Home BancShares, Inc. Reaches $300 Million in Net Income for 2018 and Earns #1 Ranking on the Forbes “Best Banks in America” List Two Years in a Row

1/17/2019

CONWAY, Ark., Jan. 17, 2019 (GLOBE NEWSWIRE) -- Home BancShares, Inc. (NASDAQ GS: HOMB), parent company of Centennial Bank, today announced reaching $300.4 million in net income for the year of 2018, an increase of $165.3 million or 122.4%, compared to $135.1 million for the year of 2017.  Additionally, the Company ranked #1 on the Forbes “Best Banks in America” list for the second consecutive year.

Highlights of the Fourth Quarter of 2018:

Performance Metric Q4 2018 Q4 2017 Q4 2018, As Adjusted
(non-GAAP)(1)
Net Income $71.0 million $23.3 million $75.8 million
Total Revenue $201.3 million $186.3 million $201.3 million
Diluted Earnings Per Share $0.41 $0.13 $0.44
ROA 1.90% 0.66% 2.03%
ROE 12.05% 4.17% 12.86%
ROTCE (non-GAAP)(1) 21.08% 7.46% 22.50%
Organic Loan Growth $239.1 million $45.0 million $239.1 million
(1) Calculation of this metric and the reconciliation to GAAP are included in the schedules accompanying this release.
 

“2017 was a great year for HOMB; however, 2018 was even better,” said John Allison, Chairman. “Even though bank stocks have underperformed as a sector for the second consecutive year, we didn’t. We saw our earnings, as adjusted (non-GAAP), grow from a record $204.8 million in 2017 to a record $305.2 million in 2018 and were recognized again by Forbes as the Best Bank in America for the second year in a row,” Allison continued.

“Reaching a record $1.14 billion in loan originations this quarter indicates that loan demand is still out there,” said Tracy French, Centennial Bank President and Chief Executive Officer. “I am pleased with our $239.1 million in loan growth for the fourth quarter,” French added.

“I am proud once again and for the 31st time to report record quarterly earnings, as adjusted (non-GAAP), when compared to the same quarter of previous year,” said Randy Sims, Home BancShares, Inc. Chief Executive Officer. “This has been a special year and we anticipate continuing our record pace in 2019,” added Sims.

Operating Highlights

Net interest margin, on a fully taxable equivalent basis, was 4.30% for the quarter just ended compared to 4.47% for the same quarter in 2017.   Net interest margin for the fourth quarter of 2018 includes accretion income of $9.4 million and average purchase accounting loan discounts of $141.2 million, compared to accretion income of $12.4 million and average purchase accounting loan discounts of $178.0 million for the fourth quarter of 2017.

During the fourth quarter of 2018, the Company did not record a provision for loan loss compared to $4.9 million recorded in the fourth quarter of 2017.  The Company continues to see strong asset quality including a decline in net charge-offs.  Non-performing loans to total loans was 0.58% as of December 31, 2018 compared to 0.43% as of December 31, 2017. Non-performing assets to total assets also increased from 0.44% as of December 31, 2017 to 0.51% as of December 31, 2018.  For the fourth quarter of 2018, net charge-offs were $1.4 million compared to net charge-offs of $6.3 million for the fourth quarter of 2017.

The Company reported $23.5 million of non-interest income for the fourth quarter of 2018, compared to $27.3 million for the fourth quarter of 2017.  Excluding securities gains during the fourth quarter of 2017, non-interest income decreased $2.6 million from $26.1 million for the fourth quarter of 2017 to $23.5 million for the fourth quarter of 2018. The most important components of the fourth quarter non-interest income were $7.6 million from other service charges and fees, $7.0 million from service charges on deposits accounts, $2.6 million from mortgage lending income, $2.7 million from other income and $2.0 million from dividends from the FHLB, FRB, FNBB & other equity investments.  The Company exceeded $10 billion in assets during the first quarter of 2017 and became subject to the Durbin Amendment to the Dodd-Frank Act interchange fee restrictions beginning in the third quarter of 2018. The Durbin Amendment negatively impacted debit card and ATM fees beginning in the second half of 2018. The Company estimates quarterly interchange fees are approximately $3.0 million dollars lower as a result of the Durbin Amendment.

Non-interest expense for the fourth quarter of 2018 was $71.3 million compared to $63.2 million for the fourth quarter of 2017.  Excluding $6.5 million in merger and hurricane expenses during the fourth quarter of 2018, non-interest expense increased $1.6 million from $63.2 million for the fourth quarter of 2017 to $64.8 million for the fourth quarter of 2018.  For the fourth quarter of 2018, our efficiency ratio increased to 42.18% from the 37.05% reported for the fourth quarter of 2017. 

Financial Condition

Total loans receivable were $11.07 billion at December 31, 2018 compared to $10.33 billion at December 31, 2017.  Total deposits were $10.90 billion at December 31, 2018 compared to $10.39 billion at December 31, 2017.  Total assets were $15.30 billion at December 31, 2018 compared to $14.45 billion at December 31, 2017.

