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

10/18/2018

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

Highlights of the Third Quarter of 2018:

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


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

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

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

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

Operating Highlights

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

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

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

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

Financial Condition

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

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

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

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

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

Branches

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

Conference Call

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

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

Non-GAAP Financial Measures

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

General

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

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

FOR MORE INFORMATION CONTACT:

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

 

 
Home BancShares, Inc.
 Consolidated End of Period Balance Sheets
 (Unaudited)
           
   Sep. 30,  Jun. 30,  Mar. 31,  Dec. 31,  Sep. 30,
 (In thousands)    2018      2018      2018      2017      2017  
           
ASSETS          
           
 Cash and due from banks $   208,681   $   197,658   $   185,479   $   166,915   $   197,953  
 Interest-bearing deposits with other banks      323,376       298,085       325,122       469,018       354,367  
  Cash and cash equivalents     532,057       495,743       510,601       635,933       552,320  
 Federal funds sold     500       500       1,825       24,109       4,545  
 Investment securities - available-for-sale     1,744,430       1,718,704       1,693,018       1,663,517       1,575,685  
 Investment securities - held-to-maturity     199,266       204,401       213,731       224,756       234,945  
 Loans receivable     10,832,815       10,897,970       10,325,736       10,331,188       10,286,193  
 Allowance for loan losses     (110,191 )     (111,516 )     (110,212 )     (110,266 )     (111,620 )
  Loans receivable, net     10,722,624       10,786,454       10,215,524       10,220,922       10,174,573  
 Bank premises and equipment, net     233,652       234,634       235,607       237,439       239,990  
 Foreclosed assets held for sale     13,507       17,853       20,134       18,867       21,701  
 Cash value of life insurance     148,014       147,281       147,424       146,866       146,158  
 Accrued interest receivable     48,909       45,682       45,361       45,708       41,071  
 Deferred tax asset, net     79,548       78,435       78,328       76,564       121,787  
 Goodwill     958,408       956,418       927,949       927,949       929,129  
 Core deposit and other intangibles     44,484       46,101       47,726       49,351       50,982  
 Other assets     187,339       191,914       186,001       177,779       163,081  
  Total assets $   14,912,738   $   14,924,120   $   14,323,229   $   14,449,760   $   14,255,967  
           
LIABILITIES AND STOCKHOLDERS' EQUITY          
           
Liabilities          
 Deposits:          
  Demand and non-interest-bearing $   2,482,857   $   2,523,553   $   2,473,602   $   2,385,252   $   2,555,465  
  Savings and interest-bearing transaction accounts     6,420,951       6,573,902       6,437,408       6,476,819       6,341,883  
  Time deposits     1,720,930       1,638,578       1,485,605       1,526,431       1,551,422  
    Total deposits     10,624,738       10,736,033       10,396,615       10,388,502       10,448,770  
 Federal funds purchased     -        -        -        -        -   
 Securities sold under agreements to repurchase     142,146       139,750       150,315       147,789       149,531  
 FHLB and other borrowed funds     1,363,851       1,309,950       1,115,061       1,299,188       1,044,333  
 Accrued interest payable and other liabilities     72,381       55,971       54,845       41,959       38,782  
 Subordinated debentures     368,596       368,403       368,212       368,031       367,835  
  Total liabilities     12,571,712       12,610,107       12,085,048       12,245,469       12,049,251  
           
 Stockholders' equity          
 Common stock     1,741       1,745       1,736       1,736       1,737  
 Capital surplus     1,668,106       1,693,337       1,671,141       1,675,318       1,674,642  
 Retained earnings     701,900       642,540       585,586       530,658       526,448  
 Accumulated other comprehensive (loss) income     (30,721 )     (23,609 )     (20,282 )     (3,421 )     3,889  
  Total stockholders' equity     2,341,026       2,314,013       2,238,181       2,204,291       2,206,716  
  Total liabilities and stockholders' equity $   14,912,738   $   14,924,120   $   14,323,229   $   14,449,760   $   14,255,967  
           
