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CST: 26/05/2019 10:46:52   

Home BancShares, Inc. Remains Steady and Solid in First Quarter, Margin Remains Unchanged

38 Days ago

CONWAY, Ark., April 18, 2019 (GLOBE NEWSWIRE) -- Home BancShares, Inc. (NASDAQ GS: HOMB), parent company of Centennial Bank, released first quarter earnings today that included a net interest margin that remained flat from the fourth quarter of 2018 at 4.30%.

Highlights of the First Quarter of 2019:

Centennial Community Banking   Centennial CFG
             
Performance Metric Q1 2019 Q4 2018   Performance Metric Q1 2019 Q4 2018
Net Income $58.1 million $57.7 million   Net Income $12.0 million $12.2 million
Total Revenue $166.9 million $165.9 million   Total Revenue $31.1 million $30.6 million
ROA 1.80% 1.77%   ROA 3.08% 3.33%
Net Interest Margin 4.20% 4.18%   Net Interest Margin 5.34% 5.50%
Purchase Accounting Accretion $8.3 million $8.6 million   Purchase Accounting Accretion $33,000 $33,000


Shore Premier Finance   Consolidated
             
Performance Metric Q1 2019 Q4 2018   Performance Metric Q1 2019 Q4 2018
Net Income $1.3 million $1.1 million   Net Income $71.4 million $71.0 million
Total Revenue $5.2 million $4.8 million   Total Revenue $203.2 million $201.3 million
ROA 1.15% 1.06%   ROA 1.92% 1.90%
Net Interest Margin 3.04% 3.29%   Net Interest Margin 4.30% 4.30%
Purchase Accounting Accretion $741,000 $812,000   Purchase Accounting Accretion $9.1 million $9.4 million
        ROTCE (non-GAAP)(1) 21.53% 21.08%
        Diluted Earnings Per Share $0.42 $0.41

(1) Calculation of this metric and the reconciliation to GAAP are included in the schedules accompanying this release.

“Considering all the noise in the market the last two quarters, we are proud to maintain our net interest margin at 4.30% and to meet the earnings per share target of $0.42,” said John Allison, Chairman. “We think stability and good asset quality are important and outweigh the need for fast growth,” Allison continued.

“Centennial Community Banking saw improvement in its net interest margin for the 1st quarter with 4.20%, up from 4.18% in the fourth quarter of 2018. Our core banking footprint remained steady during the recent chaos in the economy,” said Tracy French, Centennial Bank President and Chief Executive Officer.

“With an increase in return on average assets, return on tangible common equity and meeting our EPS target, Home BancShares delivered another good solid quarter for our shareholders,” said Randy Sims, Home BancShares, Inc. Chief Executive Officer.

Operating Highlights

Our net interest margin was 4.30% for the three-month period ended March 31, 2019 and December 31, 2018. The yield on loans was 6.03% and 5.96% for the three months ended March 31, 2019 and December 31, 2018, respectively, as average loans increased from $10.88 billion to $11.04 billion. The rate on subordinated debentures increased from 5.61% as of December 31, 2018 to 5.78% as of March 31, 2019.  Since the interest expense on our subordinated debentures is on the 30/360 accrual method, the increase was primarily due to having two less days in the first quarter of 2019 compared to the fourth quarter of 2018, plus the increase in the floating rates on our trust preferred securities.  Additionally, the rate on interest bearing deposits increased to 1.34% as of March 31, 2019 from 1.22% as of December 31, 2018, with average balances of $8.50 billion and $8.20 billion, respectively.  The net interest margin for the quarter ended March 31, 2019 remained flat when compared to the quarter ended December 31, 2018 as the result of an increase in average interest earning assets and yield on interest earning assets, which was offset by an increase in interest bearing liabilities and yield on interest bearing liabilities.

For the three months ended March 31, 2019 and December 31, 2018, we recognized $9.1 million and $9.4 million, respectively, in total net accretion for acquired loans and deposits.  Purchase accounting accretion on acquired loans was $9.0 million and $9.4 million and average purchase accounting loan discounts were $131.6 million and $141.2 million for the three-month periods ended March 31, 2019 and December 31, 2018, respectively.  Net accretion of time deposit premiums was $30,198 and $48,777 and net average remaining CD premiums were $357,000 and $396,000 for the three-month periods ended March 31, 2019 and December 31, 2018, respectively. 