During the fourth quarter 2018 the Company experienced approximately $239.1 million in organic loan growth.  Centennial CFG experienced $86.6 million of organic loan growth and had loans of $1.56 billion at December 31, 2018.  Our legacy footprint produced approximately $152.5 million in organic loan growth during the quarter.

Non-performing loans at December 31, 2018 were $17.4 million, $43.3 million, $179,000, $3.4 million and zero in the Arkansas, Florida, Alabama, Shore Premier and Centennial CFG markets, respectively, for a total of $64.2 million.  Non-performing assets at December 31, 2018 were $24.0 million, $50.2 million, $306,000, $3.4 million and zero in the Arkansas, Florida, Alabama, Shore Premier and Centennial CFG markets, respectively, for a total of $78.0 million. 

The Company’s allowance for loan losses was $108.8 million at December 31, 2018, or 0.98% of total loans, compared to $110.3 million, or 1.07% of total loans, at December 31, 2017. As of December 31, 2018, and December 31, 2017, the Company’s allowance for loan losses was 169% and 247% of its total non-performing loans, respectively.

Stockholders’ equity was $2.35 billion at December 31, 2018 compared to $2.20 billion at December 31, 2017, an increase of $145.6 million. The increase in stockholders’ equity is primarily associated with the $221.5 million increase in retained earnings and the issuance of $28.2 million in stock as a part of the acquisition of Shore Premier Finance, partially offset by $10.4 million of comprehensive loss and the repurchase of $104.3 million of our common stock during 2018, which includes the repurchase during the 4th quarter of 2018 of the shares issued as part of the acquisition of the Shore Premier Finance. Book value per common share was $13.76 at December 31, 2018 compared to $12.70 at December 31, 2017.  Tangible book value per common share (non-GAAP) was $7.90 at December 31, 2018 compared to $7.07 at December 31, 2017, an increase of 11.7%. 

Branches

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, January 17, 2019.  We encourage all participants to pre-register for the conference call using the following link:  http://dpregister.com/10127084.  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: 10127084, which will be available until January 24, 2019 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 net income (earnings), as adjusted; diluted earnings per common share, as adjusted; return on average assets, as adjusted; return on average common equity, as adjusted; return on average tangible common equity; return on average tangible common equity, as adjusted; efficiency ratio, as adjusted and tangible book value per common share--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)
                                         
     Dec. 31,     Sep. 30,     Jun. 30,     Mar. 31,     Dec. 31, 
(In thousands)      2018       2018       2018       2018       2017  
                                         
ASSETS                                        
                                         
Cash and due from banks   $   175,024     $   208,681     $   197,658     $   185,479     $   166,915  
Interest-bearing deposits with other banks       482,915         323,376         298,085         325,122         469,018  
Cash and cash equivalents       657,939         532,057         495,743         510,601         635,933  
Federal funds sold       325         500         500         1,825         24,109  
Investment securities - available-for-sale       1,785,862         1,744,430         1,718,704         1,693,018         1,663,517  
Investment securities - held-to-maturity       192,776         199,266         204,401         213,731         224,756  
Loans receivable       11,071,879         10,832,815         10,897,970         10,325,736         10,331,188  
Allowance for loan losses       (108,791 )       (110,191 )       (111,516 )       (110,212 )       (110,266 )
Loans receivable, net       10,963,088         10,722,624         10,786,454         10,215,524         10,220,922  
Bank premises and equipment, net       233,261         233,652         234,634         235,607         237,439  
Foreclosed assets held for sale       13,236         13,507         17,853         20,134         18,867  
Cash value of life insurance       148,621         148,014         147,281         147,424         146,866  
Accrued interest receivable       48,945         48,909         45,682         45,361         45,708  
Deferred tax asset, net       73,275         79,548         78,435         78,328         76,564  
Goodwill       958,408         958,408         956,418         927,949         927,949  
Core deposit and other intangibles       42,896         44,484         46,101         47,726         49,351  
Other assets       183,806         187,339         191,914         186,001         177,779  
Total assets    $   15,302,438     $   14,912,738     $   14,924,120     $   14,323,229     $   14,449,760  
             
LIABILITIES AND STOCKHOLDERS' EQUITY            
             
Liabilities            
Deposits:            
Demand and non-interest-bearing   $   2,401,232     $   2,482,857     $   2,523,553     $   2,473,602     $   2,385,252  
Savings and interest-bearing transaction accounts       6,624,407         6,420,951         6,573,902         6,437,408         6,476,819  
Time deposits       1,874,139         1,720,930         1,638,578         1,485,605         1,526,431  
Total deposits       10,899,778         10,624,738         10,736,033         10,396,615         10,388,502  
Federal funds purchased     -       -       -       -       -  
Securities sold under agreements to repurchase       143,679         142,146         139,750         150,315         147,789  
FHLB and other borrowed funds       1,472,393         1,363,851         1,309,950         1,115,061         1,299,188  
Accrued interest payable and other liabilities       67,912         72,381         55,971         54,845         41,959  
Subordinated debentures       368,790         368,596         368,403         368,212         368,031  
Total liabilities        12,952,552         12,571,712         12,610,107         12,085,048         12,245,469  
             
