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Home BancShares, Inc. Announces Record Quarterly Loan Originations And Maintains Outstanding Performance Ratios in All Areas

7/19/2018

CONWAY, Ark., July 19, 2018 (GLOBE NEWSWIRE) -- Home BancShares, Inc. (NASDAQ:HOMB), parent company of Centennial Bank, today announced record quarterly loan originations of $957.9 million with a loan yield of 5.66% resulting in $198.8 million of organic loan growth.   The Company reported record quarterly profit of $76.0 million, record pre-tax income of $100.3 million and record diluted earnings per share of $0.44 per share.  Additionally, the Company’s performance ratios showed continued improvement with a net interest margin of 4.47%, return on average assets of 2.13%, return on average common equity of 13.54%, return on average tangible common equity excluding intangible amortization (non-GAAP)1 of 24.27%, and an efficiency ratio of 36.74%. 

“I have no complaints about our results for this quarter.  They were outstanding,” said John Allison, Chairman.  “Our average assets have grown $3.77 billion or, 36%, while net income has grown approximately $26 million, or 52%, and EPS increased $0.09, or 26%, compared to prior year.  In addition, the loan portfolio increased $572.2 million, or 5.5%, through $198.8 million of organic loan growth and the acquisition of Shore Premier Finance this quarter.”

“We achieved an impressive return on average assets of 2.13% for the second quarter. We also maintained strong asset quality while growing the portfolio with non-performing loans to total loans of 0.52% and non-performing assets to total assets of 0.50%,” added Tracy French, Centennial Bank President and Chief Executive Officer.  “We are excited to add Shore Premier Finance to the Centennial family and look forward to growing our new marine lending division.”

1 The calculation of this metric and the reconciliation to generally accepted accounting principles (“GAAP”) is included in the schedules accompanying this release.

“We are once again proud to report our most profitable quarter in the Company’s history,” said Randy Sims, Home BancShares, Inc. Chief Executive Officer.  “We had record net interest income with the majority of the organic loan growth being recorded late in the quarter.  With our acquisition of Shore Premier Finance plus our organic loan growth, the Company’s daily run rate continues to improve.  Plus, our team has continued to control expenses improving our efficiency ratio from an impressive 37.48% for the second quarter of 2017 to an incredible 36.74% for the second quarter of 2018.  This becomes even more impressive considering the recent conversion of Stonegate in February and our ability to quickly reap the dividends of consolidation.”

Operating Highlights

Net interest margin, on a fully taxable equivalent basis, was 4.47% for the quarter just ended compared to 4.46% for the first quarter of 2018.  During the quarter, the Company originated loans with an average loan yield of 5.66% compared to loan payoffs with a yield of 5.13%.

The Company recorded a provision for loan loss of $2.7 million during the second quarter of 2018 compared to $387,000 in the second quarter of 2017.  The Company continues to see improvement in asset quality.  Non-performing loans to total loans was 0.52% as of June 30, 2018 compared to 0.60% as of June 30, 2017, an improvement of 13.3%. Non-performing assets to total assets also improved from 0.60% as of June 30, 2017 to 0.50% as of June 30, 2018, an improvement of 16.7%. For the second quarter of 2018, net charge-offs were $1.4 million compared to net charge-offs of $1.7 million for the first quarter of 2018.

The Company reported $27.7 million of non-interest income for the second quarter of 2018.  The most important components of the second quarter non-interest income were $9.8 million from other service charges and fees, $6.8 million from service charges on deposits accounts, $3.5 million from mortgage lending income, and $3.1 million from other income.  

Non-interest expense for the second quarter of 2018 was $63.2 million.  The most important components of the second quarter non-interest expense were $34.5 million from salaries and employee benefits, $16.9 million in other expense and $8.5 million in occupancy and equipment expenses.  For the second quarter of 2018, our efficiency ratio improved to 36.74% from 37.48% reported for the second quarter of 2017. 

Financial Condition

Total loans receivable were $10.90 billion at June 30, 2018 compared to $10.33 billion at December 31, 2017.  Total deposits were $10.74 billion at June 30, 2018 compared to $10.39 billion at December 31, 2017.  Total assets were $14.92 billion at June 30, 2018 compared to $14.45 billion at December 31, 2017.

From March 31, 2018 to June 30, 2018, the Company experienced approximately $198.8 million in organic loan growth.  Centennial CFG produced $140.3 million of organic loan growth and had loans of $1.65 billion at June 30, 2018.  Our legacy footprint produced approximately 81% of the $957.9 million in loan originations during the second quarter of 2018.  

Non-performing loans at June 30, 2018 were $13.0 million, $43.0 million, $52,000, $776,000 and zero in the Arkansas, Florida, Alabama, Shore Premier and Centennial CFG markets, respectively, for a total of $56.8 million.  Non-performing assets at June 30, 2018 were $21.0 million, $51.5 million, $1.4 million, $776,000 and zero in the Arkansas, Florida, Alabama, Shore Premier and Centennial CFG markets, respectively, for a total of $74.6 million. 