Net interest income on a fully taxable equivalent basis decreased $857,000, or 0.60%, to $140.8 million for the three-month period ended March 31, 2019, from $141.7 million for the three-month period ended December 31, 2018.  This decrease in net interest income for the three-month period ended March 31, 2019 was the result of a $2.5 million increase in interest expense on interest bearing liabilities, which was partially offset by a $1.7 million increase in interest income.  The $2.5 million increase in interest expense was primarily the result of a $2.8 million increase in interest expense on interest bearing deposits repricing in a higher interest rate environment, combined with a 3.7% increase in average interest-bearing deposits. The repricing of our interest-bearing liabilities in a higher interest rate environment resulted in an approximately $2.6 million increase in interest expense. The higher level of our interest-bearing liabilities resulted in an increase in interest expense of approximately $578,000.  These increases were partially offset by a decrease of approximately $648,000 in interest expense due to there being two less days in the first quarter of 2019 compared to the fourth quarter of 2018. The $1.7 million increase in interest income was primarily the result of a 1.6% increase in interest earning assets. The higher level of earning assets resulted in an increase in interest income of approximately $2.6 million and a $2.7 million increase in earning asset yields.  These increases were partially offset by a decrease of approximately $3.6 million in interest income due to there being two less days in the first quarter of 2019 compared to the fourth quarter of 2018. 

Centennial CFG net interest margin was 5.34% for the quarter just ended compared to 5.50% for the quarter ended December 31, 2018. Centennial CFG net interest margin for the first quarter of 2019 includes average interest earning assets of $1.55 billion and net interest income of $20.4 million, compared to average interest earning assets of $1.46 billion and net interest income of $20.2 million for the quarter ended December 31, 2018. During 2018, Centennial CFG recognized $7.2 million of interest income from payoff events including minimum interest, default interest, acceleration of deferred origination fees and acceleration of other discounts.  Centennial CFG interest income events of approximately $1.0 million, $2.1 million, $4.0 million and $100,000 were recognized during the first, second, third and fourth quarters of 2018, respectively.  These interest income events impacted the Company’s net interest margin by 3, 6, 12 and 0 basis points for the first, second, third and fourth quarters of 2018, respectively.  During the first quarter of 2019, Centennial CFG had no interest income events as a result of payoffs.

Centennial Community Banking (excluding Centennial CFG and Shore Premier Finance) net interest margin was 4.20% for the quarter just ended compared to 4.18% for the quarter ended December 31, 2018. The net interest margin for the first quarter of 2019 includes average interest earning assets of $11.31 billion and net interest income of $117.2 million, compared to average interest earning assets of $11.23 billion and net interest income of $118.2 million for the fourth quarter of 2018. 

The acquisition of Shore Premier Finance is dilutive to our consolidated net interest margin by 3 basis points.

During the first quarter of 2019 and the fourth quarter of 2018, the Company did not record a provision for loan loss.  The Company continues to see strong asset quality.  Non-performing loans to total loans was 0.58% as of March 31, 2019 and December 31, 2018, and non-performing assets to total assets was 0.52% as of March 31, 2019 compared to 0.51% as of December 31, 2018. For the first quarter of 2019, net charge-offs were $2.4 million compared to net charge-offs of $1.4 million for the fourth quarter of 2018.

The Company reported $23.7 million of non-interest income for the first quarter of 2019, compared to $23.5 million for the fourth quarter of 2018. The most important components of the first quarter non-interest income were $6.6 million from other service charges and fees, $6.4 million from service charges on deposits accounts, $2.4 million from mortgage lending income, $2.5 million from other income and $3.5 million from dividends from the FHLB, FRB, FNBB & other equity investments.  During the first quarter of 2019, the Company received a $2.1 million special dividend from an equity investment. This special dividend was related to a significant income realization event generated in the first quarter of 2019 from one of the underlying assets in the equity investment. 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 first quarter of 2019 was $69.1 million compared to $71.3 million for the fourth quarter of 2018.  During the first quarter of 2019, the company incurred $900,000 in expense related to an outsourced special project. The Company also incurred $897,000 in hurricane expense associated with Hurricane Michael which made landfall in Mexico Beach, Florida on October 10, 2018. For the first quarter of 2019, our efficiency ratio was 41.01% compared to 42.18% reported for the fourth quarter of 2018. 

Financial Condition

Total loans receivable were $10.98 billion at March 31, 2019 compared to $11.07 billion at December 31, 2018.  Total deposits were $11.07 billion at March 31, 2019 compared to $10.90 billion at December 31, 2018.  Total assets were $15.18 billion at March 31, 2019 compared to $15.30 billion at December 31, 2018.

During the first quarter 2019, the Company experienced approximately $92.9 million in organic loan decline.  Centennial Community Banking experienced approximately $76.3 million in organic loan decline. Centennial CFG experienced $25.1 million of organic loan decline and had loans of $1.52 billion at March 31, 2019.   Additionally, Shore Premier Finance experienced $8.5 million of loan growth and had loans of $436.2 million at March 31, 2019.

Non-performing loans at March 31, 2019 were $17.7 million, $40.0 million, $3.0 million, $3.5 million and zero in the Arkansas, Florida, Alabama, Shore Premier Finance and Centennial CFG markets, respectively, for a total of $64.2 million.  Non-performing assets at March 31, 2019 were $24.9 million, $48.2 million, $3.0 million, $3.5 million and zero in the Arkansas, Florida, Alabama, Shore Premier Finance and Centennial CFG markets, respectively, for a total of $79.6 million. 