Stockholders' equity             
Common stock       1,707         1,741         1,745         1,736         1,736  
Capital surplus       1,609,810         1,668,106         1,693,337         1,671,141         1,675,318  
Retained earnings       752,184         701,900         642,540         585,586         530,658  
Accumulated other comprehensive (loss) income       (13,815 )       (30,721 )       (23,609 )       (20,282 )       (3,421 )
Total stockholders' equity        2,349,886         2,341,026         2,314,013         2,238,181         2,204,291  
Total liabilities and stockholders' equity    $   15,302,438     $   14,912,738     $   14,924,120     $   14,323,229     $   14,449,760  
             

 

 
 Home BancShares, Inc. 
 Consolidated Statements of Income 
 (Unaudited) 
                                                         
     Quarter Ended    Year Ended 
     Dec. 31,     Sep. 30,    Jun. 30,    Mar. 31,    Dec. 31,    Dec. 31,    Dec. 31,
(In thousands)      2018       2018       2018      2018      2017       2018       2017  
                                                         
Interest income                                                         
Loans   $   163,201     $   166,334     $   152,996     $   148,065     $   147,426     $   630,596     $   479,189  
Investment securities                                                        
Taxable       9,873         9,011         8,979         8,970         7,793         36,833         26,776  
Tax-exempt       3,456         3,427         3,368         3,006         3,025         13,257         11,967  
Deposits - other banks       1,241         1,273         1,206         929         736         4,649         2,309  
Federal funds sold       9         6         12         6         1         33         10  
                                                         
Total interest income       177,780         180,051         166,561         160,976         158,981         685,368         520,251  
                                                         
Interest expense                                                         
Interest on deposits       25,207         21,412         18,164         14,806         12,946         79,589         33,777  
Federal funds purchased     -       -       -         1         1         1         1  
FHLB borrowed funds       6,474         7,055         4,245         4,580         3,806         22,354         14,513  
Securities sold under agreements to repurchase       602         472         372         376         325         1,822         918  
Subordinated debentures       5,215         5,202         5,168         5,004         4,934         20,589         15,137  
                                                         
Total interest expense       37,498         34,141         27,949         24,767         22,012         124,355         64,346  
                                                         
Net interest income        140,282         145,910         138,612         136,209         136,969         561,013         455,905  
Provision for loan losses     -       -         2,722         1,600         4,926         4,322         44,250  
Net interest income after provision for loan losses        140,282         145,910         135,890         134,609         132,043         556,691         411,655  
                                                         
Non-interest income                                                         
Service charges on deposit accounts       7,004         6,992         6,780         6,075         6,566         26,851         24,922  
Other service charges and fees       7,598         9,041         9,797         10,155         10,144         36,591         36,127  
Trust fees       290         437         379         446         548         1,552         1,678  
Mortgage lending income       2,554         3,691         3,477         2,657         3,573         12,379         13,286  
Insurance commissions       442         463         526         679         466         2,110         1,948  
Increase in cash value of life insurance       737         735         730         654         738         2,856         1,989  
Dividends from FHLB, FRB, FNBB & other       1,992         1,288         1,600         877         1,030         5,757         3,485  
Gain on acquisitions     -       -       -       -       -       -         3,807  
Gain (loss) on SBA loans     75       47       262       182       -       566         738  
Gain (loss) on branches, equipment and other assets, net     (25 )     (102 )     -       7       2       (120 )       (960 )
Gain (loss) on OREO, net     114       836       1,046       405       176       2,401         1,025  
Gain (loss) on securities, net     -       -       -       -       1,193       -         2,132  
Other income       2,726         2,419         3,076         3,668         2,856         11,889         9,459  
                                                         
Total non-interest income       23,507         25,847         27,673         25,805         27,292         102,832         99,636  
                                                         
Non-interest expense                                                         
Salaries and employee benefits       36,230         37,825         34,476         35,014         35,404         143,545         119,369  
Occupancy and equipment       8,310         8,148         8,519         8,983         9,009         33,960         30,055  
Data processing expense       3,642         3,461         3,339         3,986         3,559         14,428         11,998  
Other operating expenses       23,090         16,689         16,894         15,397         15,246         72,070         78,786  
                                                         
Total non-interest expense       71,272         66,123         63,228         63,380         63,218         264,003         240,208  
                                                         
Income before income taxes        92,517         105,634         100,335         97,034         96,117         395,520         271,083  
Income tax expense       21,487         25,350         24,310         23,970         72,808         95,117         136,000  
Net income    $   71,030     $   80,284     $   76,025     $   73,064     $   23,309     $   300,403     $   135,083  
                                                         

