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CST: 14/11/2019 06:19:39   

Home BancShares, Inc. Third Quarter Results Reveal Book Value, Tangible Book, Credit Quality and Net Interest Margin as Pillars of Strength

27 Days ago

CONWAY, Ark., Oct. 17, 2019 (GLOBE NEWSWIRE) -- Home BancShares, Inc. (NASDAQ GS: HOMB), parent company of Centennial Bank, announced third quarter earnings today that once again included a solid net interest margin at 4.32%, up from 4.28% in the second quarter.

Highlights of the Third Quarter of 2019:

Metric Q3 2019 Q2 2019 Q1 2019 Q4 2018 Q3 2018
Net Income $72.8 million $72.2 million $71.4 million $71.0 million $80.3 million
Total Revenue (net) $167.7 million $164.1 million $163.1 million $163.8 million $171.8 million
ROA   1.93%     1.92%     1.92%     1.90%     2.14%  
NIM   4.32%     4.28%     4.30%     4.30%     4.46%  
Purchase Accounting Accretion $8.5 million $9.2 million $9.1 million $9.4 million $10.7 million
ROE   11.84%     12.18%     12.34%     12.05%     13.74%  
ROTCE (non-GAAP)(1)   20.04%     21.01%     21.53%     21.08%     24.20%  
Diluted Earnings Per Share $0.44   $0.43   $0.42   $0.41   $0.46  
Non-Performing Assets to Total Assets   0.45%     0.51%     0.52%     0.51%     0.47%  

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

“Book value per common share was $14.80 at September 30, 2019 compared to $13.44 at September 30, 2018, an annual increase of 10.1%, and tangible book value per common share (non-GAAP) was $8.83 at September 30, 2019 compared to $7.68 at September 30, 2018, an annual increase of 15.0%,” said John Allison, Chairman. “We made the strategic decision to participate in a stock repurchase program, although it is dilutive to tangible book,” Allison continued. “If we had not bought back stock, our year over year increase in tangible book value would have been 20.2%. These are numbers I am very proud of,” added Allison.

“Our Net Interest Margin has held the course in 2019, at 4.32% for the third quarter as compared to 4.28% in the second quarter and 4.30% in the first quarter,” said Tracy French, Centennial Bank President and Chief Executive Officer. “I think this speaks to the discipline within this company and is a performance metric we are very proud of,” French added.

“Asset quality has been another strong pillar for Centennial Bank,” said Randy Sims, Home BancShares, Inc. Chief Executive Officer. “Our non-performing assets to total assets was 0.45% in the third quarter as compared to 0.51% in the second quarter, which is a very reassuring position,” Sims added.

Operating Highlights

Our net interest margin was 4.32% for the three-month period ended September 30, 2019 compared to 4.28% for the three-month period ended June 30, 2019. The yield on loans was 6.08% and 6.06% for the three months ended September 30, 2019 and June 30, 2019, respectively, as average loans decreased from $11.00 billion to $10.94 billion. Additionally, the rate on interest bearing deposits decreased to 1.36% as of September 30, 2019 from 1.38% as of June 30, 2019, with average balances of $8.64 billion and $8.62 billion, respectively. 

From the second quarter of 2019 to the third quarter of 2019, we experienced a $373,000 increase in investment premium amortization resulting from increased prepayment speeds on investment securities due to the declining interest rate environment. This increased investment premium amortization negatively impacted the net interest margin for the quarter ended September 30, 2019 by 1.1 basis points.

During 2018, the Company recognized $7.2 million of interest income from large payoff events including minimum interest, default interest, acceleration of deferred origination fees and acceleration of other discounts. The Company’s 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. The first six months of 2019 do not include any additional interest income for payoff events. However, during the third quarter of 2019, we had several interest income events primarily related to large payoffs.  These events totaled $2.8 million of interest income and increased the net interest margin by 8.4 basis points for the third quarter of 2019.

For the three months ended September 30, 2019 and June 30, 2019, we recognized $8.5 million and $9.2 million, respectively, in total net accretion for acquired loans and deposits. The $778,000 decline in accretion income decreased the net interest margin by 2.3 basis points for the third quarter of 2019.

Purchase accounting accretion on acquired loans was $8.4 million and $9.2 million and average purchase accounting loan discounts were $112.6 million and $122.2 million for the three-month periods ended September 30, 2019 and June 30, 2019, respectively. Net amortization of time deposit premiums was $30,000 per quarter and net average remaining CD premiums were $297,000 and $327,000 for the three-month periods ended September 30, 2019 and June 30, 2019, respectively.