           

 

Home BancShares, Inc.
 Consolidated Statements of Income
 (Unaudited)
                 
     Quarter Ended        Nine Months Ended  
     Sep. 30,      Jun. 30,    Mar. 31    Dec. 31,    Sep. 30,        Sep. 30,      Sep. 30,  
 (In thousands)    2018      2018    2018    2017    2017        2018      2017  
                 
 Interest income                
  Loans $   166,334   $   152,996 $   148,065 $   147,426 $   113,269     $   467,395   $   331,763  
  Investment securities                
    Taxable     9,011       8,979     8,970     7,793     7,071         26,960       18,983  
    Tax-exempt     3,427       3,368     3,006     3,025     3,032         9,801       8,942  
  Deposits - other banks     1,273       1,206     929     736     538         3,408       1,573  
  Federal funds sold     6       12     6     1     3         24       9  
                 
 Total interest income     180,051       166,561     160,976     158,981     123,913         507,588       361,270  
                 
 Interest expense                
  Interest on deposits     21,412       18,164     14,806     12,946     8,535         54,382       20,831  
  Federal funds purchased     -        -      1     1     -          1       -   
  FHLB borrowed funds     7,055       4,245     4,580     3,806     3,408         15,880       10,707  
  Securities sold under agreements to repurchase     472       372     376     325     232         1,220       593  
  Subordinated debentures     5,202       5,168     5,004     4,934     4,969         15,374       10,203  
                 
 Total interest expense     34,141       27,949     24,767     22,012     17,144         86,857       42,334  
                 
 Net interest income     145,910       138,612     136,209     136,969     106,769         420,731       318,936  
  Provision for loan losses     -        2,722     1,600     4,926     35,023         4,322       39,324  
 Net interest income after                
  provision for loan losses     145,910       135,890     134,609     132,043     71,746         416,409       279,612  
                 
 Non-interest income                
  Service charges on deposit accounts     6,992       6,780     6,075     6,566     6,408         19,847       18,356  
  Other service charges and fees     9,041       9,797     10,155     10,144     8,490         28,993       25,983  
  Trust fees     437       379     446     548     365         1,262       1,130  
  Mortgage lending income     3,691       3,477     2,657     3,573     3,172         9,825       9,713  
  Insurance commissions     463       526     679     466     472         1,668       1,482  
  Increase in cash value of life insurance     735       730     654     738     478         2,119       1,251  
  Dividends from FHLB, FRB, FNBB & other     1,288       1,600     877     1,030     834         3,765       2,455  
  Gain on acquisitions     -        -      -      -      -          -        3,807  
  Gain (loss) on SBA loans     47       262     182     -      163         491       738  
  Gain (loss) on branches, equipment and other assets, net     (102 )     -      7     2     (1,337 )       (95 )     (962 )
  Gain (loss) on OREO, net     836       1,046     405     176     335         2,287       849  
  Gain (loss) on securities, net     -        -      -      1,193     136         -        939  
  Other income     2,419       3,076     3,668     2,856     1,941         9,163       6,603  
                 
 Total non-interest income     25,847       27,673     25,805     27,292     21,457         79,325       72,344  
                 
 Non-interest expense                
  Salaries and employee benefits     37,825       34,476     35,014     35,404     28,510         107,315       83,965  
  Occupancy and equipment     8,148       8,519     8,983     9,009     7,887         25,650       21,602  
  Data processing expense     3,461       3,339     3,986     3,559     2,853         10,786       8,439  
  Other operating expenses     16,689       16,894     15,397     15,246     31,596         48,980       62,984  
                 
 Total non-interest expense     66,123       63,228     63,380     63,218     70,846         192,731       176,990  
                 
 Income before income taxes      105,634       100,335     97,034     96,117     22,357         303,003       174,966  
  Income tax expense     25,350       24,310     23,970     72,808     7,536         73,630       63,192  
 Net income $   80,284   $   76,025 $   73,064 $   23,309 $   14,821     $   229,373   $   111,774  
                 