 

 
 Home BancShares, Inc. 
 Selected Financial Information
 (Unaudited)
                                                         
     Quarter Ended    Year Ended
     Dec. 31,    Sep. 30,    Jun. 30,    Mar. 31,    Dec. 31,    Dec. 31,    Dec. 31,
(Dollars and shares in thousands, except per share data)     2018     2018     2018     2018     2017     2018     2017 
                                                         
PER SHARE DATA                                                        
                                                         
Diluted earnings per common share   $   0.41     $   0.46     $   0.44     $   0.42     $   0.13     $   1.73     $   0.89  
Diluted earnings per common share, as adjusted, 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         0.46         0.44         0.42         0.35         1.75         1.35  
Basic earnings per common share       0.41         0.46         0.44         0.42         0.13         1.73         0.90  
Dividends per share - common       0.1200         0.1200         0.1100         0.1100         0.1100         0.4600         0.4000  
Book value per common share       13.76         13.44         13.26         12.89         12.70         13.76         12.70  
Tangible book value per common share (non-GAAP)(1)       7.90         7.68         7.52         7.27         7.07         7.90         7.07  
                                                         
                                                         
STOCK INFORMATION                                                        
                                                         
Average common shares outstanding       173,023         174,440         173,403         173,761         173,641         173,657         150,806  
Average diluted shares outstanding       173,311         174,867         173,936         174,383         174,349         174,124         151,528  
End of period common shares outstanding       170,720         174,135         174,511         173,603         173,633         170,720         173,633  
                                                         
                                                         
ANNUALIZED PERFORMANCE METRICS                                                        
                                                         
Return on average assets     1.90 %     2.14 %     2.13 %     2.08 %     0.66 %     2.06 %     1.17 %
Return on average assets excluding gain on acquisitions, merger expenses, hurricane expenses & effect of tax rate change (ROA, as adjusted) (non-GAAP)(1)     2.03 %     2.14 %     2.13 %     2.08 %     1.69 %     2.10 %     1.78 %
Return on average assets excluding intangible amortization (non-GAAP)(1)     2.07 %     2.33 %     2.32 %     2.27 %     0.73 %     2.25 %     1.26 %
Return on average assets, excluding intangible amortization, provision for loan losses, gain on acquisitions, merger expenses, hurricane expenses and income taxes (ROA, as fully adjusted) (non-GAAP)(1)     2.88 %     3.07 %     3.15 %     3.07 %     3.10 %     3.04 %     3.13 %
Return on average common equity     12.05 %     13.74 %     13.54 %     13.38 %     4.17 %     13.17 %     8.23 %
Return on average common equity excluding gain on acquisitions, merger expenses, hurricane expenses & effect of tax rate change: (ROE, as adjusted) (non-GAAP)(1)     12.86 %     13.74 %     13.54 %     13.38 %     10.77 %     13.38 %     12.48 %
Return on average tangible common equity (non-GAAP)(1)     21.08 %     24.20 %     23.90 %     23.94 %     7.46 %     23.25 %     12.68 %
Return on average tangible common equity excluding gain on acquisitions, merger expenses, hurricane expenses & effect of tax rate change: (ROTCE, as adjusted) (non-GAAP)(1)     22.50 %     24.20 %     23.90 %     23.94 %     19.29 %     23.62 %     19.23 %
Efficiency ratio     42.18 %     37.23 %     36.74 %     37.83 %     37.05 %     38.48 %     41.89 %
Efficiency ratio, as adjusted (non-GAAP)(1)     38.30 %     37.40 %     37.03 %     37.97 %     37.35 %     37.67 %     37.66 %
Net interest margin - FTE     4.30 %     4.46 %     4.47 %     4.46 %     4.47 %     4.42 %     4.51 %
Fully taxable equivalent adjustment   $   1,412     $   1,489     $   1,403     $   1,209     $   1,983     $   5,513     $   7,856  
Total revenue       201,287         205,898         194,234         186,781         186,273         788,200         619,887  
Total purchase accounting accretion       9,432         10,744         10,669         10,608         12,397         41,455         35,716  
Average purchase accounting loan discounts       141,244         151,377         153,624         164,122         178,027         152,948         120,160  
                   
                   
OTHER OPERATING EXPENSES                  
                   
Advertising   $   1,214     $   1,154     $   1,142     $   962     $   898     $   4,472     $   3,203  
Merger and acquisition expenses       6,013         -          -          -          -          6,013         25,743  
Amortization of intangibles       1,587         1,617         1,624         1,626         1,631         6,454         4,207  
Electronic banking expense       1,969         1,947         1,828         1,878         1,777         7,622         6,662  
Directors' fees       319         314         318         330         313         1,281         1,259  
Due from bank service charges       289         253         242         219         254         1,003         1,602  
FDIC and state assessment       1,869         2,293         2,788         1,608         1,476         8,558         5,239  
Hurricane expense       470         -         -         -         -         470         556  
Insurance       737         762         714         887         814         3,100         2,512  
Legal and accounting       1,151         761         858         778         1,194         3,548         2,993  
Other professional fees       1,465         1,748         1,601         1,639         1,537         6,453         5,359  
Operating supplies       510         510         602         600         602         2,222         1,978  
Postage       325         311         323         344         323         1,303         1,184  
Telephone       324         337         371         373         347         1,405         1,374  
Other expense       4,848         4,682         4,483         4,153         4,080         18,166         14,915  
                   