The Company’s allowance for loan losses was $111.5 million at June 30, 2018, or 1.02% of total loans, compared to $110.3 million, or 1.07% of total loans, at December 31, 2017. This decrease is primarily the result of acquiring the Shore Premier Finance loans which do not have an associated allowance for loan losses as a result of purchase accounting requiring them to be marked to fair value at acquisition.  As of June 30, 2018, and December 31, 2017, the Company’s allowance for loan losses was 196% and 247% of its total non-performing loans, respectively.

Stockholders’ equity was $2.31 billion at June 30, 2018 compared to $2.20 billion at December 31, 2017, an increase of $109.7 million. The increase in stockholders’ equity is primarily associated with the $111.9 million increase in retained earnings as well as the issuance of 1.25 million shares of stock with a value of $28.2 million as part of the acquisition of Shore Premier Finance which were partially offset by $20.2 million of comprehensive loss and the repurchase of $15.0 million of our common stock during 2018. Book value per common share was $13.26 at June 30, 2018 compared to $12.70 at December 31, 2017.  Tangible book value per common share was $7.52 at June 30, 2018 compared to $7.07 at December 31, 2017, an annualized increase of 12.8%. 

Branches

During the second quarter of 2018, the Company opened one branch location in Jonesboro, Arkansas, and the Company plans to open a loan production office in Chesapeake, Virginia under the management of Shore Premier Finance during the 3rd quarter of 2018.  The Company currently has 77 branches in Arkansas, 76 branches in Florida, 5 branches in Alabama and one branch in New York City.

Conference Call

We encourage all participants to pre-register for the conference call using the following link:  http://dpregister.com/10121421.  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: 10121421, which will be available until July 26, 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

Non-GAAP Financial Measures

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

General

This release contains forward-looking statements regarding the benefits of the Company’s acquisition of Shore Premier Finance (“SPF”) and 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:  (i) the risk that the benefits from the acquisition of SPF may not be fully realized or may take longer to realize than expected, including as a result of any delay in or failure to receive regulatory approval of the proposed loan production office through which SPF will be operated, changes in general economic and market conditions, interest and exchange rates, monetary policy, laws and regulations and their enforcement, and the degree of competition in the geographic and business areas in which the Company and SPF operate; (ii) the ability to promptly and effectively integrate the business of SFP into the Company; (iii) the reaction to the transaction of the Company’s and SPF’s customers, employees and counterparties; (iv) diversion of management time on acquisition-related issues; (v) economic conditions, credit quality, interest rates and loan demand; (vi) the ability to successfully integrate future acquisitions; (vii) increased regulatory requirements as a result of our exceeding $10 billion in total assets; (viii) legislative and regulatory changes; (ix) technological changes and cybersecurity risks; (x) competition from other financial institutions; (xi) changes in the assumptions used in making the forward-looking statements; and (xii) other factors described in reports we file with the Securities and Exchange Commission (the “SEC”), including those factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2017 filed with the SEC on February 27, 2018.

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

FOR MORE INFORMATION CONTACT:

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

   
Home BancShares, Inc.  
Consolidated End of Period Balance Sheets  
(Unaudited)  
               
    Jun. 30, Mar. 31, Dec. 31, Sep. 30, Jun. 30,  
 (In thousands)       2018       2018       2017       2017       2017     
                                   
ASSETS              
               
 Cash and due from banks    $   197,658   $   185,479   $   166,915   $   197,953   $   147,041    
 Interest-bearing deposits with other banks        298,085       325,122       469,018       354,367       313,447    
     Cash and cash equivalents        495,743       510,601       635,933       552,320       460,488    
 Federal funds sold        500       1,825       24,109       4,545       -     
 Investment securities - available-for-sale        1,718,704       1,693,018       1,663,517       1,575,685       1,400,431    
 Investment securities - held-to-maturity        204,401       213,731       224,756       234,945       254,161    
 Loans receivable        10,897,970       10,325,736       10,331,188       10,286,193       7,834,475    
 Allowance for loan losses        (111,516 )     (110,212 )     (110,266 )     (111,620 )     (80,138 )  
     Loans receivable, net        10,786,454       10,215,524       10,220,922       10,174,573       7,754,337    
 Bank premises and equipment, net        234,634       235,607       237,439       239,990       207,071    
 Foreclosed assets held for sale        17,853       20,134       18,867       21,701       18,789    
 Cash value of life insurance        147,281       147,424       146,866       146,158       97,684    
 Accrued interest receivable        45,682       45,361       45,708       41,071       32,445    
 Deferred tax asset, net        78,435       78,328       76,564       121,787       68,368    
 Goodwill        956,418       927,949       927,949       929,129       420,941    
 Core deposit and other intangibles        46,101       47,726       49,351       50,982       21,019    
 Other assets        191,914       186,001       177,779       163,081       136,494    
     Total assets    $   14,924,120   $   14,323,229   $   14,449,760   $   14,255,967   $   10,872,228    
                                   