                 

 

Home BancShares, Inc.
 Selected Financial Information
 (Unaudited)
                 
     Quarter Ended              Nine Months Ended  
                 
   Sep. 30,  Jun. 30,  Mar. 31  Dec. 31,  Sep. 30,    Sep. 30,  Sep. 30,
 (Dollars and shares in thousands, except per share data)    2018      2018      2018      2017      2017        2018      2017  
                 
PER SHARE DATA                
                 
Diluted earnings per common share $   0.46   $   0.44   $   0.42   $   0.13   $   0.10     $   1.32   $   0.78  
Diluted earnings per common share excluding gain on acquisitions, merger expenses, FDIC loss share buy-out
expense, reduced provision for loan losses as a result of a
significant loan recovery, hurricane expenses & effect of tax
rate change (non-GAAP)(1)
    0.46       0.44       0.42       0.35       0.32         1.32       1.00  
Basic earnings per common share     0.46       0.44       0.42       0.13       0.10         1.32       0.78  
Dividends per share - common     0.1200       0.1100       0.1100       0.1100       0.1100         0.3400       0.2900  
Book value per common share     13.44       13.26       12.89       12.70       12.71         13.44       12.71  
Tangible book value per common share (non-GAAP)(1)     7.68       7.52       7.27       7.07       7.06         7.68       7.06  
                 
                 
STOCK INFORMATION                
                 
Average common shares outstanding     174,440       173,403       173,761       173,641       144,238         173,870       143,111  
Average diluted shares outstanding     174,867       173,936       174,383       174,349       144,987         174,394       143,839  
End of period common shares outstanding     174,135       174,511       173,603       173,633       173,666         174,135       173,666  
                 
                 
ANNUALIZED PERFORMANCE METRICS                
                 
Return on average assets   2.14 %   2.13 %   2.08 %   0.66 %   0.54 %     2.12 %   1.41 %
Return on average assets excluding gain on acquisitions, merger expenses, FDIC loss share buy-out expense, reduced provision for loan losses as a result of a significant loan recovery, hurricane expenses & effect of tax rate change (non-GAAP)(1)   2.14 %   2.13 %   2.08 %   1.69 %   1.70 %     2.12 %   1.82 %
Return on average assets excluding intangible amortization (non-GAAP)(1)   2.33 %   2.32 %   2.27 %   0.73 %   0.59 %     2.31 %   1.49 %
Return on average assets excluding intangible amortization,  provision for loan losses, gain on acquisitions, merger expenses, FDIC loss share buy-out expense, hurricane expenses and income taxes (ROA, as adjusted) (non-GAAP)(1)   3.07 %   3.15 %   3.07 %   3.10 %   2.94 %     3.09 %   3.14 %
Return on average common equity   13.74 %   13.54 %   13.38 %   4.17 %   3.88 %     13.56 %   10.33 %
Return on average tangible common equity excluding intangible  amortization (non-GAAP)(1)   24.56 %   24.27 %   24.33 %   7.78 %   5.80 %     24.39 %   15.06 %
Efficiency ratio   37.23 %   36.74 %   37.83 %   37.05 %   53.77 %     37.26 %   43.92 %
Efficiency ratio, as adjusted (non-GAAP)(1)   37.40 %   37.03 %   37.97 %   37.35 %   39.12 %     37.46 %   37.79 %
Net interest margin - FTE   4.46 %   4.47 %   4.46 %   4.47 %   4.40 %     4.46 %   4.53 %
Fully taxable equivalent adjustment $   1,489   $   1,403   $   1,209   $   1,983   $   1,846     $   4,101   $   5,873  
Total revenue     205,898       194,234       186,781       186,273       145,370         586,913       433,614  
Total purchase accounting accretion     10,744       10,669       10,608       12,397       7,174         32,021       23,319  
Average purchase accounting loan discounts     151,377       153,624       164,122       178,027       97,978         156,855       97,158  
                 