  Total other operating expenses    $   23,090     $   16,689     $   16,894     $   15,397     $   15,246     $   72,070     $   78,786  
                   
                   
 (1)  Calculation of this metric and the reconciliation to GAAP are included in the schedules accompanying this release. 
 

 

 
 Home BancShares, Inc. 
 Selected Financial Information
 (Unaudited) 
                                         
    Dec. 31,    Sep. 30,    June. 30,    Mar. 31,    Dec. 31,
(Dollars in thousands)      2018      2018       2018       2018       2017  
                                         
BALANCE SHEET RATIOS                                        
                                         
Total loans to total deposits     101.58 %     101.96 %     101.51 %     99.32 %     99.45 %
Common equity to assets     15.36 %     15.70 %     15.51 %     15.63 %     15.25 %
Tangible common equity to tangible assets (non-GAAP)(1)     9.43 %     9.62 %     9.42 %     9.46 %     9.11 %
                                         
                                         
LOANS RECEIVABLE                                        
                                         
Real estate                                        
Commercial real estate loans                                        
Non-farm/non-residential   $   4,806,684     $   4,685,827     $   4,734,315     $   4,658,209     $   4,600,117  
Construction/land development       1,546,035         1,550,910         1,662,199         1,641,834         1,700,491  
Agricultural       76,433         72,930         77,053         81,151         82,229  
Residential real estate loans          
Residential 1-4 family       1,975,586         1,982,666         1,960,841         1,915,346         1,970,311  
Multifamily residential       560,475         608,608         540,526         464,194         441,303  
Total real estate       8,965,213         8,900,941         8,974,934         8,760,734         8,794,451  
Consumer       443,105         428,192         417,499         40,842         46,148  
Commercial and industrial       1,476,331         1,303,841         1,287,637         1,324,173         1,297,397  
Agricultural       48,562         58,644         55,768         50,770         49,815  
Other       138,668         141,197         162,132         149,217         143,377  
Loans receivable   $   11,071,879     $   10,832,815     $   10,897,970     $   10,325,736     $   10,331,188  
                                                   
Discount for credit losses on purchased loans   $   113,648     $   120,849     $   129,903     $   137,404     $   146,557  
Purchased loans, net of discount for credit losses on purchased loans       2,900,284         3,081,695         3,522,753         3,232,004         3,464,990  
           
           
ALLOWANCE FOR LOAN LOSSES          
           
Balance, beginning of period   $   110,191     $   111,516     $   110,212     $   110,266     $   111,620  
Loans charged off       1,814         2,501         2,132         2,540         6,936  
Recoveries of loans previously charged off       414         1,176         714         886         656  
Net loans (recovered)/charged off       1,400         1,325         1,418         1,654         6,280  
Provision for loan losses       -          -          2,722         1,600         4,926  
Balance, end of period   $   108,791     $   110,191     $   111,516     $   110,212     $   110,266  
                                                   
Net (recoveries) charge-offs to average total loans     0.05 %     0.05 %     0.05 %     0.06 %     0.24 %
Allowance for loan losses to total loans     0.98 %     1.02 %     1.02 %     1.07 %     1.07 %
           
           
NON-PERFORMING ASSETS          
           
Non-performing loans          
Non-accrual loans   $   47,083     $   36,198     $   37,082     $   36,266     $   34,032  
Loans past due 90 days or more       17,159         20,267         19,696         13,223         10,665  
Total non-performing loans       64,242         56,465         56,778         49,489         44,697  
Other non-performing assets          
Foreclosed assets held for sale, net       13,236         13,507         17,853         20,134         18,867  
Other non-performing assets       497         405         3         3         3  
Total other non-performing assets       13,733         13,912         17,856         20,137         18,870  
Total non-performing assets   $   77,975     $   70,377     $   74,634     $   69,626     $   63,567  
           
Allowance for loan losses for loans to non-performing loans     169.35 %     195.15 %     196.41 %     222.70 %     246.70 %
Non-performing loans to total loans     0.58 %     0.52 %     0.52 %     0.48 %     0.43 %
Non-performing assets to total assets     0.51 %     0.47 %     0.50 %     0.49 %     0.44 %
           
           
 (1)  Calculation of this metric and the reconciliation to GAAP is included in the schedules accompanying this release.     
           