Net interest income on a fully taxable equivalent basis increased $1.9 million, or 1.35%, to $144.2 million for the three-month period ended September 30, 2019, from $142.3 million for the three-month period ended June 30, 2019. This increase in net interest income for the three-month period ended September 30, 2019 was the result of a $723,000 increase in interest income as well as a $1.2 million decrease in interest expense. The $723,000 increase in interest income was primarily the result of a $1.6 million increase in loan interest income which was partially offset by a $560,000 decrease in income on deposits with other banks and a $345,000 decrease in investment income primarily due to increased investment premium amortization. The $1.2 million decrease in interest expense was primarily the result of a $1.0 million decrease in interest expense on FHLB borrowed funds as a result of the average balance of FHLB and other borrowings decreasing by $183.8 million or 19.71%. Interest expense on deposits decreased by $143,000 for the three-month period ended September 30, 2019. This decrease was the result of a $1.0 million decrease in interest expense on savings and interest-bearing transaction accounts which was partially offset by an $879,000 increase in interest expense on time deposits.

During the third quarter of 2019, no provision for loan loss was recorded. The Company continues to see strong asset quality. Non-performing loans to total loans was 0.54% as of September 30, 2019 compared to 0.57% as of June 30, 2019, an improvement of 4.25%. Non-performing assets to total assets improved by 10.38% from 0.51% as of June 30, 2019 to 0.45% as of September 30, 2019. For the third quarter of 2019, net charge-offs were $1.8 million compared to net charge-offs of $1.6 million for the second quarter of 2019.

The Company reported $24.7 million of non-interest income for the third quarter of 2019, compared to $23.1 million for the second quarter of 2019. The most important components of the third quarter non-interest income were $8.7 million from other service charges and fees, $6.5 million from service charges on deposits accounts, $4.6 million from mortgage lending income, $1.5 million from other income and $1.1 million from dividends from FHLB, FRB, FNBB & other equity investments.

Non-interest expense for the third quarter of 2019 was $67.8 million compared to $67.6 million for the second quarter of 2019. The most important components of the third quarter non-interest expense were $39.9 million from salaries and employee benefits, $14.7 million in other expense and $9.0 million in occupancy and equipment expenses. For the third quarter of 2019, our efficiency ratio improved to 39.16% compared to 39.93% reported for the second quarter of 2019. 

Non-interest expense for the third quarter of 2019 included a $2.3 million FDIC small bank assessment credit. Small banks (total consolidated assets of less than $10 billion) were awarded FDIC assessment credits for the portion of their assessments that contributed to the growth in the reserve ratio from 1.15 percent to 1.35 percent, to be applied when the reserve ratio is at least 1.38 percent. The assessment regulations provide that after the reserve ratio reaches 1.38 percent the FDIC will automatically apply small bank credits to reduce the banks’ regular deposit insurance assessments. Centennial Bank was classified as a small bank until January 1, 2018. During the third quarter, the Company was notified that the Deposit Insurance Fund (DIF) reserve ratio as of June 30, 2019 was 1.40 percent. As a result, the Company recorded its FDIC small bank assessment credit in the amount of $2.3 million during the third quarter of 2019.

During the third quarter of 2019, the State of Florida reduced its corporate income tax rate from 5.50% to 4.458% for the tax years January 1, 2019 through December 31, 2021. Because of this reduction, our third quarter income taxes were reduced by $763,000 of which $497,000 was related to the first six months of 2019.

Also, during the third quarter of 2019, the Company made a strategic decision to surrender $47.5 million of its underperforming separate account bank owned life insurance (“BOLI”). When a BOLI contract is surrendered, the gains within the policy become taxable and a 10% IRS penalty is levied on the gain. As a result of the BOLI decision, the Company recorded a $3.7 million tax expense related to this transaction.

Financial Condition

Total loans receivable were $10.77 billion at September 30, 2019 compared to $11.07 billion at December 31, 2018. Total deposits were $11.05 billion at September 30, 2019 compared to $10.90 billion at December 31, 2018. Total assets were $14.90 billion at September 30, 2019 compared to $15.30 billion at December 31, 2018.

During the third quarter 2019, the Company experienced approximately $281.2 million in organic loan decline. Centennial CFG experienced $170.9 million of organic loan decline and had loans of $1.50 billion at September 30, 2019. Our legacy footprint experienced $110.3 million in organic loan decline during the quarter.  