The Company’s allowance for loan losses was $106.4 million at March 31, 2019, or 0.97% of total loans, compared to $108.8 million, or 0.98% of total loans, at December 31, 2018. As of March 31, 2019, and December 31, 2018, the Company’s allowance for loan losses was 165.7% and 169.4% of its total non-performing loans, respectively.

Stockholders’ equity was $2.36 billion at March 31, 2019 compared to $2.35 billion at December 31, 2018, an increase of $11.6 million. The increase in stockholders’ equity is primarily associated with the $51.0 million increase in retained earnings, $9.5 million decrease in comprehensive loss and the repurchase of $51.7 million of our common stock during the first quarter of 2019.  Book value per common share was $14.04 at March 31, 2019 compared to $13.76 at December 31, 2018.  Tangible book value per common share (non-GAAP) was $8.10 at March 31, 2019 compared to $7.90 at December 31, 2018, an annualized increase of 10.3%. 

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, April 18, 2019.  We encourage all participants to pre-register for the conference call using the following link:  http://dpregister.com/10129659.  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: 10129659, which will be available until April 25, 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, 2018 filed with the SEC on February 26, 2019.

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)  
           
        Mar. 31,           Dec. 31,           Sep. 30,           Jun. 30,           Mar. 31,    
(In thousands)     2019       2018       2018       2018       2018  
                                         
ASSETS                                        
                                         
Cash and due from banks   $ 141,027     $ 175,024     $ 208,681     $ 197,658     $ 185,479  
Interest-bearing deposits with other banks     421,443       482,915       323,376       298,085       325,122  
Cash and cash equivalents     562,470       657,939       532,057       495,743       510,601  
Federal funds sold     1,700       325       500       500       1,825  
Investment securities - available-for-sale     2,013,123       1,785,862       1,744,430       1,718,704       1,693,018  
Investment securities - held-to-maturity     -       192,776       199,266       204,401       213,731  
Loans receivable     10,978,935       11,071,879       10,832,815       10,897,970       10,325,736  
Allowance for loan losses     (106,357 )     (108,791 )     (110,191 )     (111,516 )     (110,212 )
Loans receivable, net     10,872,578       10,963,088       10,722,624       10,786,454       10,215,524  
Bank premises and equipment, net     279,012       233,261       233,652       234,634       235,607  
Foreclosed assets held for sale     14,466       13,236       13,507       17,853       20,134  
Cash value of life insurance     149,353       148,621       148,014       147,281       147,424  
Accrued interest receivable     50,288       48,945       48,909       45,682       45,361  
Deferred tax asset, net     64,061       73,275       79,548       78,435       78,328  
Goodwill     958,408       958,408       958,408       956,418       927,949  
Core deposit and other intangibles     41,310       42,896       44,484       46,101       47,726  
Other assets     172,732       183,806       187,339       191,914       186,001  
Total assets     $ 15,179,501     $ 15,302,438     $ 14,912,738     $ 14,924,120     $ 14,323,229  
                                         
LIABILITIES AND STOCKHOLDERS' EQUITY          
           
Liabilities          
Deposits:          
Demand and non-interest-bearing   $ 2,519,175     $ 2,401,232     $ 2,482,857     $ 2,523,553     $ 2,473,602  
Savings and interest-bearing transaction accounts     6,650,181       6,624,407       6,420,951       6,573,902       6,437,408  
Time deposits     1,898,096       1,874,139       1,720,930       1,638,578       1,485,605  
Total deposits     11,067,452       10,899,778       10,624,738       10,736,033       10,396,615  
Securities sold under agreements to repurchase     152,239       143,679       142,146       139,750       150,315  
FHLB and other borrowed funds     1,105,175       1,472,393       1,363,851       1,309,950       1,115,061  
Accrued interest payable and other liabilities     124,172       67,912       72,381       55,971       54,845  
Subordinated debentures     368,979       368,790       368,596       368,403       368,212  
Total liabilities       12,818,017       12,952,552       12,571,712       12,610,107       12,085,048  
                                         
  Stockholders' equity            
Common stock     1,682       1,707       1,741       1,745       1,736  
Capital surplus     1,560,904       1,609,810       1,668,106       1,693,337       1,671,141  
Retained earnings     803,170       752,184       701,900       642,540       585,586  
Accumulated other comprehensive (loss) income     (4,272 )     (13,815 )     (30,721 )     (23,609 )     (20,282 )
Total stockholders' equity       2,361,484       2,349,886       2,341,026       2,314,013       2,238,181  
Total liabilities and stockholders' equity     $ 15,179,501     $ 15,302,438     $ 14,912,738     $ 14,924,120     $ 14,323,229  
                                         

 

   
  Home BancShares, Inc.    
  Consolidated Statements of Income    
  (Unaudited)    
                   