 

 
 Home BancShares, Inc. 
 Consolidated Net Interest Margin 
 (Unaudited) 
                 
     Three Months Ended 
     December 31, 2018     September 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    $   244,551   $   1,241   2.01 %   $   281,115   $   1,273   1.80 %
  Federal funds sold        741       9   4.82 %       524       6   4.54 %
  Investment securities - taxable        1,553,467       9,873   2.52 %       1,526,455       9,011   2.34 %
  Investment securities - non-taxable - FTE        400,742       4,453   4.41 %       402,355       4,507   4.44 %
  Loans receivable - FTE        10,884,911       163,616   5.96 %       10,909,646       166,743   6.06 %
    Total interest-earning assets        13,084,412       179,192   5.43 %       13,120,095       181,540   5.49 %
  Non-earning assets        1,754,567           1,760,836    
    Total assets    $  14,838,979       $  14,880,931    
                 
LIABILITIES AND SHAREHOLDERS' EQUITY                
Liabilities                 
  Interest-bearing liabilities                 
    Savings and interest-bearing transaction accounts    $   6,405,419   $   17,873   1.11 %   $   6,406,711   $   15,596   0.97 %
    Time deposits        1,794,358       7,334   1.62 %       1,661,129       5,816   1.39 %
  Total interest-bearing deposits        8,199,777       25,207   1.22 %       8,067,840       21,412   1.05 %
  Federal funds purchased        -       -   0.00 %       -       -   0.00 %
  Securities sold under agreement to repurchase        147,895       602   1.61 %       148,791       472   1.26 %
  FHLB borrowed funds        1,242,985       6,474   2.07 %       1,398,738       7,055   2.00 %
  Subordinated debentures        368,695       5,215   5.61 %       368,501       5,202   5.60 %
  Total interest-bearing liabilities        9,959,352       37,498   1.49 %       9,983,870       34,141   1.36 %
  Non-interest bearing liabilities                 
  Non-interest bearing deposits       2,464,003           2,512,690    
  Other liabilities        76,822           66,441    
  Total liabilities        12,500,177           12,563,001    
Shareholders' equity        2,338,802           2,317,930    
  Total liabilities and shareholders' equity    $  14,838,979       $  14,880,931    
Net interest spread          3.94 %         4.13 %
Net interest income and margin - FTE        $   141,694   4.30 %       $   147,399   4.46 %
                 

 

 
 Home BancShares, Inc. 
 Consolidated Net Interest Margin 
 (Unaudited) 
                 
     Year Ended 
     December 31, 2018     December 31, 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    $   265,071   $   4,649   1.75 %   $   220,231   $   2,309   1.05 %
  Federal funds sold        2,876       33   1.15 %       6,308       10   0.16 %
  Investment securities - taxable        1,542,188       36,833   2.39 %       1,300,384       26,776   2.06 %
  Investment securities - non-taxable - FTE        386,790       17,434   4.51 %       348,865       19,411   5.56 %
  Loans receivable - FTE        10,618,796       631,932   5.95 %       8,403,154       479,601   5.71 %
    Total interest-earning assets        12,815,721       690,881   5.39 %       10,278,942       528,107   5.14 %
  Non-earning assets        1,751,492           1,220,163    
  Total assets    $  14,567,213       $  11,499,105    
                 
LIABILITIES AND SHAREHOLDERS' EQUITY                
Liabilities                 
  Interest-bearing liabilities                 
  Savings and interest-bearing transaction accounts    $   6,418,186   $   58,199   0.91 %   $   4,823,626   $   23,176   0.48 %
  Time deposits        1,645,986       21,390   1.30 %       1,444,828       10,601   0.73 %
  Total interest-bearing deposits        8,064,172       79,589   0.99 %       6,268,454       33,777   0.54 %
  Federal funds purchased        31       1   3.23 %       77       1   1.30 %
  Securities sold under agreement to repurchase        148,327       1,822   1.23 %       134,689       918   0.68 %
  FHLB borrowed funds        1,180,897       22,354   1.89 %       1,117,817       14,513   1.30 %
  Subordinated debentures        368,409       20,589   5.59 %       285,733       15,137   5.30 %
  Total interest-bearing liabilities        9,761,836       124,355   1.27 %       7,806,770       64,346   0.82 %
  Non-interest bearing liabilities                 
  Non-interest bearing deposits       2,464,024           2,005,632    
  Other liabilities        60,298           45,425    
  Total liabilities        12,286,158           9,857,827    
Shareholders' equity        2,281,055           1,641,278    
  Total liabilities and shareholders' equity    $  14,567,213       $  11,499,105    
Net interest spread          4.12 %         4.32 %
Net interest income and margin - FTE        $   566,526   4.42 %       $   463,761   4.51 %
                 

 

 
 Home BancShares, Inc. 
 Non-GAAP Reconciliations 
 (Unaudited) 
                   
     Quarter Ended    Year Ended
(Dollars and shares in thousands,     Dec. 31,   Sep. 30,   Jun. 30,   Mar. 31   Dec. 31,     Dec. 31,   Dec. 31, 
except per share data)       2018         2018         2018         2018         2017         2018         2017   
                   