Non-performing loans at September 30, 2019 were $19.2 million, $37.0 million, $494,000, $1.9 million and zero in the Arkansas, Florida, Alabama, Shore Premier Finance and Centennial CFG markets, respectively, for a total of $58.6 million. Non-performing assets at September 30, 2019 were $23.1 million, $42.2 million, $528,000, $1.9 million and zero in the Arkansas, Florida, Alabama, Shore Premier Finance and Centennial CFG markets, respectively, for a total of $67.7 million. 

The Company’s allowance for loan losses was $104.3 million at September 30, 2019, or 0.97% of total loans, compared to $108.8 million, or 0.98% of total loans, at December 31, 2018. As of September 30, 2019, and December 31, 2018, the Company’s allowance for loan losses was 178.0% and 169.4% of its total non-performing loans, respectively.

Stockholders’ equity was $2.47 billion at September 30, 2019 compared to $2.35 billion at December 31, 2018, an increase of approximately $120.0 million. The increase in stockholders’ equity is primarily associated with the $152.8 million increase in retained earnings and the $33.7 million increase in comprehensive income which were partially offset by the repurchase of $75.4 million of our common stock during 2019.  Book value per common share was $14.80 at September 30, 2019 compared to $13.76 at December 31, 2018.  Tangible book value per common share (non-GAAP) was $8.83 at September 30, 2019 compared to $7.90 at December 31, 2018, an annualized increase of 15.7%. 

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, October 17, 2019.  We encourage all participants to pre-register for the conference call using the following link: http://dpregister.com/10134963.  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: 10134963, which will be available until October 24, 2019 at 10:59 p.m. CT (11:59 p.m. 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, tangible book value per common share and tangible common equity to tangible assets--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)
             
    Sep. 30, Jun. 30, Mar. 31, Dec. 31, Sep. 30,
(In thousands)     2019     2019     2019     2018     2018  
                                 
ASSETS            
             
Cash and due from banks   $ 171,492   $ 183,745   $ 141,027   $ 175,024   $ 208,681  
Interest-bearing deposits with other banks     270,804     373,557     421,443     482,915     323,376  
  Cash and cash equivalents     442,296     557,302     562,470     657,939     532,057  
Federal funds sold     1,650     1,075     1,700     325     500  
Investment securities - available-for-sale     2,087,508     2,053,939     2,013,123     1,785,862     1,744,430  
Investment securities - held-to-maturity     -     -     -     192,776     199,266  
Loans receivable     10,771,946     11,053,129     10,978,935     11,071,879     10,832,815  
Allowance for loan losses     (104,304 )   (106,066 )   (106,357 )   (108,791 )   (110,191 )
  Loans receivable, net     10,667,642     10,947,063     10,872,578     10,963,088     10,722,624  
Bank premises and equipment, net     277,966     278,821     279,012     233,261     233,652  
Foreclosed assets held for sale     8,639     13,734     14,466     13,236     13,507  
Cash value of life insurance     102,003     149,708     149,353     148,621     148,014  
Accrued interest receivable     47,557     48,992     50,288     48,945     48,909  
Deferred tax asset, net     53,436     58,517     64,061     73,275     79,548  
Goodwill     958,408     958,408     958,408     958,408     958,408  
Core deposit and other intangibles     38,136     39,723     41,310     42,896     44,484  
Other assets     216,694     180,293     172,732     183,806     187,339  
  Total assets   $ 14,901,935   $ 15,287,575   $ 15,179,501   $ 15,302,438   $ 14,912,738  
                                 
LIABILITIES AND STOCKHOLDERS' EQUITY            
             
Liabilities            
Deposits:            
  Demand and non-interest-bearing   $ 2,394,207   $ 2,575,696   $ 2,519,175   $ 2,401,232   $ 2,482,857  
  Savings and interest-bearing transaction accounts     6,620,616     6,774,162     6,650,181     6,624,407     6,420,951  
  Time deposits     2,032,547     1,997,458     1,898,096     1,874,139     1,720,930  
  Total deposits     11,047,370     11,347,316     11,067,452     10,899,778     10,624,738  
Federal funds purchased     50,000     -     -     -     -  
Securities sold under agreements to repurchase     157,038     142,541     152,239     143,679     142,146  
FHLB and other borrowed funds     691,443     899,447     1,105,175     1,472,393     1,363,851  
Accrued interest payable and other liabilities     117,332     107,695     124,172     67,912     72,381  
Subordinated debentures     369,363     369,170     368,979     368,790     368,596  
  Total liabilities     12,432,546     12,866,169     12,818,017     12,952,552     12,571,712  
                                 