LIABILITIES AND STOCKHOLDERS' EQUITY              
               
Liabilities              
 Deposits:               
     Demand and non-interest-bearing    $   2,523,553   $   2,473,602   $   2,385,252   $   2,555,465   $   1,957,677    
     Savings and interest-bearing transaction accounts        6,573,902       6,437,408       6,476,819       6,341,883       4,335,456    
     Time deposits        1,638,578       1,485,605       1,526,431       1,551,422       1,474,255    
         Total deposits        10,736,033       10,396,615       10,388,502       10,448,770       7,767,388    
 Federal funds purchased        -        -        -        -        -     
 Securities sold under agreements to repurchase        139,750       150,315       147,789       149,531       133,741    
 FHLB and other borrowed funds        1,309,950       1,115,061       1,299,188       1,044,333       1,099,478    
 Accrued interest payable and other liabilities        55,971       54,845       41,959       38,782       37,751    
 Subordinated debentures        368,403       368,212       368,031       367,835       357,838    
     Total liabilities        12,610,107       12,085,048       12,245,469       12,049,251       9,396,196    
                                   
 Stockholders' equity               
 Common stock        1,745       1,736       1,736       1,737       1,431    
 Capital surplus        1,693,337       1,671,141       1,675,318       1,674,642       940,821    
 Retained earnings        642,540       585,586       530,658       526,448       527,338    
 Accumulated other comprehensive (loss) income        (23,609 )     (20,282 )     (3,421 )     3,889       6,442    
     Total stockholders' equity        2,314,013       2,238,181       2,204,291       2,206,716       1,476,032    
     Total liabilities and stockholders' equity    $   14,924,120   $   14,323,229   $   14,449,760   $   14,255,967   $   10,872,228    
                                   

 

 Home BancShares, Inc.   
 Consolidated Statements of Income   
 (Unaudited)   
                     
     Quarter Ended     Six Months Ended   
     Jun. 30,   Mar. 31,   Dec. 31,   Sep. 30,   Jun. 30,     Jun. 30,   Jun. 30,   
 (In thousands)       2018       2018       2017       2017       2017       2018       2017   
                                             
 Interest income                     
  Loans    $   152,996   $   148,065   $   147,426   $   113,269   $   112,732   $   301,061   $   218,494  
  Investment securities                     
       Taxable        8,979       8,970       7,793       7,071       6,434       17,949       11,912  
       Tax-exempt        3,368       3,006       3,025       3,032       2,966       6,374       5,910  
  Deposits - other banks        1,206       929       736       538       727       2,135       1,035  
  Federal funds sold        12       6       1       3       4       18       6  
                                             
 Total interest income        166,561       160,976       158,981       123,913       122,863       327,537       237,357  
                                             
 Interest expense                     
  Interest on deposits        18,164       14,806       12,946       8,535       6,810       32,970       12,296  
  Federal funds purchased        -        1       1       -        -        1       -   
  FHLB borrowed funds        4,245       4,580       3,806       3,408       3,710       8,825       7,299  
  Securities sold under agreements to repurchase        372       376       325       232       196       748       361  
  Subordinated debentures        5,168       5,004       4,934       4,969       4,795       10,172       5,234  
                                             
 Total interest expense        27,949       24,767       22,012       17,144       15,511       52,716       25,190  
                                             
 Net interest income        138,612       136,209       136,969       106,769       107,352       274,821       212,167  
  Provision for loan losses        2,722       1,600       4,926       35,023       387       4,322       4,301  
 Net interest income after                                             
  provision for loan losses        135,890       134,609       132,043       71,746       106,965       270,499       207,866  
                                             
 Non-interest income                     
  Service charges on deposit accounts        6,780       6,075       6,566       6,408       5,966       12,855       11,948  
  Other service charges and fees        9,797       10,155       10,144       8,490       8,576       19,952       17,493  
  Trust fees        379       446       548       365       309       825       765  
  Mortgage lending income        3,477       2,657       3,573       3,172       3,750       6,134       6,541  
  Insurance commissions        526       679       466       472       465       1,205       1,010  
  Increase in cash value of life insurance        730       654       738       478       463       1,384       773  
  Dividends from FHLB, FRB, Bankers' Bank & other        1,600       877       1,030       834       472       2,477       1,621  
  Gain on acquisitions        -        -        -        -        -        -        3,807  
  Gain (loss) on SBA loans        262       182       -        163       387       444       575  
  Gain (loss) on branches, equipment and
    other assets, net 
      -        7       2       (1,337 )     431       7       375  
  Gain (loss) on OREO, net        1,046       405       176       335       393       1,451       514  
  Gain (loss) on securities, net        -        -        1,193       136       380       -        803  
  Other income        3,076       3,668       2,856       1,941       2,825       6,744       4,662  
                                             