    Quarter Ended     Three Months Ended  
      Mar. 31,     Dec. 31,       Sep. 30,       Jun. 30,     Mar. 31,       Mar. 31,     Mar. 31,  
(In thousands)     2019     2018       2018       2018     2018       2019     2018  
                                                   
Interest income                                                    
Loans   $   163,848   $   163,201     $   166,334     $   152,996   $   148,065     $   163,848   $   148,065  
Investment securities                                                  
Taxable       10,706       9,873         9,011         8,979       8,970         10,706       8,970  
Tax-exempt       3,379       3,456         3,427         3,368       3,006         3,379       3,006  
Deposits - other banks       1,543       1,241         1,273         1,206       929         1,543       929  
Federal funds sold       11       9         6         12       6         11       6  
                                                   
Total interest income       179,487       177,780         180,051         166,561       160,976         179,487       160,976  
                                                   
Interest expense                                                  
Interest on deposits       28,006       25,207         21,412         18,164       14,806         28,006       14,806  
Federal funds purchased       -        -          -          -        1         -        1  
FHLB borrowed funds       6,118       6,474         7,055         4,245       4,580         6,118       4,580  
Securities sold under agreements to repurchase       634       602         472         372       376         634       376  
Subordinated debentures       5,259       5,215         5,202         5,168       5,004         5,259       5,004  
                                                   
Total interest expense       40,017       37,498         34,141         27,949       24,767         40,017       24,767  
                                                   
Net interest income         139,470       140,282         145,910         138,612       136,209         139,470       136,209  
Provision for loan losses       -        -          -          2,722       1,600         -        1,600  
Net interest income after provision for loan losses         139,470       140,282         145,910         135,890       134,609         139,470       134,609  
                                                   
Non-interest income                                                    
Service charges on deposit accounts       6,401       7,004         6,992         6,780       6,075         6,401       6,075  
Other service charges and fees       6,563       7,598         9,041         9,797       10,155         6,563       10,155  
Trust fees       403       290         437         379       446         403       446  
Mortgage lending income       2,435       2,554         3,691         3,477       2,657         2,435       2,657  
Insurance commissions       609       442         463         526       679         609       679  
Increase in cash value of life insurance       736       737         735         730       654         736       654  
Dividends from FHLB, FRB, FNBB & other       3,505       1,992         1,288         1,600       877         3,505       877  
Gain (loss) on SBA loans       241       75         47         262       182         241       182  
Gain (loss) on branches, equipment and other assets, net       79       (25 )       (102 )       -        7         79       7  
Gain (loss) on OREO, net       206       114         836         1,046       405         206       405  
Other income       2,494       2,726         2,419         3,076       3,668         2,494       3,668  
                                                   
Total non-interest income       23,672       23,507         25,847         27,673       25,805         23,672       25,805  
                                                   
Non-interest expense                                                    
Salaries and employee benefits       37,836       36,230         37,825         34,476       35,014         37,836       35,014  
Occupancy and equipment       8,823       8,310         8,148         8,519       8,983         8,823       8,983  
Data processing expense       3,970       3,642         3,461         3,339       3,986         3,970       3,986  
Other operating expenses       18,428       23,090         16,689         16,894       15,397         18,428       15,397  
                                                   
Total non-interest expense       69,057       71,272         66,123         63,228       63,380         69,057       63,380  
                                                   
Income before income taxes         94,085       92,517         105,634         100,335       97,034         94,085       97,034  
Income tax expense       22,735       21,487         25,350         24,310       23,970         22,735       23,970  
Net income     $   71,350   $   71,030     $   80,284     $   76,025   $   73,064     $   71,350   $   73,064  
                                                   

 

  Home BancShares, Inc.  
  Selected Financial Information  
  (Unaudited)  
                 
    Quarter Ended     Three Months Ended  
(Dollars and shares in thousands,       Mar. 31,       Dec. 31,       Sep. 30,       Jun. 30,       Mar. 31,       Mar. 31,       Mar. 31,  
except per share data)     2019       2018       2018       2018       2018       2019       2018  
                                                         
PER SHARE DATA                                                        
                                                         
Diluted earnings per common share   $   0.42     $   0.41     $   0.46     $   0.44     $   0.42     $   0.42     $   0.42  
Diluted earnings per common share, as adjusted, excluding special dividend from equity investment, merger expenses, hurricane expenses & outsourced special project expense (non-GAAP)(1)       0.42         0.44         0.46         0.44         0.42         0.42         0.42  
Basic earnings per common share       0.42         0.41         0.46         0.44         0.42         0.42         0.42  
Dividends per share - common       0.1200         0.1200         0.1200         0.1100         0.1100         0.1200         0.1100  
Book value per common share       14.04         13.76         13.44         13.26         12.89         14.04         12.89  
Tangible book value per common share (non-GAAP)(1)       8.10         7.90         7.68         7.52         7.27         8.10         7.27  
                                                         