EARNINGS, AS ADJUSTED                  
                   
GAAP net income available to common shareholders (A)   $ 71,030     $ 80,284     $ 76,025     $ 73,064     $ 23,309     $ 300,403     $ 135,083  
Adjustments                  
Gain on acquisitions     -       -       -       -       -       -         (3,807 )
Merger and acquisition expenses     6,013       -       -       -       -       6,013       25,743  
Hurricane expenses(1)     470       -       -       -       -       470       33,445  
Effect of tax rate change     -       -       -       -       36,935       -       36,935  
Total adjustments     6,483       -       -       -       36,935       6,483       92,316  
Tax-effect of adjustments(2)     1,694       -       -       -       -       1,694       22,626  
Adjustments after-tax (B)     4,789       -       -       -       36,935       4,789       69,690  
Earnings, as adjusted (C)   $ 75,819     $ 80,284     $ 76,025     $ 73,064     $ 60,244     $ 305,192     $ 204,773  
                   
Average diluted shares outstanding (D)     173,311       174,867       173,936       174,383       174,349       174,124       151,528  
                   
GAAP diluted earnings per share: A/D   $ 0.41     $ 0.46     $ 0.44     $ 0.42     $ 0.13     $ 1.73     $ 0.89  
Adjustments after-tax: B/D     0.03       -       -       -       0.22       0.02       0.46  
Diluted earnings per common share excluding gain on acquisitions, merger expenses, hurricane expenses & effect of  tax rate change: C/D   $ 0.44     $ 0.46     $ 0.44     $ 0.42     $ 0.35     $ 1.75     $ 1.35  
                   
ANNUALIZED RETURN ON AVERAGE ASSETS                  
                   
Return on average assets: A/H     1.90 %     2.14 %     2.13 %     2.08 %     0.66 %     2.06 %     1.17 %
Return on average assets excluding gain on acquisitions, merger expenses, hurricane expenses & effect of tax rate change: (ROA, as adjusted) (A+F)/H     2.03 %     2.14 %     2.13 %     2.08 %     1.69 %     2.10 %     1.78 %
Return on average assets excluding intangible amortization: (A+C)/(H-I)     2.07 %     2.33 %     2.32 %     2.27 %     0.73 %     2.25 %     1.26 %
Return on average assets excluding intangible amortization, provision for loan losses, gain on acquisitions, merger expenses, hurricane expenses and income taxes (ROA, as fully adjusted): (A+B+D+E+G)/(H-I)     2.88 %     3.07 %     3.15 %     3.07 %     3.10 %     3.04 %     3.13 %
                   
GAAP net income available to common shareholders (A)   $ 71,030     $ 80,284     $ 76,025     $ 73,064     $ 23,309     $ 300,403     $ 135,083  
Amortization of intangibles (B)     1,587       1,617       1,624       1,626       1,631       6,454       4,207  
Amortization of intangibles after-tax (C)     1,172       1,194       1,200       1,201       991       4,767       2,557  
Provision for loan losses excluding hurricane provision (D)     -       -       2,722       1,600       4,926       4,322       11,361  
Total adjustments (E)     6,483       -       -       -       36,935       6,483       92,316  
Adjustments after-tax (F)     4,789       -       -       -       36,935       4,789       69,690  
Income tax expense excluding effect of tax rate change (G)     21,487       25,350       24,310       23,970       35,873       95,117       99,065  
Average assets (H)     14,838,979       14,880,931       14,304,483       14,234,369       14,113,936       14,567,213       11,499,105  
Average goodwill, core deposits & other intangible assets (I)     1,002,070       1,001,843       975,345       976,451       979,209       989,033       576,258  
                   
                   
(1)  Hurricane expenses for 2018 include $470 of damage expense related to Hurricane Michael and expenses for 2017 include $32,889 of provision for loan losses and $556 of damage expense related to Hurricane Irma. 
(2)  Effective tax rate of 26.135% for 2018 and 39.225% for 2017, adjusted for non-taxable gain on acquisition and non-deductible merger-related costs. 
                   

 

 
 Home BancShares, Inc. 
Non-GAAP Reconciliations
 (Unaudited)
                 
    Quarter Ended    Year Ended 
(Dollars and shares in thousands,   Dec. 31,   Sep. 30,   Jun. 30,   Mar. 31   Dec. 31,     Dec. 31,   Dec. 31, 
except per share data)      2018       2018       2018       2018       2017       2018       2017  
                 