                 
OTHER OPERATING EXPENSES                
                 
Advertising $   1,154   $   1,142   $   962   $   898   $   795     $   3,258   $   2,305  
Merger and acquisition expenses     -        -        -        -        18,227         -        25,743  
Amortization of intangibles     1,617       1,624       1,626       1,631       906         4,867       2,576  
Electronic banking expense     1,947       1,828       1,878       1,777       1,712         5,653       4,885  
Directors' fees     314       318       330       313       309         962       946  
Due from bank service charges     253       242       219       254       472         714       1,348  
FDIC and state assessment     2,293       2,788       1,608       1,476       1,293         6,689       3,763  
Insurance     762       714       887       814       577         2,363       1,698  
Legal and accounting     761       858       778       1,194       698         2,397       1,799  
Other professional fees     1,748       1,601       1,639       1,537       1,436         4,988       3,822  
Operating supplies     510       602       600       602       432         1,712       1,376  
Postage     311       323       344       323       280         978       861  
Telephone     337       371       373       347       305         1,081       1,027  
Other expense     4,682       4,483       4,153       4,080       4,154         13,318       10,835  
                 
  Total other operating expenses $   16,689   $   16,894   $   15,397   $   15,246   $   31,596     $   48,980   $   62,984  
                 
                 
 (1)  Calculation of this metric and the reconciliation to GAAP is included in the schedules accompanying this release.
                 

 

Home BancShares, Inc.
 Selected Financial Information
 (Unaudited)
           
   Sep. 30,   June. 30,   Mar. 31,   Dec. 31,   Sep. 30, 
 (Dollars in thousands)    2018      2018      2018      2017      2017  
           
BALANCE SHEET RATIOS          
           
Total loans to total deposits   101.96 %   101.51 %   99.32 %   99.45 %   98.44 %
Common equity to assets   15.70 %   15.51 %   15.63 %   15.25 %   15.48 %
Tangible common equity to tangible assets (non-GAAP)(1)   9.62 %   9.42 %   9.46 %   9.11 %   9.24 %
           
           
LOANS RECEIVABLE          
           
Real estate          
  Commercial real estate loans          
    Non-farm/non-residential $   4,685,827   $   4,734,315   $   4,658,209   $   4,600,117   $   4,532,402  
    Construction/land development     1,550,910       1,662,199       1,641,834       1,700,491       1,648,923  
    Agricultural     72,930       77,053       81,151       82,229       88,295  
  Residential real estate loans          
    Residential 1-4 family     1,982,666       1,960,841       1,915,346       1,970,311       1,968,688  
    Multifamily residential     608,608       540,526       464,194       441,303       497,910  
Total real estate     8,900,941       8,974,934       8,760,734       8,794,451       8,736,218  
Consumer     428,192       417,499       40,842       46,148       51,515  
Commercial and industrial     1,303,841       1,287,637       1,324,173       1,297,397       1,296,485  
Agricultural     58,644       55,768       50,770       49,815       57,489  
Other     141,197       162,132       149,217       143,377       144,486  
  Loans receivable $   10,832,815   $   10,897,970   $   10,325,736   $   10,331,188   $   10,286,193  
                                         
Discount for credit losses on purchased loans $   120,849   $   129,903   $   137,404   $   146,557   $   158,001  
Purchased loans, net of discount for credit losses on purchased loans     3,081,695       3,522,753       3,232,004       3,464,990       3,653,079  
           
           
ALLOWANCE FOR LOAN LOSSES          
           
Balance, beginning of period $   111,516   $   110,212   $   110,266   $   111,620   $   80,138  
Loans charged off     2,501       2,132       2,540       6,936       4,424  
Recoveries of loans previously charged off     1,176       714       886       656       883  
  Net loans (recovered)/charged off     1,325       1,418       1,654       6,280       3,541  
Provision for loan losses     -        2,722       1,600       4,926       35,023  
Balance, end of period $   110,191   $   111,516   $   110,212   $   110,266   $   111,620  
                               