                                                         
STOCK INFORMATION                                                        
                                                         
Average common shares outstanding     169,592       173,023       174,440       173,403       173,761       169,592       173,761  
Average diluted shares outstanding     169,592       173,311       174,867       173,936       174,383       169,592       174,383  
End of period common shares outstanding     168,173       170,720       174,135       174,511       173,603       168,173       173,603  
                                                         
                                                         
ANNUALIZED PERFORMANCE METRICS                                                        
                                                         
Return on average assets     1.92 %     1.90 %     2.14 %     2.13 %     2.08 %     1.92 %     2.08 %
Return on average assets excluding special dividend from equity investment, merger expenses, hurricane expenses & outsourced special project expense (ROA, as adjusted) (non-GAAP)(1)     1.91 %     2.03 %     2.14 %     2.13 %     2.08 %     1.91 %     2.08 %
Return on average assets excluding intangible amortization (non-GAAP)(1)     2.09 %     2.07 %     2.33 %     2.32 %     2.27 %     2.09 %     2.27 %
Return on average common equity     12.34 %     12.05 %     13.74 %     13.54 %     13.38 %     12.34 %     13.38 %
Return on average common equity excluding special dividend from equity investment, merger expenses, hurricane expenses & outsourced special project expense: (ROE, as adjusted) (non-GAAP)(1)     12.30 %     12.86 %     13.74 %     13.54 %     13.38 %     12.30 %     13.38 %
Return on average tangible common equity (non-GAAP)(1)     21.53 %     21.08 %     24.20 %     23.90 %     23.94 %     21.53 %     23.94 %
Return on average tangible common equity excluding special dividend from equity investment, merger expenses, hurricane expenses & outsourced special project expense: (ROTCE, as adjusted) (non-GAAP)(1)     21.45 %     22.50 %     24.20 %     23.90 %     23.94 %     21.45 %     23.94 %
Efficiency ratio     41.01 %     42.18 %     37.23 %     36.74 %     37.83 %     41.01 %     37.83 %
Efficiency ratio, as adjusted (non-GAAP)(1)     40.58 %     38.30 %     37.40 %     37.03 %     37.97 %     40.58 %     37.97 %
Net interest margin - FTE     4.30 %     4.30 %     4.46 %     4.47 %     4.46 %     4.30 %     4.46 %
Fully taxable equivalent adjustment   $   1,367     $   1,412     $   1,489     $   1,403     $   1,209     $   1,367     $   1,209  
Total revenue       203,159         201,287         205,898         194,234         186,781         203,159         186,781  
Total purchase accounting accretion       9,055         9,432         10,744         10,669         10,608         9,055         10,608  
Average purchase accounting loan discounts       131,596         141,244         151,377         153,624         164,122         131,596         164,122  
                                                         
                                                         
OTHER OPERATING EXPENSES                                                        
                                                         
Advertising   $   1,051     $   1,214     $   1,154     $   1,142     $   962     $   1,051     $   962  
Merger and acquisition expenses       -          6,013         -          -          -          -          -   
Amortization of intangibles       1,587         1,587         1,617         1,624         1,626         1,587         1,626  
Electronic banking expense       1,903         1,969         1,947         1,828         1,878         1,903         1,878  
Directors' fees       434         319         314         318         330         434         330  
Due from bank service charges       238         289         253         242         219         238         219  
FDIC and state assessment       1,710         1,869         2,293         2,788         1,608         1,710         1,608  
Hurricane expense       897         470         -          -          -          897         -   
Insurance       697         737         762         714         887         697         887  
Legal and accounting       981         1,151         761         858         778         981         778  
Other professional fees       2,812         1,465         1,748         1,601         1,639         2,812         1,639  
Operating supplies       536         510         510         602         600         536         600  
Postage       326         325         311         323         344         326         344  
Telephone       303         324         337         371         373         303         373  
Other expense       4,953         4,848         4,682         4,483         4,153         4,953         4,153  
                                                         
Total other operating expenses    $   18,428     $   23,090     $   16,689     $   16,894     $   15,397     $   18,428     $   15,397  
                                                         
                                                         
 (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)  
           
      Mar. 31,       Dec. 31,       Sep. 30,       June. 30,       Mar. 31,  
(Dollars in thousands)     2019       2018       2018       2018       2018  
                                         
BALANCE SHEET RATIOS                                        
                                         
Total loans to total deposits     99.20 %     101.58 %     101.96 %     101.51 %     99.32 %
Common equity to assets     15.56 %     15.36 %     15.70 %     15.51 %     15.63 %
Tangible common equity to tangible assets (non-GAAP)(1)     9.60 %     9.43 %     9.62 %     9.42 %     9.46 %
                                         