Stockholders' equity            
Common stock     1,669     1,675     1,682     1,707     1,741  
Capital surplus     1,542,858     1,550,999     1,560,994     1,609,810     1,668,106  
Retained earnings     904,980     853,964     803,629     752,184     701,900  
Accumulated other comprehensive (loss) income     19,882     14,768     (4,821 )   (13,815 )   (30,721 )
  Total stockholders' equity     2,469,389     2,421,406     2,361,484     2,349,886     2,341,026  
  Total liabilities and stockholders' equity   $ 14,901,935   $ 15,287,575   $ 15,179,501   $ 15,302,438   $ 14,912,738  
                                 


Home BancShares, Inc.
Consolidated Statements of Income
(Unaudited)
                   
    Quarter Ended   Nine Months Ended
    Sep. 30, Jun. 30, Mar. 31, Dec. 31, Sep. 30,   Sep. 30, Sep. 30,
(In thousands)     2019     2019     2019     2018     2018       2019     2018  
                                               
Interest income                  
  Loans   $ 167,470   $ 165,816   $ 163,848   $ 163,201   $ 166,334     $ 497,134   $ 467,395  
  Investment securities                  
  Taxable     10,343     10,650     10,706     9,873     9,011       31,699     26,960  
  Tax-exempt     3,193     3,183     3,379     3,456     3,427       9,755     9,801  
  Deposits - other banks     1,068     1,628     1,543     1,241     1,273       4,239     3,408  
  Federal funds sold     8     10     11     9     6       29     24  
                                               
Total interest income     182,082     181,287     179,487     177,780     180,051       542,856     507,588  
                                               
Interest expense                                              
  Interest on deposits     29,566     29,709     28,006     25,207     21,412       87,281     54,382  
  Federal funds purchased     21     -     -     -     -       21     1  
  FHLB borrowed funds     3,683     4,722     6,118     6,474     7,055       14,523     15,880  
  Securities sold under agreements to repurchase     628     630     634     602     472       1,892     1,220  
  Subordinated debentures     5,207     5,239     5,259     5,215     5,202       15,705     15,374  
                                               
Total interest expense     39,105     40,300     40,017     37,498     34,141       119,422     86,857  
                                               
Net interest income     142,977     140,987     139,470     140,282     145,910       423,434     420,731  
  Provision for loan losses     -     1,325     -     -     -       1,325     4,322  
Net interest income after                                              
  provision for loan losses     142,977     139,662     139,470     140,282     145,910       422,109     416,409  
                                               
Non-interest income                                              
  Service charges on deposit accounts     6,492     6,259     6,401     7,004     6,992       19,152     19,847  
  Other service charges and fees     8,710     8,177     6,563     7,598     9,041       23,450     28,993  
  Trust fees     382     391     403     290     437       1,176     1,262  
  Mortgage lending income     4,610     3,457     2,435     2,554     3,691       10,502     9,825  
  Insurance commissions     603     515     609     442     463       1,727     1,668  
  Increase in cash value of life insurance     714     740     736     737     735       2,190     2,119  
  Dividends from FHLB, FRB, FNBB & other     1,101     1,149     3,505     1,992     1,288       5,755     3,765  
  Gain (loss) on SBA loans     291     355     241     75     47       887     491  
  Gain (loss) on branches, equipment and other assets, net     12     (129 )   79     (25 )   (102 )     (38 )   (95 )
  Gain (loss) on OREO, net     334     58     206     114     836       598     2,287  
  Other income     1,500     2,094     2,494     2,726     2,419       6,088     9,163  
                                               
Total non-interest income     24,749     23,066     23,672     23,507     25,847       71,487     79,325  
                                               
Non-interest expense                                              
  Salaries and employee benefits     39,919     37,976     37,836     36,230     37,825       115,731     107,315  
  Occupancy and equipment     9,047     8,853     8,823     8,310     8,148       26,723     25,650  
  Data processing expense     4,059     3,838     3,970     3,642     3,461       11,867     10,786  
  Other operating expenses     14,739     16,957     18,428     23,090     16,689       50,124     48,980  
                                               
Total non-interest expense     67,764     67,624     69,057     71,272     66,123       204,445     192,731  
                                               
Income before income taxes     99,962     95,104     94,085     92,517     105,634       289,151     303,003  
  Income tax expense     27,199     22,940     22,735     21,487     25,350       72,874     73,630  
Net income   $ 72,763   $ 72,164   $ 71,350   $ 71,030   $ 80,284     $ 216,277   $ 229,373  
                                               

