, Inc.   
 Consolidated Net Interest Margin   
 (Unaudited)   
                   
     Year Ended   
     December 31, 2017     December 31, 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   $ 220,231   $ 2,309   1.05 %   $ 117,022   $ 471   0.40 %  
Federal funds sold     6,308     10   0.16 %     1,764     9   0.51 %  
Investment securities - taxable     1,300,384     26,776   2.06 %     1,161,428     21,246   1.83 %  
Investment securities - non-taxable - FTE     348,865     19,411   5.56 %     337,318     18,598   5.51 %  
Loans receivable - FTE     8,403,154     479,601   5.71 %     6,986,759     404,137   5.78 %  
Total interest-earning assets     10,278,942     528,107   5.14 %     8,604,291     444,461   5.17 %  
Non-earning assets     1,220,163                 964,562              
Total assets   $ 11,499,105               $ 9,568,853              
                                       
LIABILITIES AND SHAREHOLDERS' EQUITY                                      
Liabilities                                      
Interest-bearing liabilities                                      
Savings and interest-bearing transaction accounts   $ 4,823,626   $ 23,176   0.48 %   $ 3,717,880   $ 8,978   0.24 %  
Time deposits     1,444,828     10,601   0.73 %     1,362,680     6,948   0.51 %  
Total interest-bearing deposits     6,268,454     33,777   0.54 %     5,080,560     15,926   0.31 %  
Federal funds purchased     77     1   1.30 %     255     2   0.78 %  
Securities sold under agreement to repurchase     134,689     918   0.68 %     120,576     574   0.48 %  
FHLB borrowed funds     1,117,817     14,513   1.30 %     1,376,364     12,484   0.91 %  
Subordinated debentures     285,733     15,137   5.30 %     60,826     1,593   2.62 %  
Total interest-bearing liabilities     7,806,770     64,346   0.82 %     6,638,581     30,579   0.46 %  
Non-interest bearing liabilities                                      
Non-interest bearing deposits     2,005,632           1,619,128        
Other liabilities     45,425           53,218        
Total liabilities     9,857,827           8,310,927        
Shareholders' equity     1,641,278           1,257,926        
Total liabilities and shareholders' equity   $ 11,499,105         $ 9,568,853        
Net interest spread               4.32 %               4.71 %  
Net interest income and margin - FTE     $ 463,761   4.51 %     $ 413,882   4.81 %  
                                       

 

 Home BancShares, Inc.   
 Non-GAAP Reconciliations   
 (Unaudited)   
                     
     Quarter Ended      Year Ended     
 (Dollars and shares in thousands,     Dec. 31,     Sep. 30,     Jun. 30,     Mar. 31,     Dec. 31,       Dec. 31,     Dec. 31,     
 except per share data)       2017       2017       2017       2017       2016         2017       2016     
                                                 
EARNINGS EXCLUDING NON-FUNDAMENTAL ITEMS                                                
                                                 
GAAP net income available to common shareholders (A)   $ 23,309   $ 14,821   $ 50,097   $ 46,856   $ 48,590     $ 135,083   $ 177,146    
Non-fundamental items                                                
Gain on acquisitions     -     -     -     (3,807 )   -       (3,807 )   -    
Merger and acquisition expenses     -     18,227     789     6,727     433       25,743     433    
FDIC loss share buy-out expense     -     -     -     -     -       -     3,849    
Reduced provision for loan losses as a result of a 
  significant loan recovery
    -     -     -     -     (4,457 )     -     (4,457 )  
Hurricane expenses(2)     -     33,445     -     -     -       33,445     -    
Effect of tax rate change       36,935       -        -        -        -          36,935       -     
Total non-fundamental items     36,935     51,672     789     2,920     (4,024 )     92,316     (175 )  
Tax-effect of non-fundamental items(3)       -        20,045       199       2,382       (1,578 )       22,626       (69 )  
Non-fundamental items after-tax (B)       36,935       31,627       590       538       (2,446 )       69,690       (106 )  
Earnings excluding non-fundamental items (C)   $   60,244   $   46,448   $   50,687   $   47,394   $   46,144     $   204,773   $   177,040    
                                                 
Average diluted shares outstanding (D)     174,349     144,987     144,116     142,492     140,781       151,528     140,713    
                                                 