                                         
LOANS RECEIVABLE                                        
                                         
Real estate                                        
Commercial real estate loans                                        
Non-farm/non-residential   $   4,623,174     $   4,806,684     $   4,685,827     $   4,734,315     $   4,658,209  
Construction/land development       1,649,303         1,546,035         1,550,910         1,662,199         1,641,834  
Agricultural       76,092         76,433         72,930         77,053         81,151  
Residential real estate loans                                        
Residential 1-4 family       1,947,119         1,975,586         1,982,666         1,960,841         1,915,346  
Multifamily residential       538,098         560,475         608,608         540,526         464,194  
Total real estate       8,833,786         8,965,213         8,900,941         8,974,934         8,760,734  
Consumer       448,093         443,105         428,192         417,499         40,842  
Commercial and industrial       1,505,773         1,476,331         1,303,841         1,287,637         1,324,173  
Agricultural       58,966         48,562         58,644         55,768         50,770  
Other       132,317         138,668         141,197         162,132         149,217  
Loans receivable   $   10,978,935     $   11,071,879     $   10,832,815     $   10,897,970     $   10,325,736  
                                         
Discount for credit losses on purchased loans   $   106,617     $   113,648     $   120,849     $   129,903     $   137,404  
Purchased loans, net of discount for credit losses on purchased loans       2,712,315         2,900,284         3,081,695         3,522,753         3,232,004  
                                         
                                         
ALLOWANCE FOR LOAN LOSSES                                        
                                         
Balance, beginning of period   $   108,791     $   110,191     $   111,516     $   110,212     $   110,266  
Loans charged off       3,391         1,814         2,501         2,132         2,540  
Recoveries of loans previously charged off       957         414         1,176         714         886  
Net loans (recovered)/charged off       2,434         1,400         1,325         1,418         1,654  
Provision for loan losses       -          -          -          2,722         1,600  
Balance, end of period   $   106,357     $   108,791     $   110,191     $   111,516     $   110,212  
                                         
Net (recoveries) charge-offs to average total loans     0.09 %     0.05 %     0.05 %     0.05 %     0.06 %
Allowance for loan losses to total loans     0.97 %     0.98 %     1.02 %     1.02 %     1.07 %
                                         
                                         
NON-PERFORMING ASSETS                                        
                                         
Non-performing loans                                        
Non-accrual loans   $   49,616     $   47,083     $   36,198     $   37,082     $   36,266  
Loans past due 90 days or more       14,577         17,159         20,267         19,696         13,223  
Total non-performing loans       64,193         64,242         56,465         56,778         49,489  
Other non-performing assets                                        
Foreclosed assets held for sale, net       14,466         13,236         13,507         17,853         20,134  
Other non-performing assets       947         497         405         3         3  
Total other non-performing assets       15,413         13,733         13,912         17,856         20,137  
Total non-performing assets   $   79,606     $   77,975     $   70,377     $   74,634     $   69,626  
                                         
Allowance for loan losses for loans to non-performing loans     165.68 %     169.35 %     195.15 %     196.41 %     222.70 %
Non-performing loans to total loans     0.58 %     0.58 %     0.52 %     0.52 %     0.48 %
Non-performing assets to total assets     0.52 %     0.51 %     0.47 %     0.50 %     0.49 %
                                         
           
 (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  
    March 31, 2019   December 31, 2018  
      Average     Income/   Yield/     Average     Income/   Yield/  
(Dollars in thousands)     Balance     Expense   Rate     Balance     Expense   Rate  
                                   
ASSETS                                  
Earning assets                                  
Interest-bearing balances due from banks   $ 272,410   $ 1,543   2.30%   $ 244,551   $ 1,241   2.01%  
Federal funds sold     1,491     11   2.99%     741     9   4.82%  
Investment securities - taxable     1,595,605     10,706   2.72%     1,553,467     9,873   2.52%  
Investment securities - non-taxable - FTE     390,754     4,424   4.59%     400,742     4,453   4.41%  
Loans receivable - FTE     11,036,503     164,170   6.03%     10,884,911     163,616   5.96%  
Total interest-earning assets     13,296,763     180,854   5.52%     13,084,412     179,192   5.43%  
Non-earning assets     1,782,909               1,754,567            
Total assets   $ 15,079,672             $ 14,838,979            
                                   
LIABILITIES AND SHAREHOLDERS' EQUITY                                  
Liabilities                                  
Interest-bearing liabilities                                  
Savings and interest-bearing transaction accounts   $ 6,596,895   $ 19,537   1.20%   $ 6,405,419   $ 17,873   1.11%  
Time deposits     1,903,373     8,469   1.80%     1,794,358     7,334   1.62%  
Total interest-bearing deposits     8,500,268     28,006   1.34%     8,199,777     25,207   1.22%  
Securities sold under agreement to repurchase     150,803     634   1.71%     147,895     602   1.61%  
FHLB borrowed funds     1,159,629     6,118   2.14%     1,242,985     6,474   2.07%  
Subordinated debentures     368,884     5,259   5.78%     368,695     5,215   5.61%  
Total interest-bearing liabilities     10,179,584     40,017   1.59%     9,959,352     37,498   1.49%  
Non-interest bearing liabilities                                  
Non-interest bearing deposits     2,439,520               2,464,003            
Other liabilities     115,911               76,822            
Total liabilities     12,735,015               12,500,177            
Shareholders' equity     2,344,657               2,338,802            
Total liabilities and shareholders' equity   $ 15,079,672             $ 14,838,979            
Net interest spread               3.93%               3.94%  
Net interest income and margin - FTE         $ 140,837   4.30%         $ 141,694   4.30%  
                                   