 

Home BancShares, Inc.
Selected Financial Information
(Unaudited)
                   
    Quarter Ended   Nine Months Ended
      Sep. 30,       Jun. 30,       Mar. 31,       Dec. 31,       Sep. 30,         Sep. 30,       Sep. 30,    
(Dollars and shares in thousands, except per share data)     2019       2019       2019       2018       2018         2019       2018    
                                                             
PER SHARE DATA                  
                   
Diluted earnings per common share   $ 0.44     $ 0.43     $ 0.42     $ 0.41     $ 0.46       $ 1.29     $ 1.32    
Diluted earnings per common share, as adjusted, excluding                                                             
FDIC Small Bank Assessment Credit, Florida tax savings, BOLI redemption tax,special dividend from equity investment, merger expenses, hurricane expenses & outsourced special project expense (non-GAAP)(1)     0.44       0.43       0.42       0.44       0.46         1.30       1.32    
Basic earnings per common share     0.44       0.43       0.42       0.41       0.46         1.29       1.32    
Dividends per share - common     0.1300       0.1300       0.1200       0.1200       0.1200         0.3800       0.3400    
Book value per common share     14.80       14.46       14.04       13.76       13.44         14.80       13.44    
Tangible book value per common share (non-GAAP)(1)     8.83       8.50       8.10       7.90       7.68         8.83       7.68    
                   
                   
STOCK INFORMATION                  
                   
Average common shares outstanding     167,178       167,791       169,592       173,023       174,440         168,178       173,870    
Average diluted shares outstanding     167,178       167,791       169,592       173,311       174,867         168,178       174,394    
End of period common shares outstanding     166,860       167,466       168,173       170,720       174,135         166,860       174,135    
                   
                   
ANNUALIZED PERFORMANCE METRICS                  
                   
Return on average assets     1.93 %     1.92 %     1.92 %     1.90 %     2.14 %       1.92 %     2.12 %  
Return on average assets excluding FDIC Small Bank                                                             
Assessment Credit, Florida tax savings, BOLI redemption tax, special dividend from equity investment, merger expenses, hurricane expenses & outsourced special project expense (ROA, as adjusted) (non-GAAP)(1)     1.96 %     1.92 %     1.92 %     2.03 %     2.14 %       1.94 %     2.12 %  
Return on average assets excluding intangible                                                            
amortization (non-GAAP)(1)     2.10 %     2.09 %     2.09 %     2.07 %     2.33 %       2.09 %     2.31 %  
Return on average common equity     11.84 %     12.18 %     12.34 %     12.05 %     13.74 %       12.12 %     13.56 %  
Return on average common equity excluding FDIC Small                                                             
Bank Assessment Credit, Florida tax savings, BOLI redemption tax, special dividend from equity investment, merger expenses, hurricane expenses & outsourced special project expense: (ROE, as adjusted) (non-GAAP)(1)     12.08 %     12.22 %     12.34 %     12.86 %     13.74 %       12.21 %     13.56 %  
Return on average tangible common equity (non-GAAP)(1)     20.04 %     21.01 %     21.53 %     21.08 %     24.20 %       20.84 %     24.02 %  
Return on average tangible common equity excluding                                                             
intangible amortization (non-GAAP)(1)     20.36 %     21.35 %     21.88 %     21.43 %     24.56 %       21.18 %     24.39 %  
Return on average tangible common equity excluding FDIC                                                             
Small Bank Assessment Credit, Florida tax savings, BOLI redemption tax, special dividend from equity investment, merger expenses, hurricane expenses & outsourced special project expense: (ROTCE, as adjusted) (non-GAAP)(1)     20.45 %     21.08 %     21.53 %     22.50 %     24.20 %       21.00 %     24.02 %  
Efficiency ratio     39.16 %     39.93 %     41.01 %     42.18 %     37.23 %       40.03 %     37.26 %  
Efficiency ratio, as adjusted (non-GAAP)(1)     40.60 %     39.92 %     40.52 %     38.28 %     37.39 %       40.35 %     37.43 %  
Net interest margin - FTE     4.32 %     4.28 %     4.30 %     4.30 %     4.46 %       4.30 %     4.46 %  
Fully taxable equivalent adjustment   $ 1,247     $ 1,319     $ 1,367     $ 1,412     $ 1,489       $ 3,933     $ 4,101    
Total revenue (net)     167,726       164,053       163,142       163,789       171,757         494,921       500,056    
Total purchase accounting accretion     8,462       9,240       9,055       9,432       10,744         26,757       32,021    
Average purchase accounting loan discounts     112,623       122,197       131,596       141,244       151,377         122,121       156,855    
                   