GAAP diluted earnings per share: A/D   $ 0.13   $ 0.10   $ 0.35   $ 0.33   $ 0.35     $ 0.89   $ 1.26    
Non-fundamental items after-tax: B/D       0.22       0.22       -        -        (0.02 )       0.46       -     
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: C/D
  $   0.35   $   0.32   $   0.35   $   0.33   $   0.33     $   1.35   $   1.26    
                                                 
ANNUALIZED RETURN ON AVERAGE ASSETS                                                
                                                 
 Return on average assets: A/H      0.66 %   0.54 %   1.86 %   1.86 %   1.98 %     1.17 %   1.85 %  
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: (A+F)/H
    1.69 %   1.70 %   1.88 %   1.88 %   1.88 %     1.78 %   1.85 %  
 Return on average assets excluding intangible 
  amortization: (A+C)/(H-I) 
    0.73 %   0.59 %   1.96 %   1.96 %   2.08 %     1.26 %   1.95 %  
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 (Core ROA): (A+B+D+E+G)/(H-I)
    3.10 %   2.94 %   3.19 %   3.31 %   3.23 %     3.13 %   3.32 %  
                     
 GAAP net income available to common shareholders (A)    $   23,309   $   14,821   $   50,097   $   46,856   $   48,590     $   135,083   $   177,146    
 Amortization of intangibles (B)        1,631       906       866       804       762         4,207       3,132    
 Amortization of intangibles after-tax (C)        991       551       526       489       463         2,557       1,903    
 Provision for loan losses excluding hurricane provision (D)        4,926       2,134       387       3,914       1,703         11,361       18,608    
 Total non-fundamental items (E)        36,935       51,672       789       2,920       (4,024 )       92,316       (175 )  
 Non-fundamental items after-tax (F)        36,935       31,627       590       538       (2,446 )       69,690       (106 )  
 Income tax expense excluding effect of tax rate change (G)        35,873       7,536       30,282       25,374       29,248         99,065       105,500    
 Average assets (H)        14,113,936       10,853,559       10,793,770       10,198,844       9,777,148         11,499,105       9,568,853    
 Average goodwill, core deposits & other intangible assets (I)        979,209       462,799       442,380       415,699       396,662         576,258       397,809    
                     
                     
ANNUALIZED RETURN ON AVERAGE COMMON EQUITY                    
                     
Return on average common equity: A/C     4.17 %   3.88 %   13.83 %   13.85 %   14.79 %     8.23 %   14.08 %  
Return on average tangible common equity
  excluding intangible amortization: (A+B)/(C-D)
    7.78 %   5.80 %   20.09 %   20.08 %   21.45 %     12.92 %   20.82 %  
                     
                     
GAAP net income available to common shareholders (A)   $ 23,309   $ 14,821   $ 50,097   $ 46,856   $ 48,590     $ 135,083   $ 177,146    
Amortization of intangibles after-tax (B)     991     551     526     489     463       2,557     1,903    
Average common equity (C)     2,218,549     1,513,829     1,453,099     1,371,730     1,306,571       1,641,278     1,257,926    
Average goodwill, core deposits & other intangible assets (D)     979,209     462,799     442,380     415,699     396,662       576,258     397,809    
                     
                     
 (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      Year Ended       
 (Dollars and shares in thousands,     Dec. 31,     Sep. 30,     Jun. 30,     Mar. 31,     Dec. 31,       Dec. 31,     Dec. 31,       
 except per share data)       2017       2017       2017       2017       2016         2017       2016       
                                                   
EFFICIENCY RATIO                                                  
                                                   
Efficiency ratio:  ((C-E)/(A+B+D))     37.05 %   53.77 %   37.48 %   40.76 %   36.19 %     41.89 %   37.65 %    
Core efficiency ratio:  ((C-E-G)/(A+B+D-F))     37.35 %   39.12 %   37.29 %   36.96 %   35.97 %     37.66 %   36.55 %    
                                                   
Net interest income (A)   $ 136,969   $ 106,769   $ 107,352   $ 104,815   $ 103,207     $ 455,905   $ 405,958      
Non-interest income (B)     27,292     21,457     24,417     26,470     23,828       99,636     87,051      
Non-interest expense (C)     63,218     70,846     51,003     55,141     47,494       240,208     191,755      
Fully taxable equivalent adjustment (D)     1,983     1,846     2,016     2,011     2,108       7,856     7,924      
Amortization of intangibles (E)     1,631     906     866     804     762       4,207     3,132      
                                                   