Net (recoveries) charge-offs to average total loans   0.05 %   0.05 %   0.06 %   0.24 %   0.18 %
Allowance for loan losses to total loans   1.02 %   1.02 %   1.07 %   1.07 %   1.09 %
           
           
NON-PERFORMING ASSETS          
           
Non-performing loans          
  Non-accrual loans $   36,198   $   37,082   $   36,266   $   34,032   $   34,794  
  Loans past due 90 days or more     20,267       19,696       13,223       10,665       29,183  
    Total non-performing loans     56,465       56,778       49,489       44,697       63,977  
Other non-performing assets          
  Foreclosed assets held for sale, net     13,507       17,853       20,134       18,867       21,701  
  Other non-performing assets     405       3       3       3       3  
    Total other non-performing assets     13,912       17,856       20,137       18,870       21,704  
    Total non-performing assets $   70,377   $   74,634   $   69,626   $   63,567   $   85,681  
           
Allowance for loan losses for loans to non-performing loans   195.15 %   196.41 %   222.70 %   246.70 %   174.47 %
Non-performing loans to total loans   0.52 %   0.52 %   0.48 %   0.43 %   0.62 %
Non-performing assets to total assets   0.47 %   0.50 %   0.49 %   0.44 %   0.60 %
           
           
 (1)  Calculation of this metric and the reconciliation to GAAP is included in the schedules accompanying this release.    
           
           

 

Home BancShares, Inc.
 Consolidated Net Interest Margin
 (Unaudited)
               
     Three Months Ended  
     September 30, 2018        June 30, 2018  
     Average    Income/  Yield/        Average    Income/  Yield/  
 (Dollars in thousands)    Balance    Expense  Rate        Balance    Expense  Rate  
                           
ASSETS                          
 Earning assets                          
  Interest-bearing balances due from banks $   281,115 $   1,273 1.80 %   $   288,643 $   1,206 1.68 %
  Federal funds sold     524     6 4.54 %       679     12 7.09 %
  Investment securities - taxable     1,526,455     9,011 2.34 %       1,528,613     8,979 2.36 %
  Investment securities - non-taxable - FTE     402,355     4,507 4.44 %       398,067     4,476 4.51 %
  Loans receivable - FTE     10,909,646     166,743 6.06 %       10,345,846     153,291 5.94 %
    Total interest-earning assets     13,120,095     181,540 5.49 %       12,561,848     167,964 5.36 %
  Non-earning assets     1,760,836           1,742,635    
    Total assets $  14,880,931       $  14,304,483    
               
LIABILITIES AND SHAREHOLDERS' EQUITY              
 Liabilities              
  Interest-bearing liabilities              
    Savings and interest-bearing transaction accounts $   6,406,711 $   15,596 0.97 %   $   6,451,204 $   13,489 0.84 %
    Time deposits     1,661,129     5,816 1.39 %       1,611,353     4,675 1.16 %
      Total interest-bearing deposits     8,067,840     21,412 1.05 %       8,062,557     18,164 0.90 %
  Federal funds purchased     -      -  0.00 %       46     -  0.00 %
  Securities sold under agreement to repurchase     148,791     472 1.26 %       143,952     372 1.04 %
  FHLB borrowed funds     1,398,738     7,055 2.00 %       928,357     4,245 1.83 %
  Subordinated debentures     368,501     5,202 5.60 %       368,309     5,168 5.63 %
      Total interest-bearing liabilities     9,983,870     34,141 1.36 %       9,503,221     27,949 1.18 %
  Non-interest bearing liabilities              
    Non-interest bearing deposits     2,512,690           2,496,701    
    Other liabilities     66,441           53,149    
      Total liabilities     12,563,001           12,053,071    
 Shareholders' equity     2,317,930           2,251,412    
    Total liabilities and shareholders' equity $  14,880,931       $  14,304,483    
 Net interest spread     4.13 %         4.18 %
 Net interest income and margin - FTE   $   147,399 4.46 %     $   140,015 4.47 %
                 

 

Home BancShares, Inc.
 Consolidated Net Interest Margin
 (Unaudited)
               