ANNUALIZED RETURN ON AVERAGE COMMON EQUITY                
                 
Return on average common equity: A/C     12.05 %     13.74 %     13.54 %     13.38 %     4.17 %     13.17 %     8.23 %
Return on average common equity excluding gain on acquisitions, merger expenses, hurricane expenses & effect of tax rate change: (ROE, as adjusted) (A+B)/C     12.86 %     13.74 %     13.54 %     13.38 %     10.77 %     13.38 %     12.48 %
Return on average tangible common equity: A/(C-D)     21.08 %     24.20 %     23.90 %     23.94 %     7.46 %     23.25 %     12.68 %
Return on average tangible common equity excluding gain on acquisitions, merger expenses, hurricane expenses & effect of tax rate change: (ROTCE, as adjusted) (A+B)/(C-D)     22.50 %     24.20 %     23.90 %     23.94 %     19.29 %     23.62 %     19.23 %
                 
GAAP net income available to common shareholders (A)   $ 71,030     $ 80,284     $ 76,025     $ 73,064     $ 23,309     $ 300,403     $ 135,083  
Adjustments after-tax (B)     4,789       -       -       -       36,935       4,789       69,690  
Average common equity (C)     2,338,802       2,317,930       2,251,412       2,214,302       2,218,549       2,281,055       1,641,278  
Average goodwill, core deposits & other intangible assets (D)     1,002,070       1,001,843       975,345       976,451       979,209       989,033       576,258  
                 
                 
EFFICIENCY RATIO                
                 
Efficiency ratio:  ((C-E)/(A+B+D))      42.18 %     37.23 %     36.74 %     37.83 %     37.05 %     38.48 %     41.89 %
Efficiency ratio, as adjusted:  ((C-E-G)/(A+B+D-F))      38.30 %     37.40 %     37.03 %     37.97 %     37.35 %     37.67 %     37.66 %
                -          -          -   
Net interest income (A)    $ 140,282     $ 145,910     $ 138,612     $ 136,209     $ 136,969     $ 561,013     $ 455,905  
Non-interest income (B)      23,507       25,847       27,673       25,805       27,292       102,832       99,636  
Non-interest expense (C)      71,272       66,123       63,228       63,380       63,218       264,003       240,208  
Fully taxable equivalent adjustment (D)      1,412       1,489       1,403       1,209       1,983       5,513       7,856  
Amortization of intangibles (E)      1,587       1,617       1,624       1,626       1,631       6,454       4,207  
                 
Adjustments:                 
Non-interest income:                
Gain on acquisition   $ -     $ -     $ -     $ -     $ -     $ -     $ 3,807  
Gain (loss) on OREO     114       836       1,046       405       176       2,401       1,025  
Gain (loss) on SBA loans     75       47       262       182       -       566       738  
Gain (loss) on branches, equipment and other assets, net     (25 )     (102 )     -       7       2       (120 )     (960 )
Gain (loss) on securities     -       -       -       -       1,193       -       2,132  
Recoveries on historic losses     -       -       -       -       -       -       -  
Total non-interest income adjustments (F)   $ 164     $ 781     $ 1,308     $ 594     $ 1,371     $ 2,847     $ 6,742  
                 
Non-interest expense:                
Merger Expenses   $ 6,013     $ -     $ -     $ -     $ -     $ 6,013     $ 25,743  
Hurricane damage expense     470       -       -       -       -       470       556  
Vacant properties write-downs     -       -       -       -       -       -       47  
Total non-interest expense adjustments (G)   $ 6,483     $ -     $ -     $ -     $ -     $ 6,483     $ 26,346  
                 

 

 
 Home BancShares, Inc. 
 Non-GAAP Reconciliations 
 (Unaudited) 
             
     Dec. 31,   Sep. 30,   Jun. 30,   Mar. 31,   Dec. 31, 
(Dollars in thousands)     2018       2018       2018       2018       2017  
             
TANGIBLE BOOK VALUE PER COMMON SHARE            
             
Book value per common share: A/B   $   13.76     $   13.44     $   13.26     $   12.89     $   12.70  
Tangible book value per common share: (A-C-D)/B       7.90         7.68         7.52         7.27         7.07  
             
Total stockholders' equity (A)   $   2,349,886     $   2,341,026     $   2,314,013     $   2,238,181     $   2,204,291  
End of period common shares outstanding (B)       170,720         174,135         174,511         173,603         173,633  
Goodwill (C)   $   958,408     $   958,408     $   956,418     $   927,949     $   927,949  
Core deposit and other intangibles (D)       42,896         44,484         46,101         47,726         49,351  
             
             
TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS            
             
Equity to assets: B/A     15.36 %     15.70 %     15.51 %     15.63 %     15.25 %
Tangible common equity to tangible assets: (B-C-D)/(A-C-D)     9.43 %     9.62 %     9.42 %     9.46 %     9.11 %
                  -   
Total assets (A)   $   15,302,438     $   14,912,738     $   14,924,120     $   14,323,229     $   14,449,760  
Total stockholders' equity (B)       2,349,886         2,341,026         2,314,013         2,238,181         2,204,291  
Goodwill (C)       958,408         958,408         956,418         927,949         927,949  
Core deposit and other intangibles (D)       42,896         44,484         46,101         47,726         49,351  
             

Homebancshares Corporate Color Logo

Source: Home BancShares, Inc.

 

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