                   
OTHER OPERATING EXPENSES                  
                   
Advertising   $ 1,201     $ 1,095     $ 1,051     $ 1,214     $ 1,154       $ 3,347     $ 3,258    
Merger and acquisition expenses     -       -       -       6,013       -         -       -    
Amortization of intangibles     1,587       1,587       1,586       1,587       1,617         4,760       4,867    
Electronic banking expense     1,901       1,851       1,903       1,969       1,947         5,655       5,653    
Directors' fees     380       392       434       319       314         1,206       962    
Due from bank service charges     272       282       238       289       253         792       714    
FDIC and state assessment     (532 )     1,655       1,710       1,869       2,293         2,833       6,689    
Hurricane expense     -       -       897       470       -         897       -    
Insurance     698       661       697       737       762         2,056       2,363    
Legal and accounting     1,414       989       981       1,151       761         3,384       2,397    
Other professional fees     1,906       2,306       2,812       1,465       1,748         7,024       4,988    
Operating supplies     511       505       536       510       510         1,552       1,712    
Postage     320       293       326       325       311         939       978    
Telephone     289       306       303       324       337         898       1,081    
Other expense     4,792       5,035       4,954       4,848       4,682         14,781       13,318    
                                                             
  Total other operating expenses   $ 14,739     $ 16,957     $ 18,428     $ 23,090     $ 16,689       $ 50,124     $ 48,980    
                                                             
                   
(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)
             
      Sep. 30,       Jun. 30,       Mar. 31,       Dec. 31,       Sep. 30,  
(Dollars in thousands)     2019       2019       2019       2018       2018  
                                         
BALANCE SHEET RATIOS            
             
Total loans to total deposits     97.51 %     97.41 %     99.20 %     101.58 %     101.96 %
Common equity to assets     16.57 %     15.84 %     15.56 %     15.36 %     15.70 %
Tangible common equity to tangible assets (non-GAAP)(1)     10.59 %     9.96 %     9.60 %     9.43 %     9.62 %
             
             
LOANS RECEIVABLE            
             
Real estate            
  Commercial real estate loans            
  Non-farm/non-residential   $ 4,375,970     $ 4,495,558     $ 4,623,174     $ 4,806,684     $ 4,685,827  
  Construction/land development     1,827,454       1,930,838       1,649,303       1,546,035       1,550,910  
  Agricultural     87,087       85,045       76,092       76,433       72,930  
  Residential real estate loans            
  Residential 1-4 family     1,808,099       1,852,784       1,947,119       1,975,586       1,982,666  
  Multifamily residential     498,079       523,789       538,098       560,475       608,608  
Total real estate     8,596,689       8,888,014       8,833,786       8,965,213       8,900,941  
Consumer     469,741       455,554       448,093       443,105       428,192  
Commercial and industrial     1,479,724       1,515,357       1,505,773       1,476,331       1,303,841  
Agricultural     90,343       80,621       58,966       48,562       58,644  
Other     135,449       113,583       132,317       138,668       141,197  
  Loans receivable   $ 10,771,946     $ 11,053,129     $ 10,978,935     $ 11,071,879     $ 10,832,815  
                                         
Discount for credit losses on purchased loans   $ 89,615     $ 98,672     $ 106,617     $ 113,648     $ 120,849  
Purchased loans, net of discount for credit losses on purchased loans     2,227,386       2,469,579       2,712,315       2,900,284       3,081,695  
             
             
ALLOWANCE FOR LOAN LOSSES            
             
Balance, beginning of period   $ 106,066     $ 106,357     $ 108,791     $ 110,191     $ 111,516  
Loans charged off     2,302       2,279       3,391       1,814       2,501  
Recoveries of loans previously charged off     540       663       957       414       1,176  
  Net loans (recovered)/charged off     1,762       1,616       2,434       1,400       1,325  
Provision for loan losses     -       1,325       -       -       -  
Balance, end of period   $ 104,304     $ 106,066     $ 106,357     $ 108,791     $ 110,191  
                                         
Net (recoveries) charge-offs to average total loans     0.06 %     0.06 %     0.09 %     0.05 %     0.05 %
Allowance for loan losses to total loans     0.97 %     0.96 %     0.97 %     0.98 %     1.02 %
             