     Nine Months Ended  
     September 30, 2018        September 30, 2017  
     Average    Income/  Yield/        Average    Income/  Yield/  
 (Dollars in thousands)   Balance   Expense  Rate       Balance   Expense  Rate  
               
                           
                           
ASSETS                          
 Earning assets                          
  Interest-bearing balances due from banks $   271,987 $   3,408 1.68 %   $   218,324 $   1,573 0.96 %
  Federal funds sold     3,595     24 0.89 %       1,161     9 1.04 %
  Investment securities - taxable     1,538,387     26,960 2.34 %       1,231,619     18,983 2.06 %
  Investment securities - non-taxable - FTE     382,088     12,981 4.54 %       347,578     14,506 5.58 %
  Loans receivable - FTE     10,529,117     468,316 5.95 %       7,785,925     332,072 5.70 %
    Total interest-earning assets     12,725,174     511,689 5.38 %       9,584,607     367,143 5.12 %
  Non-earning assets     1,750,456           1,033,310    
    Total assets $  14,475,630       $  10,617,917    
               
LIABILITIES AND SHAREHOLDERS' EQUITY              
 Liabilities              
  Interest-bearing liabilities              
    Savings and interest-bearing transaction accounts $   6,422,489 $   40,327 0.84 %   $   4,316,032 $   13,445 0.42 %
    Time deposits     1,595,985     14,055 1.18 %       1,415,383     7,386 0.70 %
      Total interest-bearing deposits     8,018,474     54,382 0.91 %       5,731,415     20,831 0.49 %
  Federal funds purchased     41     1 3.26 %       -      -  0.00 %
  Securities sold under agreement to repurchase     148,472     1,220 1.10 %       129,580     593 0.61 %
  FHLB borrowed funds     1,159,973     15,880 1.83 %       1,155,503     10,707 1.24 %
  Subordinated debentures     368,313     15,374 5.58 %       258,032     10,203 5.29 %
    Total interest-bearing liabilities     9,695,273     86,857 1.20 %       7,274,530     42,334 0.78 %
  Non-interest bearing liabilities              
    Non-interest bearing deposits     2,464,032           1,847,843    
    Other liabilities     54,731           48,804    
      Total liabilities     12,214,036           9,171,177    
 Shareholders' equity     2,261,594           1,446,740    
    Total liabilities and shareholders' equity $  14,475,630       $  10,617,917    
 Net interest spread     4.18 %       4.34 %
 Net interest income and margin - FTE   $   424,832 4.46 %     $   324,809 4.53 %
               
               

 

Home BancShares, Inc.
 Non-GAAP Reconciliations
 (Unaudited)
               
     Quarter Ended      Nine Months Ended  
 (Dollars and shares in thousands,    Sep. 30,      Jun. 30,      Mar. 31      Dec. 31,      Sep. 30,      Sep. 30,      Sep. 30,  
 except per share data)    2018      2018      2018      2017      2017      2018      2017  
               
EARNINGS, AS ADJUSTED              
               
GAAP net income available to common shareholders (A) $   80,284   $   76,025   $   73,064   $   23,309   $   14,821   $   229,373   $   111,774  
Adjustments              
Gain on acquisitions     -        -        -        -        -        -        (3,807 )
Merger and acquisition expenses     -        -        -        -        18,227       -        25,743  
Hurricane expenses(1)     -        -        -        -        33,445       -        33,445  
Effect of tax rate change     -        -        -        36,935       -        -        -   
Total adjustments     -        -        -        36,935       51,672       -        55,381  
Tax-effect of adjustments(2)     -        -        -        -        20,045       -        22,626  
Adjustments after-tax (B)     -        -        -        36,935       31,627       -        32,755  
Earnings, as adjusted (C) $   80,284   $   76,025   $   73,064   $   60,244   $   46,448   $   229,373   $   144,529  
               
Average diluted shares outstanding (D)     174,867       173,936       174,383       174,349       144,987       174,394       143,839  
               