 

 
  Home BancShares, Inc.  
  Consolidated Net Interest Margin  
  (Unaudited)  
             
      Three Months Ended  
 
      March 31, 2019  
    March 31, 2018  
 
        Average         Income/       Yield/         Average         Income/       Yield/    
  (Dollars in thousands)         Balance         Expense       Rate         Balance         Expense       Rate    
                                   
ASSETS                                  
Earning assets                                  
Interest-bearing balances due from banks   $ 272,410   $ 1,543   2.30%   $ 245,815   $ 929   1.53%  
Federal funds sold     1,491     11   2.99%     9,682     6   0.25%  
Investment securities - taxable     1,595,605     10,706   2.72%     1,560,464     8,970   2.33%  
Investment securities - non-taxable - FTE     390,754     4,424   4.59%     345,217     3,997   4.70%  
Loans receivable - FTE     11,036,503     164,170   6.03%     10,325,439     148,283   5.82%  
Total interest-earning assets     13,296,763     180,854   5.52%     12,486,617     162,185   5.27%  
Non-earning assets     1,782,909               1,747,752            
Total assets   $ 15,079,672             $ 14,234,369            
                                   
LIABILITIES AND SHAREHOLDERS' EQUITY                                  
Liabilities                                  
Interest-bearing liabilities                                  
Savings and interest-bearing transaction accounts   $ 6,596,895   $ 19,537   1.20%   $ 6,409,585   $ 11,242   0.71%  
Time deposits     1,903,373     8,469   1.80%     1,513,854     3,564   0.95%  
Total interest-bearing deposits     8,500,268     28,006   1.34%     7,923,439     14,806   0.76%  
Federal funds purchased     -     -   0.00%     78     1   5.20%  
Securities sold under agreement to repurchase     150,803     634   1.71%     152,716     376   1.00%  
FHLB borrowed funds     1,159,629     6,118   2.14%     1,150,091     4,580   1.62%  
Subordinated debentures     368,884     5,259   5.78%     368,124     5,004   5.51%  
Total interest-bearing liabilities     10,179,584     40,017   1.59%     9,594,448     24,767   1.05%  
Non-interest bearing liabilities                                  
Non-interest bearing deposits     2,439,520               2,381,259            
Other liabilities     115,911               44,360            
Total liabilities     12,735,015               12,020,067            
Shareholders' equity     2,344,657               2,214,302            
Total liabilities and shareholders' equity   $ 15,079,672             $ 14,234,369            
Net interest spread               3.93%               4.22%  
Net interest income and margin - FTE         $ 140,837   4.30%         $ 137,418   4.46%  
                                   

 

 
  Home BancShares, Inc.  
  Non-GAAP Reconciliations  
  (Unaudited)  
                 
    Quarter Ended     Three Months Ended
 
(Dollars and shares in thousands,     Mar. 31,     Dec. 31,     Sep. 30,     Jun. 30,     Mar. 31,       Mar. 31,     Mar. 31,  
except per share data)     2019     2018     2018     2018     2018       2019     2018  
                                               
EARNINGS, AS ADJUSTED                                              
                                               
GAAP net income available to common shareholders (A)   $   71,350   $   71,030   $   80,284   $   76,025   $   73,064     $   71,350   $   73,064  
Adjustments                                              
Special dividend from equity investment       (2,134 )     -        -        -        -          (2,134 )     -   
Merger and acquisition expenses       -        6,013       -        -        -          -        -   
Hurricane expenses       897       470       -        -        -          897       -   
Outsourced special project expense       900       -        -        -        -          900       -   
Total adjustments       (337 )     6,483       -        -        -          (337 )     -   
Tax-effect of adjustments       (88 )     1,694       -        -        -          (88 )     -   
Adjustments after-tax (B)       (249 )     4,789       -        -        -          (249 )     -   
Earnings, as adjusted (C)   $   71,101   $   75,819   $   80,284   $   76,025   $   73,064     $   71,101   $   73,064  
                                               
Average diluted shares outstanding (D)       169,592       173,311       174,867       173,936       174,383         169,592       174,383  
                                               