             
NON-PERFORMING ASSETS            
             
Non-performing loans            
  Non-accrual loans   $ 48,640     $ 52,841     $ 49,616     $ 47,083     $ 36,198  
  Loans past due 90 days or more     9,964       9,961       14,577       17,159       20,267  
  Total non-performing loans     58,604       62,802       64,193       64,242       56,465  
Other non-performing assets            
  Foreclosed assets held for sale, net     8,639       13,734       14,466       13,236       13,507  
  Other non-performing assets     447       947       947       497       405  
  Total other non-performing assets     9,086       14,681       15,413       13,733       13,912  
  Total non-performing assets   $ 67,690     $ 77,483     $ 79,606     $ 77,975     $ 70,377  
                                         
Allowance for loan losses for loans to non-performing loans     177.98 %     168.89 %     165.68 %     169.35 %     195.15 %
Non-performing loans to total loans     0.54 %     0.57 %     0.58 %     0.58 %     0.52 %
Non-performing assets to total assets     0.45 %     0.51 %     0.52 %     0.51 %     0.47 %
                                         
             
(1) Calculation of this metric and the reconciliation to GAAP is included in the schedules accompanying this release.    
             

 

Home BancShares, Inc.
Consolidated Net Interest Margin
(Unaudited)
     
    Three Months Ended
    September 30, 2019   June 30, 2019
      Average     Income/   Yield/       Average     Income/   Yield/
(Dollars in thousands)     Balance     Expense   Rate       Balance     Expense   Rate
                                     
ASSETS                                    
Earning assets                                    
  Interest-bearing balances due from banks   $ 213,671   $ 1,068   1.98 %   $ 298,821   $ 1,628   2.19 %
  Federal funds sold     1,442     8   2.20 %     1,596     10   2.51 %
  Investment securities - taxable     1,705,647     10,343   2.41 %     1,640,883     10,650   2.60 %
  Investment securities - non-taxable - FTE     370,376     4,139   4.43 %     379,437     4,177   4.42 %
  Loans receivable - FTE     10,944,638     167,771   6.08 %     11,000,926     166,141   6.06 %
  Total interest-earning assets     13,235,774     183,329   5.50 %     13,321,663     182,606   5.50 %
  Non-earning assets     1,757,458                 1,776,937            
  Total assets   $ 14,993,232               $ 15,098,600            
                                     
LIABILITIES AND SHAREHOLDERS' EQUITY                                    
Liabilities                                    
  Interest-bearing liabilities                                    
  Savings and interest-bearing transaction accounts   $ 6,629,491   $ 19,614   1.17 %   $ 6,677,683   $ 20,637   1.24 %
  Time deposits     2,014,630     9,952   1.96 %     1,943,320     9,072   1.87 %
  Total interest-bearing deposits     8,644,121     29,566   1.36 %     8,621,003     29,709   1.38 %
  Federal funds purchased     4,801     21   1.74 %     -     -   0.00 %
  Securities sold under agreement to repurchase     143,628     628   1.73 %     144,478     630   1.75 %
  FHLB borrowed funds     748,577     3,683   1.95 %     932,365     4,722   2.03 %
  Subordinated debentures     369,269     5,207   5.59 %     369,076     5,239   5.69 %
  Total interest-bearing liabilities     9,910,396     39,105   1.57 %     10,066,922     40,300   1.61 %
  Non-interest bearing liabilities                                  
 Non-interest bearing deposits     2,530,664                 2,553,060            
 Other liabilities     114,352                 101,900            
   Total liabilities     12,555,412                 12,721,882            
Shareholders' equity     2,437,820                 2,376,718            
  Total liabilities and shareholders' equity   $ 14,993,232               $ 15,098,600            
Net interest spread               3.93 %             3.89 %
Net interest income and margin - FTE       $ 144,224   4.32 %       $ 142,306   4.28 %
                                     

 

Home BancShares, Inc.
Consolidated Net Interest Margin
(Unaudited)
                 
    Nine Months Ended
    September 30, 2019   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   $ 261,419   $ 4,239   2.17 %   $ 271,987   $ 3,408   1.68 %
  Federal funds sold     1,510     29   2.57 %     3,595     24   0.89 %
  Investment securities - taxable     1,647,781     31,699   2.57 %     1,538,387     26,960   2.34 %
  Investment securities - non-taxable - FTE     380,115     12,741   4.48 %     382,088     12,981   4.54 %
  Loans receivable - FTE     10,993,686     498,081   6.06 %     10,529,117     468,316   5.95 %
  Total interest-earning assets     13,284,511     546,789   5.50 %     12,725,174     511,689   5.38 %
  Non-earning assets     1,772,341                 1,750,456            
  Total assets   $ 15,056,852               $ 14,475,630            
                                 