 Total non-interest income        27,673       25,805       27,292       21,457       24,417       53,478       50,887  
                                             
 Non-interest expense                     
  Salaries and employee benefits        34,476       35,014       35,404       28,510       28,034       69,490       55,455  
  Occupancy and equipment        8,519       8,983       9,009       7,887       7,034       17,502       13,715  
  Data processing expense        3,339       3,986       3,559       2,853       2,863       7,325       5,586  
  Other operating expenses        16,894       15,397       15,246       31,596       13,072       32,291       31,388  
                                             
 Total non-interest expense        63,228       63,380       63,218       70,846       51,003       126,608       106,144  
                                             
 Income before income taxes        100,335       97,034       96,117       22,357       80,379       197,369       152,609  
  Income tax expense        24,310       23,970       72,808       7,536       30,282       48,280       55,656  
 Net income    $   76,025   $   73,064   $   23,309   $   14,821   $   50,097   $   149,089   $   96,953  
                                             

 

 Home BancShares, Inc.   
 Selected Financial Information   
 (Unaudited)   
                       
       Quarter Ended     Six Months Ended   
       Jun. 30,   Mar. 31   Dec. 31,   Sep. 30,   Jun. 30,     Jun. 30,   Jun. 30,   
 (Dollars and shares in thousands, except per share data)         2018       2018       2017       2017       2017         2018       2017     
                                                   
PER SHARE DATA                      
                       
Diluted earnings per common share     $   0.44   $   0.42   $   0.13   $   0.10   $   0.35     $   0.86   $   0.68    
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)
        0.44       0.42       0.35       0.32       0.35         0.86       0.68    
Basic earnings per common share         0.44       0.42       0.13       0.10       0.35         0.86       0.68    
Dividends per share - common         0.1100       0.1100       0.1100       0.1100       0.0900         0.2200       0.1800    
Book value per common share         13.26       12.89       12.70       12.71       10.32         13.26       10.32    
Tangible book value per common share (non-GAAP)(1)         7.52       7.27       7.07       7.06       7.23         7.52       7.23    
                       
                       
STOCK INFORMATION                      
                       
Average common shares outstanding         173,403       173,761       173,641       144,238       143,282         173,581       142,538    
Average diluted shares outstanding         173,936       174,383       174,349       144,987       144,116         174,168       143,270    
End of period common shares outstanding         174,511       173,603       173,633       173,666       143,071         174,511       143,071    
                       
                       
ANNUALIZED PERFORMANCE METRICS                      
                       
Return on average assets       2.13 %   2.08 %   0.66 %   0.54 %   1.86 %     2.11 %   1.86 %  
Return on average assets excluding gain on acquisitions,
  merger expenses, FDIC loss share buy-out expense,
  reduced provision for loan losses as a result of a significant
  loan recovery, hurricane expenses & effect of tax rate
  change (non-GAAP)(1)
      2.13 %   2.08 %   1.69 %   1.70 %   1.88 %     2.11 %   1.88 %  
Return on average assets excluding intangible
  amortization (non-GAAP)(1)
      2.32 %   2.27 %   0.73 %   0.59 %   1.96 %     2.30 %   1.96 %  
Return on average assets excluding intangible
  amortization, provision for loan losses, gain on acquisitions,
  merger expenses, FDIC loss share buy-out expense,
  hurricane expenses and income taxes (ROA, as adjusted)
  (non-GAAP)(1)
      3.15 %   3.07 %   3.10 %   2.94 %   3.19 %     3.11 %   3.25 %  
Return on average common equity       13.54 %   13.38 %   4.17 %   3.88 %   13.83 %     13.46 %   13.84 %  
Return on average tangible common equity excluding
  intangible amortization (non-GAAP)(1)
      24.27 %   24.33 %   7.78 %   5.80 %   20.09 %     24.30 %   20.09 %  
Efficiency ratio       36.74 %   37.83 %   37.05 %   53.77 %   37.48 %     37.28 %   39.12 %  
Efficiency ratio, as adjusted (non-GAAP)(1)       37.03 %   37.97 %   37.35 %   39.12 %   37.29 %     37.49 %   37.13 %  
Net interest margin - FTE       4.47 %   4.46 %   4.47 %   4.40 %   4.50 %     4.47 %   4.60 %  
Fully taxable equivalent adjustment     $   1,403   $   1,209   $   1,983   $   1,846   $   2,016     $   2,612   $   4,027    
Total revenue         194,234       186,781       186,273       145,370       147,280         381,015       288,244    
Total purchase accounting accretion         10,669       10,608       12,397       7,174       8,497         21,276       16,145    
Average purchase accounting loan discounts         153,624       164,122       178,027       97,978       104,384         159,443       101,403    
                       