GAAP diluted earnings per share: A/D $   0.46   $   0.44   $   0.42   $   0.13   $   0.10   $   1.32   $   0.78  
Adjustments after-tax: B/D     -        -        -        0.22       0.22       -        0.22  
Diluted earnings per common share excluding gain on acquisitions, merger expenses,  hurricane expenses & effect of tax rate change: C/D $   0.46   $   0.44   $   0.42   $   0.35   $   0.32   $   1.32   $   1.00  
                                           
               
ANNUALIZED RETURN ON AVERAGE ASSETS              
               
Return on average assets: A/H   2.14 %   2.13 %   2.08 %   0.66 %   0.54 %   2.12 %   1.41 %
Return on average assets excluding gain on acquisitions, merger expenses, hurricane expenses & effect of tax rate change: (A+F)/H   2.14 %   2.13 %   2.08 %   1.69 %   1.70 %   2.12 %   1.82 %
Return on average assets excluding intangible amortization:  (A+C)/(H-I)   2.33 %   2.32 %   2.27 %   0.73 %   0.59 %   2.31 %   1.49 %
Return on average assets excluding intangible amortization, provision for loan losses, gain on acquisitions, merger expenses, hurricane expenses and income taxes (ROA, as adjusted): (A+B+D+E+G)/(H-I)   3.07 %   3.15 %   3.07 %   3.10 %   2.94 %   3.09 %   3.14 %
               
GAAP net income available to common shareholders (A) $   80,284   $   76,025   $   73,064   $   23,309   $   14,821   $   229,373   $   111,774  
Amortization of intangibles (B)     1,617       1,624       1,626       1,631       906       4,867       2,576  
Amortization of intangibles after-tax (C)     1,194       1,200       1,201       991       551       3,595       1,566  
Provision for loan losses excluding hurricane provision (D)     -        2,722       1,600       4,926       2,134       4,322       6,435  
Total adjustments (E)     -        -        -        36,935       51,672       -        55,381  
Adjustments after-tax (F)     -        -        -        36,935       31,627       -        32,755  
Income tax expense excluding effect of tax rate change (G)     25,350       24,310       23,970       35,873       7,536       73,630       63,192  
Average assets (H)   14,880,931     14,304,483     14,234,369     14,113,936     10,853,559     14,475,630     10,617,917  
Average goodwill, core deposits & other intangible assets (I)     1,001,843       975,345       976,451       979,209       462,799       984,639       440,465  
               
               
 (1)  Hurricane expenses include $32,889 of provision for loan losses and $556 of damage expense related to Hurricane Irma.
 (2)  Effective tax rate of 39.225%, adjusted for non-taxable gain on acquisition and non-deductible merger-related costs.
               

 

Home BancShares, Inc.
 Non-GAAP Reconciliations
 (Unaudited)
                 
     Quarter Ended              Nine Months Ended  
                 
 (Dollars and shares in thousands,  Sep. 30,  Jun. 30,  Mar. 31  Dec. 31,  Sep. 30,    Sep. 30,  Sep. 30,
 except per share data)    2018      2018      2018      2017      2017        2018      2017  
                 
ANNUALIZED RETURN ON AVERAGE COMMON EQUITY                
                 
Return on average common equity: A/C   13.74 %   13.54 %   13.38 %   4.17 %   3.88 %     13.56 %   10.33 %
Return on average tangible common equity excluding intangible  amortization: (A+B)/(C-D)   24.56 %   24.27 %   24.33 %   7.78 %   5.80 %     24.39 %   15.06 %
                 
                 
GAAP net income available to common shareholders (A) $   80,284   $   76,025   $   73,064   $   23,309   $   14,821     $   229,373   $   111,774  
Amortization of intangibles after-tax (B)     1,194       1,200       1,201       991       551         3,595       1,566  
Average common equity (C)     2,317,930       2,251,412       2,214,302       2,218,549       1,513,829         2,261,594       1,446,740  
Average goodwill, core deposits & other intangible assets (D)     1,001,843       975,345       976,451       979,209       462,799         984,639       440,465  
                 