Non-core items:                                                  
Non-interest income:                                                  
Gain on acquisition   $ -   $ -   $ -   $ 3,807   $ -     $ 3,807   $ -      
Gain (loss) on OREO     176     335     393     121     159       1,025     (554 )    
Gain (loss) on SBA loans     -     163     387     188     645       738     1,088      
Gain (loss) on branches, equipment and other assets, net     2     (1,337 )   431     (56 )   (1 )     (960 )   700      
Gain (loss) on securities     1,193     136     380     423     644       2,132     669      
Recoveries on historic losses     -     -     -     -     -       -     925      
Total non-core non-interest income (F)   $   1,371   $   (703 ) $   1,591   $   4,483   $   1,447     $   6,742   $   2,828      
                                                   
 Non-interest expense:                                                   
 Merger Expenses    $   -    $   18,227   $   789   $   6,727   $   433     $   25,743   $   433      
 FDIC loss share buy-out        -        -        -        -        -          -        3,849      
 Hurricane damage expense        -        556       -        -        -          556       -       
 Vacant properties write-downs        -        -        47       -        369         47       2,283      
Total non-core non-interest expense (G)   $   -    $   18,783   $   836   $   6,727   $   802     $   26,346   $   6,565      
                                                   
                                                   
ANNUALIZED NET INTEREST MARGIN                                                  
                                                   
 Net interest margin: A/C      4.47 %   4.40 %   4.50 %   4.70 %   4.75 %     4.51 %   4.81 %    
 Net interest margin (non-GAAP): B/D      4.01 %   4.07 %   4.11 %   4.32 %   4.31 %     4.12 %   4.26 %    
                                                   
 Net interest income - FTE (A)    $   138,952   $   108,615   $   109,368   $   106,826   $   105,315     $   463,761   $   413,882      
 Total purchase accounting accretion        12,397       7,174       8,497       7,652       8,659         35,720       42,343      
 Net interest income - FTE (non-GAAP) (B)    $   126,555   $   101,441   $   100,871   $   99,174   $   96,656     $   428,041   $   371,539      
                                                   
 Average interest-earning assets (C)    $  12,339,305   $   9,794,999   $   9,737,949   $   9,214,498   $   8,824,468     $  10,278,942   $   8,604,291      
 Average purchase accounting loan discounts        178,027       97,978       104,384       102,906       104,783         120,160       127,210      
 Average interest-earning assets (non-GAAP) (D)    $  12,517,332   $   9,892,977   $   9,842,333   $   9,317,404   $   8,929,251     $  10,399,102   $   8,731,501      
                                                   

 

 Home BancShares, Inc. 
 Non-GAAP Reconciliations 
 (Unaudited) 
           
     Dec. 31,       Sep. 30,       Jun. 30,       Mar. 31,       Dec. 31,   
 (Dollars in thousands)     2017       2017       2017       2017       2016   
                               
TANGIBLE BOOK VALUE PER COMMON SHARE                              
                               
 Book value per common share: A/B  $   12.70   $   12.71   $   10.32   $   10.05   $   9.45  
 Tangible book value per common share: (A-C-D)/B      7.07       7.06       7.23       6.96       6.63  
           
 Total stockholders' equity (A)  $   2,204,291   $   2,206,716   $   1,476,032   $   1,441,568   $   1,327,490  
 End of period common shares outstanding (B)      173,633       173,666       143,071       143,442       140,472  
 Goodwill (C)  $   927,949   $   929,129   $   420,941   $   420,941   $   377,983  
 Core deposit and other intangibles (D)      49,351       50,982       21,019       21,885       18,311  
           
           
TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS          
           
 Equity to assets: B/A    15.25 %   15.48 %   13.58 %   13.45 %   13.53 %
 Tangible common equity to tangible assets: (B-C-D)/(A-C-D)    9.11 %   9.24 %   9.91 %   9.72 %   9.89 %
      -        -        -        -        -   
 Total assets (A)  $   14,449,760   $   14,255,967   $   10,872,228   $   10,717,468   $   9,808,465  
 Total stockholders' equity (B)      2,204,291       2,206,716       1,476,032       1,441,568       1,327,490  
 Goodwill (C)      927,949       929,129       420,941       420,941       377,983  
 Core deposit and other intangibles (D)      49,351       50,982       21,019       21,885       18,311  
           

FOR MORE INFORMATION CONTACT:

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

 

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Source: Home BancShares, Inc.

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