GAAP diluted earnings per share: (A/D)   $   0.42   $   0.41   $   0.46   $   0.44   $   0.42     $   0.42   $   0.42  
Adjustments after-tax: (B/D)       -        0.03       -        -        -          -        -   
Diluted earnings per common share excluding special dividend from equity investment, merger expenses, hurricane expenses & outsourced special project expense: (C/D)   $   0.42   $   0.44   $   0.46   $   0.44   $   0.42     $   0.42   $   0.42  
                                               
                                               
ANNUALIZED RETURN ON AVERAGE ASSETS                                              
                                               
Return on average assets: (A/F)     1.92 %   1.90 %   2.14 %   2.13 %   2.08 %     1.92 %   2.08 %
Return on average assets excluding special dividend from equity investment, merger expenses, hurricane expenses & outsourced special project expense: (ROA, as adjusted) ((A+E)/F)     1.91 %   2.03 %   2.14 %   2.13 %   2.08 %     1.91 %   2.08 %
Return on average assets excluding intangible amortization: ((A+C)/(F-G))     2.09 %   2.07 %   2.33 %   2.32 %   2.27 %     2.09 %   2.27 %
                                               
GAAP net income available to common shareholders (A)   $   71,350   $   71,030   $   80,284   $   76,025   $   73,064     $   71,350   $   73,064  
Amortization of intangibles (B)       1,587       1,587       1,617       1,624       1,626         1,587       1,626  
Amortization of intangibles after-tax (C)       1,172       1,172       1,194       1,200       1,201         1,172       1,201  
Total adjustments (D)       (337 )     6,483       -        -        -          (337 )     -   
Adjustments after-tax (E)       (249 )     4,789       -        -        -          (249 )     -   
Average assets (F)     15,079,672     14,838,979     14,880,931     14,304,483     14,234,369       15,079,672     14,234,369  
Average goodwill, core deposits & other intangible assets (G)       1,000,494       1,002,070       1,001,843       975,345       976,451         1,000,494       976,451  
                                               

 

 
  Home BancShares, Inc.  
  Non-GAAP Reconciliations  
  (Unaudited)  
                                               
     Quarter Ended       Three Months Ended 
 
(Dollars and shares in thousands,     Mar. 31,     Dec. 31,     Sep. 30,     Jun. 30,     Mar. 31,       Mar. 31,     Mar. 31,  
except per share data)     2019     2018     2018     2018     2018       2019     2018  
                                               
ANNUALIZED RETURN ON AVERAGE COMMON EQUITY                                              
                                               
Return on average common equity: (A/C)     12.34 %   12.05 %   13.74 %   13.54 %   13.38 %     12.34 %   13.38 %
Return on average common equity excluding special dividend from equity investment, merger expenses, hurricane expenses & outsourced special project expense: (ROE, as adjusted) ((A+B)/C)     12.30 %   12.86 %   13.74 %   13.54 %   13.38 %     12.30 %   13.38 %
Return on average tangible common equity: (A/(C-D))     21.53 %   21.08 %   24.20 %   23.90 %   23.94 %     21.53 %   23.94 %
Return on average tangible common equity excluding special dividend from equity investment, merger expenses, hurricane expenses & outsourced special project expense: (ROTCE, as adjusted) ((A+B)/(C-D))     21.45 %   22.50 %   24.20 %   23.90 %   23.94 %     21.45 %   23.94 %
                                               
GAAP net income available to common shareholders (A)   $   71,350   $   71,030   $   80,284   $   76,025   $   73,064     $   71,350   $   73,064  
Adjustments after-tax (B)       (249 )     4,789       -        -        -          (249 )     -   
Average common equity (C)     2,344,657     2,338,802     2,317,930     2,251,412     2,214,302       2,344,657     2,214,302  
Average goodwill, core deposits & other intangible assets (D)     1,000,494     1,002,070     1,001,843     975,345     976,451       1,000,494     976,451  
                                               
                                               
EFFICIENCY RATIO                                              
                                               
Efficiency ratio:  ((C-E)/(A+B+D))     41.01 %   42.18 %   37.23 %   36.74 %   37.83 %     41.01 %   37.83 %
Efficiency ratio, as adjusted:  ((C-E-G)/(A+B+D-F))     40.58 %   38.30 %   37.40 %   37.03 %   37.97 %     40.58 %   37.97 %
                                               
Net interest income (A)   $   139,470   $   140,282   $   145,910   $   138,612   $   136,209     $   139,470   $   136,209  
Non-interest income (B)       23,672       23,507       25,847       27,673       25,805         23,672       25,805  
Non-interest expense (C)       69,057       71,272       66,123       63,228       63,380         69,057       63,380  
Fully taxable equivalent adjustment (D)       1,367       1,412       1,489       1,403       1,209         1,367       1,209  
Amortization of intangibles (E)       1,587       1,587       1,617       1,624       1,626         1,587       1,626  
                                               
Adjustments:                                              
Non-interest income:                                              
Special dividend from equity investment   $   2,134   $   -    $   -    $   -