                       
OTHER OPERATING EXPENSES                      
                       
Advertising     $   1,142   $   962   $   898   $   795   $   812     $   2,104   $   1,510    
Merger and acquisition expenses         -        -        -        18,227       789         -        7,516    
Amortization of intangibles         1,624       1,626       1,631       906       866         3,250       1,670    
Electronic banking expense         1,828       1,878       1,777       1,712       1,654         3,706       3,173    
Directors' fees         318       330       313       309       324         648       637    
Due from bank service charges         242       219       254       472       456         461       876    
FDIC and state assessment         2,788       1,608       1,476       1,293       1,182         4,396       2,470    
Insurance         714       887       814       577       543         1,601       1,121    
Legal and accounting         858       778       1,194       698       474         1,636       1,101    
Other professional fees         1,601       1,639       1,537       1,436       1,233         3,240       2,386    
Operating supplies         602       600       602       432       477         1,202       944    
Postage         323       344       323       280       295         667       581    
Telephone         371       373       347       305       398         744       722    
Other expense         4,483       4,153       4,080       4,154       3,569         8,636       6,681    
                                                   
  Total other operating expenses      $   16,894   $   15,397   $   15,246   $   31,596   $   13,072     $   32,291   $   31,388    
                                                   
                       
 (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)   
                 
       June. 30,   Mar. 31,   Dec. 31,   Sep. 30,   Jun. 30,   
 (Dollars in thousands)         2018       2018       2017       2017       2017     
                                     
BALANCE SHEET RATIOS                
                 
Total loans to total deposits       101.51 %   99.32 %   99.45 %   98.44 %   100.86 %  
Common equity to assets       15.51 %   15.63 %   15.25 %   15.48 %   13.58 %  
Tangible common equity to tangible assets (non-GAAP)(1)       9.42 %   9.46 %   9.11 %   9.24 %   9.91 %  
                 
                 
LOANS RECEIVABLE                
                 
Real estate                
  Commercial real estate loans                
       Non-farm/non-residential     $   4,734,315   $   4,658,209   $   4,600,117   $   4,532,402   $   3,368,663    
       Construction/land development         1,662,199       1,641,834       1,700,491       1,648,923       1,315,309    
       Agricultural         77,053       81,151       82,229       88,295       78,260    
  Residential real estate loans                
       Residential 1-4 family         1,960,841       1,915,346       1,970,311       1,968,688       1,513,888    
       Multifamily residential         540,526       464,194       441,303       497,910       398,781    
Total real estate         8,974,934       8,760,734       8,794,451       8,736,218       6,674,901    
Consumer         417,499       40,842       46,148       51,515       38,424    
Commercial and industrial         1,287,637       1,324,173       1,297,397       1,296,485       994,827    
Agricultural         55,768       50,770       49,815       57,489       69,697    
Other         162,132       149,217       143,377       144,486       56,626    
  Loans receivable     $   10,897,970   $   10,325,736   $   10,331,188   $   10,286,193   $   7,834,475    
                                     
Discount for credit losses on purchased loans     $   129,903   $   137,404   $   146,557   $   158,001   $   95,627    
Purchased loans, net of discount for credit losses
  on purchased loans
        3,522,753       3,232,004       3,464,990       3,653,079       1,355,922    
                 
                 
ALLOWANCE FOR LOAN LOSSES                
                 
Balance, beginning of period     $   110,212   $   110,266   $   111,620   $   80,138   $   80,311    
Loans charged off         2,132       2,540       6,936       4,424       1,405    
Recoveries of loans previously charged off         714       886       656       883       845    
  Net loans (recovered)/charged off         1,418       1,654       6,280       3,541       560    
Provision for loan losses         2,722       1,600       4,926       35,023       387    
Balance, end of period     $   111,516   $   110,212   $   110,266   $   111,620   $   80,138    
                                     
Net (recoveries) charge-offs to average total loans       0.05 %   0.06 %   0.24 %   0.18 %   0.03 %  
Allowance for loan losses to total loans       1.02 %   1.07 %   1.07 %   1.09 %   1.02 %  
                 
                 
NON-PERFORMING ASSETS                
                 
Non-performing loans                
  Non-accrual loans     $   37,082   $   36,266   $   34,032   $   34,794   $   32,426    
  Loans past due 90 days or more         19,696       13,223       10,665       29,183       14,442    
       Total non-performing loans         56,778       49,489       44,697       63,977       46,868    
Other non-performing assets                                    
  Foreclosed assets held for sale, net         17,853       20,134       18,867       21,701       18,789    
  Other non-performing assets         3       3       3       3       3    
       Total other non-performing assets         17,856       20,137       18,870       21,704       18,792    
       Total non-performing assets     $   74,634   $   69,626   $   63,567   $   85,681   $   65,660    
                                     
Allowance for loan losses for loans to non-performing loans       196.41 %   222.70 %   246.70 %   174.47 %   170.99 %  
Non-performing loans to total loans       0.52 %   0.48 %   0.43 %   0.62 %   0.60 %  
Non-performing assets to total assets       0.50 %   0.49 %   0.44 %   0.60 %   0.60 %  
                 
                 
 (1)  Calculation of this metric and the reconciliation to GAAP is included in the schedules accompanying this release.       
                 