                 
EFFICIENCY RATIO                
                 
 Efficiency ratio:  ((C-E)/(A+B+D))   37.23 %   36.74 %   37.83 %   37.05 %   53.77 %     37.26 %   43.92 %
 Efficiency ratio, as adjusted:  ((C-E-G)/(A+B+D-F))   37.40 %   37.03 %   37.97 %   37.35 %   39.12 %     37.46 %   37.79 %
                                 
 Net interest income (A) $   145,910   $   138,612   $   136,209   $   136,969   $   106,769     $   420,731   $   318,936  
 Non-interest income (B)     25,847       27,673       25,805       27,292       21,457         79,325       72,344  
 Non-interest expense (C)     66,123       63,228       63,380       63,218       70,846         192,731       176,990  
 Fully taxable equivalent adjustment (D)     1,489       1,403       1,209       1,983       1,846         4,101       5,873  
 Amortization of intangibles (E)     1,617       1,624       1,626       1,631       906         4,867       2,576  
                 
 Adjustments:                
 Non-interest income:                
 Gain on acquisition $   -    $   -    $   -    $   -    $   -      $   -    $   3,807  
 Gain (loss) on OREO     836       1,046       405       176       335         2,287       849  
 Gain (loss) on SBA loans     47       262       182       -        163         491       738  
 Gain (loss) on branches, equipment and other   assets, net     (102 )     -        7       2       (1,337 )       (95 )     (962 )
 Gain (loss) on securities     -        -        -        1,193       136         -        939  
 Recoveries on historic losses     -        -        -        -        -          -        -   
  Total non-interest income adjustments (F) $   781   $   1,308   $   594   $   1,371   $   (703 )   $   2,683   $   5,371  
                 
 Non-interest expense:                
 Merger Expenses $   -    $   -    $   -    $   -    $   18,227     $   -    $   25,743  
 Hurricane damage expense     -        -        -        -        556         -        556  
 Vacant properties write-downs     -        -        -        -        -          -        47  
  Total non-interest expense adjustments (G) $   -    $   -    $   -    $   -    $   18,783     $   -    $   26,346  
                 
                 

 

Home BancShares, Inc.
 Non-GAAP Reconciliations
 (Unaudited)
           
   Sep. 30,  Jun. 30,  Mar. 31,  Dec. 31,  Sep. 30, 
 (Dollars in thousands)    2018      2018      2018      2017      2017  
           
TANGIBLE BOOK VALUE PER COMMON SHARE          
           
 Book value per common share: A/B $   13.44   $   13.26   $   12.89   $   12.70   $   12.71  
 Tangible book value per common share: (A-C-D)/B     7.68       7.52       7.27       7.07       7.06  
           
 Total stockholders' equity (A) $   2,341,026   $   2,314,013   $   2,238,181   $   2,204,291   $   2,206,716  
 End of period common shares outstanding (B)     174,135       174,511       173,603       173,633       173,666  
 Goodwill (C) $   958,408   $   956,418   $   927,949   $   927,949   $   929,129  
 Core deposit and other intangibles (D)     44,484       46,101       47,726       49,351       50,982  
           
           
TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS          
           
 Equity to assets: B/A   15.70 %   15.51 %   15.63 %   15.25 %   15.48 %
 Tangible common equity to tangible assets: (B-C-D)/(A-C-D)   9.62 %   9.42 %   9.46 %   9.11 %   9.24 %
                   
 Total assets (A) $   14,912,738   $   14,924,120   $   14,323,229   $   14,449,760   $   14,255,967  
 Total stockholders' equity (B)     2,341,026       2,314,013       2,238,181       2,204,291       2,206,716  
 Goodwill (C)     958,408       956,418       927,949       927,949       929,129  
 Core deposit and other intangibles (D)     44,484       46,101       47,726       49,351       50,982  
           

HBS logo_Medium.JPG

 

Source: Home BancShares, Inc.

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