 

 Home BancShares, Inc.   
 Consolidated Net Interest Margin   
 (Unaudited)   
                   
     Three Months Ended   
     June 30, 2018     March 31, 2018   
     Average   Income/   Yield/     Average   Income/   Yield/   
 (Dollars in thousands)     Balance   Expense   Rate     Balance   Expense   Rate   
                   
ASSETS                  
 Earning assets                   
  Interest-bearing balances due from banks    $   288,643   $   1,206   1.68 %   $   245,815   $   929   1.53 %  
  Federal funds sold        679       12   7.09 %       9,682       6   0.25 %  
  Investment securities - taxable        1,528,613       8,979   2.36 %       1,560,464       8,970   2.33 %  
  Investment securities - non-taxable - FTE        398,067       4,476   4.51 %       345,217       3,997   4.70 %  
  Loans receivable - FTE        10,345,846       153,291   5.94 %       10,325,439       148,283   5.82 %  
     Total interest-earning assets        12,561,848       167,964   5.36 %       12,486,617       162,185   5.27 %  
  Non-earning assets        1,742,635           1,747,752      
     Total assets    $  14,304,483       $  14,234,369      
                   
LIABILITIES AND SHAREHOLDERS' EQUITY                  
 Liabilities                   
  Interest-bearing liabilities                   
     Savings and interest-bearing transaction accounts    $   6,451,204   $   13,489   0.84 %   $   6,409,585   $   11,242   0.71 %  
     Time deposits        1,611,353       4,675   1.16 %       1,513,854       3,564   0.95 %  
       Total interest-bearing deposits        8,062,557       18,164   0.90 %       7,923,439       14,806   0.76 %  
  Federal funds purchased        46       -    0.00 %       78       1   5.20 %  
  Securities sold under agreement to repurchase        143,952       372   1.04 %       152,716       376   1.00 %  
  FHLB borrowed funds        928,357       4,245   1.83 %       1,150,091       4,580   1.62 %  
  Subordinated debentures        368,309       5,168   5.63 %       368,124       5,004   5.51 %  
     Total interest-bearing liabilities        9,503,221       27,949   1.18 %       9,594,448       24,767   1.05 %  
  Non-interest bearing liabilities                   
     Non-interest bearing deposits       2,496,701           2,381,259      
     Other liabilities        53,149           44,360      
       Total liabilities        12,053,071           12,020,067      
 Shareholders' equity        2,251,412           2,214,302      
     Total liabilities and shareholders' equity    $  14,304,483       $  14,234,369      
 Net interest spread          4.18 %         4.22 %  
 Net interest income and margin - FTE        $   140,015   4.47 %       $   137,418   4.46 %  
                   
                   

 

 Home BancShares, Inc.   
 Consolidated Net Interest Margin   
 (Unaudited)   
                   
     Year Ended   
     June 30, 2018     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    $   267,347   $   2,135   1.61 %   $   237,617   $   1,035   0.88 %  
  Federal funds sold        5,156       18   0.70 %       1,305       6   0.93 %  
  Investment securities - taxable        1,544,451       17,949   2.34 %       1,183,588       11,912   2.03 %  
  Investment securities - non-taxable - FTE        371,788       8,473   4.60 %       346,895       9,598   5.58 %  
  Loans receivable - FTE        10,335,699       301,574   5.88 %       7,708,264       218,833   5.72 %  
      Total interest-earning assets        12,524,441       330,149   5.32 %       9,477,669       241,384   5.14 %  
  Non-earning assets        1,745,179           1,020,474      
     Total assets    $  14,269,620       $  10,498,143      
                   
LIABILITIES AND SHAREHOLDERS' EQUITY                  
 Liabilities                   
  Interest-bearing liabilities                   
     Savings and interest-bearing transaction accounts    $   6,430,509   $   24,731   0.78 %   $   4,216,025   $   7,690   0.37 %  
     Time deposits        1,562,873       8,239   1.06 %       1,400,501       4,606   0.66 %  
       Total interest-bearing deposits        7,993,382       32,970   0.83 %       5,616,526       12,296   0.44 %  
  Federal funds purchased        62       1   3.25 %       -        -    0.00 %  
  Securities sold under agreement to repurchase        148,310       748   1.02 %       126,390       361   0.58 %  
  FHLB borrowed funds        1,038,612       8,825   1.71 %       1,274,823       7,299   1.15 %  
  Subordinated debentures        368,217       10,172   5.57 %       207,043       5,234   5.10 %  
     Total interest-bearing liabilities        9,548,583       52,716   1.11 %       7,224,782       25,190   0.70 %  
  Non-interest bearing liabilities                   
     Non-interest bearing deposits       2,439,299           1,808,660      
     Other liabilities        48,779           52,062      
       Total liabilities        12,036,661           9,085,504      
 Shareholders' equity        2,232,959           1,412,639      
     Total liabilities and shareholders' equity    $  14,269,620       $  10,498,143      
 Net interest spread          4.21 %         4.44 %  
 Net interest income and margin - FTE        $   277,433   4.47 %       $   216,194   4.60 %  
                   
                   

 

 Home BancShares, Inc.   
 Non-GAAP Reconciliations   
 (Unaudited)   
                     
     Quarter Ended     Six Months Ended   
 (Dollars and shares in thousands,     Jun. 30,   Mar. 31   Dec. 31,   Sep. 30,   Jun. 30,     Jun. 30,   Jun. 30,   
 except per share data)       2018       2018       2017       2017       2017         2018       2017     
                                                 
EARNINGS, AS ADJUSTED                    
                     
GAAP net income available to common shareholders (A)   $   76,025   $   73,064   $   23,309   $   14,821   $   50,097     $   149,089   $   96,953    
Adjustments                    
Gain on acquisitions       -        -        -        -        -          -        (3,807 )  
Merger and acquisition expenses       -        -        -        18,227       789         -        7,516    
Hurricane expenses(2)       -        -        -        33,445       -          -        -     
Effect of tax rate change       -        -        36,935       -        -          -        -     
Total adjustments       -        -        36,935       51,672       789         -        3,709    
Tax-effect of adjustments(3)       -        -        -        20,045       199         -        2,581    
Adjustments after-tax (B)       -        -        36,935       31,627       590         -        1,128    
Earnings, as adjusted (C)   $   76,025   $   73,064   $   60,244   $   46,448   $   50,687     $   149,089   $   98,081    
                                                 
Average diluted shares outstanding (D)       173,936       174,383       174,349       144,987       144,116         174,168       143,270    
                     
GAAP diluted earnings per share: A/D   $   0.44   $   0.42   $   0.13   $   0.10   $   0.35     $   0.86   $   0.68    
Adjustments after-tax: B/D       -        -        0.22       0.22       -          -        -     
Diluted earnings per common share excluding gain on
  acquisitions, merger expenses,  hurricane expenses & effect of
  tax rate change: C/D
  $   0.44   $   0.42   $   0.35   $   0.32   $   0.35     $   0.86   $   0.68    
                                                 
                                                 
ANNUALIZED RETURN ON AVERAGE ASSETS                    
                     
Return on average assets: A/H     2.13 %   2.08 %   0.66 %   0.54 %   1.86 %     2.11 %   1.86 %  
Return on average assets excluding gain on acquisitions,
  merger expenses,  hurricane expenses & effect of tax rate
  change: (A+F)/H
    2.13 %   2.08 %   1.69 %   1.70 %   1.88 %     2.11 %   1.88 %  
Return on average assets excluding intangible
  amortization: (A+C)/(H-I)
    2.32 %   2.27 %   0.73 %   0.59 %   1.96 %     2.30 %   1.96 %  
Return on average assets excluding intangible amortization,
  provision for loan losses, gain on acquisitions, merger
  expenses, hurricane expenses and income taxes
  (ROA, as adjusted): (A+B+D+E+G)/(H-I)
    3.15 %   3.07 %   3.10 %   2.94 %   3.19 %     3.11 %   3.25 %  
                     
GAAP net income available to common shareholders (A)   $   76,025   $   73,064   $   23,309   $   14,821   $   50,097     $   149,089   $   96,953    
Amortization of intangibles (B)       1,624       1,626       1,631       906       866         3,250       1,670    
Amortization of intangibles after-tax (C)       1,200       1,201       991       551       526         2,401       1,015    
Provision for loan losses excluding hurricane provision (D)       2,722       1,600       4,926       2,134       387         4,322       4,301    
Total adjustments (E)       -        -        36,935       51,672       789         -        3,709    
Adjustments after-tax (F)       -        -        36,935       31,627       590         -        1,128    
Income tax expense excluding effect of tax rate change (G)       24,310       23,970       35,873       7,536       30,282         48,280       55,656    
Average assets (H)       14,304,483       14,234,369       14,113,936       10,853,559       10,793,770         14,269,620       10,498,143    
Average goodwill, core deposits & other intangible assets (I)       975,345       976,451       979,209       462,799       442,380         975,895       429,113    
                     
                     
 (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     Six Months Ended     
 (Dollars and shares in thousands,     Jun. 30,   Mar. 31   Dec. 31,   Sep. 30,   Jun. 30,     Jun. 30,   Jun. 30,     
 except per share data)       2018       2018       2017       2017       2017         2018       2017       
                                                   
ANNUALIZED RETURN ON AVERAGE COMMON EQUITY                      
                       
Return on average common equity: A/C     13.54 %   13.38 %   4.17 %   3.88 %   13.83 %     13.46 %   13.84 %    
Return on average tangible common equity
  excluding intangible amortization: (A+B)/(C-D)
    24.27 %   24.33 %   7.78 %   5.80 %   20.09 %     24.30 %   20.09 %    
                       
                       
GAAP net income available to common shareholders (A)   $   76,025   $   73,064   $   23,309   $   14,821   $   50,097     $   149,089   $   96,953      
Amortization of intangibles after-tax (B)       1,200       1,201       991       551       526         2,401       1,015      
Average common equity (C)       2,251,412       2,214,302       2,218,549       1,513,829       1,453,099         2,232,959       1,412,639      
Average goodwill, core deposits & other intangible assets (D)       975,345       976,451       979,209       462,799       442,380         975,895       429,113      
                       
                       
EFFICIENCY RATIO                      
                       
 Efficiency ratio:  ((C-E)/(A+B+D))      36.74 %   37.83 %   37.05 %   53.77 %   37.48 %     37.28 %   39.12 %    
 Efficiency ratio, as adjusted:  ((C-E-G)/(A+B+D-F))      37.03 %   37.97 %   37.35 %   39.12 %   37.29 %     37.49 %   37.13 %    
            -        -        -          -        -       
 Net interest income (A)    $   138,612   $   136,209   $   136,969   $   106,769   $   107,352     $   274,821   $   212,167      
 Non-interest income (B)        27,673       25,805       27,292       21,457       24,417         53,478       50,887      
 Non-interest expense (C)        63,228       63,380       63,218       70,846       51,003         126,608       106,144      
 Fully taxable equivalent adjustment (D)        1,403       1,209       1,983       1,846       2,016         2,612       4,027      
 Amortization of intangibles (E)        1,624       1,626       1,631       906       866         3,250       1,670      
                       
 Adjustments:                       
 Non-interest income:                       
 Gain on acquisition    $   -    $   -    $   -    $   -    $   -      $   -    $   3,807      
 Gain (loss) on OREO        1,046       405       176       335       393         1,451       514      
 Gain (loss) on SBA loans        262       182       -        163       387         444       575      
 Gain (loss) on branches, equipment and other assets, net        -        7       2       (1,337 )     431         7       375      
 Gain (loss) on securities        -        -        1,193       136       380         -        803      
 Recoveries on historic losses        -        -        -        -        -          -        -       
   Total non-interest income adjustments (F)   $   1,308   $   594   $   1,371   $   (703 ) $   1,591     $   1,902   $   6,074      
                                                   
 Non-interest expense:                       
 Merger Expenses    $   -    $   -    $   -    $   18,227   $   789     $   -    $   7,516      
 Hurricane damage expense        -        -        -        556       -          -        -       
 Vacant properties write-downs        -        -        -        -        47         -        47      
   Total non-interest expense adjustments (G)   $   -    $   -    $   -    $   18,783   $   836     $   -    $   7,563      
                                                   
                       

 

   
 Home BancShares, Inc.   
 Non-GAAP Reconciliations   
 (Unaudited)   
                 
       Jun. 30,   Mar. 31,   Dec. 31,   Sep. 30,   Jun. 30,   
 (Dollars in thousands)         2018       2018       2017       2017       2017     
                                     
TANGIBLE BOOK VALUE PER COMMON SHARE                
                 
 Book value per common share: A/B      $   13.26   $   12.89   $   12.70   $   12.71   $   10.32    
 Tangible book value per common share: (A-C-D)/B          7.52       7.27       7.07       7.06       7.23    
                 
 Total stockholders' equity (A)      $   2,314,013   $   2,238,181   $   2,204,291   $   2,206,716   $   1,476,032    
 End of period common shares outstanding (B)          174,511       173,603       173,633       173,666       143,071    
 Goodwill (C)      $   956,418   $   927,949   $   927,949   $   929,129   $   420,941    
 Core deposit and other intangibles (D)          46,101       47,726       49,351       50,982       21,019    
                 
                 
TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS                
                 
 Equity to assets: B/A        15.51 %   15.63 %   15.25 %   15.48 %   13.58 %  
 Tangible common equity to tangible assets: (B-C-D)/(A-C-D)        9.42 %   9.46 %   9.11 %   9.24 %   9.91 %  
              -        -        -     
 Total assets (A)      $   14,924,120   $   14,323,229   $   14,449,760   $   14,255,967   $   10,872,228    
 Total stockholders' equity (B)          2,314,013       2,238,181       2,204,291       2,206,716       1,476,032    
 Goodwill (C)          956,418       927,949       927,949       929,129       420,941    
 Core deposit and other intangibles (D)          46,101       47,726       49,351       50,982       21,019    
                 

Home BancShares red white and blue logo

 

Source: Home BancShares, Inc.

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