LIABILITIES AND SHAREHOLDERS' EQUITY                                
Liabilities                                
  Interest-bearing liabilities                                
  Savings and interest-bearing transaction accounts   $ 6,634,809   $ 59,788   1.20 %   $ 6,422,489   $ 40,327   0.84 %
  Time deposits     1,954,182     27,493   1.88 %     1,595,985     14,055   1.18 %
  Total interest-bearing deposits     8,588,991     87,281   1.36 %     8,018,474     54,382   0.91 %
  Federal funds purchased     1,618     21   1.74 %     41     1   3.26 %
  Securities sold under agreement to repurchase     146,277     1,892   1.73 %     148,472     1,220   1.10 %
  FHLB borrowed funds     945,351     14,523   2.05 %     1,159,973     15,880   1.83 %
  Subordinated debentures     369,078     15,705   5.69 %     368,313     15,374   5.58 %
  Total interest-bearing liabilities     10,051,315     119,422   1.59 %     9,695,273     86,857   1.20 %
  Non-interest bearing liabilities                                    
  Non-interest bearing deposits     2,508,082                 2,464,032            
  Other liabilities     110,715                 54,731            
  Total liabilities     12,670,112                 12,214,036            
Shareholders' equity     2,386,740                 2,261,594            
  Total liabilities and shareholders' equity   $ 15,056,852               $ 14,475,630            
Net interest spread         3.91 %         4.18 %
Net interest income and margin - FTE       $ 427,367   4.30 %       $ 424,832   4.46 %
                                     

 

Home BancShares, Inc.
Non-GAAP Reconciliations
(Unaudited)
                 
  Quarter Ended   Nine Months Ended
(Dollars and shares in thousands,     Sep. 30,     Jun. 30,     Mar. 31,     Dec. 31,     Sep. 30,       Sep. 30,     Sep. 30,  
except per share data)     2019     2019     2019     2018     2018       2019     2018  
                                               
EARNINGS, AS ADJUSTED                
                 
GAAP net income available to common shareholders (A)   $ 72,763   $ 72,164   $ 71,350   $ 71,030   $ 80,284     $ 216,277   $ 229,373  
Pre-tax adjustments                
FDIC Small Bank Assessment Credit     (2,291 )   -     -     -     -       (2,291 )   -  
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 pre-tax adjustments     (2,291 )   -     (337 )   6,483     -       (2,628 )   -  
Tax-effect of adjustments     (592 )   -     (87 )   1,694     -       (679 )   -  
Adjustments after-tax     (1,699 )   -     (250 )   4,789     -       (1,949 )   -  
Florida tax savings     (497 )   252     245     -     -       -     -  
BOLI redemption tax     3,667     -     -     -     -       3,667     -  
Total adjustments after-tax (B)     1,471     252     (5 )   4,789     -       1,718     -  
Earnings, as adjusted (C)   $ 74,234   $ 72,416   $ 71,345   $ 75,819   $ 80,284     $ 217,995   $ 229,373  
                                               
Average diluted shares outstanding (D)     167,178     167,791     169,592     173,311     174,867       168,178     174,394  
                 
GAAP diluted earnings per share: (A/D)   $ 0.44   $ 0.43   $ 0.42   $ 0.41   $ 0.46     $ 1.29   $ 1.32  
Adjustments after-tax: (B/D)     -     -     -     0.03     -       0.01     -  
Diluted earnings per common share excluding FDIC Small Bank Assessment Credit,                                              
Florida tax savings, BOLI redemption tax, special dividend from equity investment, merger expenses, hurricane expenses & outsourced special project expense: (C/D)   $ 0.44   $ 0.43   $ 0.42   $ 0.44   $ 0.46     $ 1.30   $ 1.32  
                                           
                 
ANNUALIZED RETURN ON AVERAGE ASSETS                
                 
Return on average assets: (A/E)     1.93 %   1.92 %   1.92 %   1.90 %   2.14 %     1.92 %   2.12 %
Return on average assets excluding FDIC Small Bank Assessment Credit,                                              
Florida tax savings, BOLI redemption tax,special dividend from equity investment, merger expenses, hurricane expenses & outsourced special project expense: (ROA, as adjusted) ((A+D)/E)     1.96 %   1.92 %   1.92 %   2.03 %   2.14 %     1.94 %   2.12 %
Return on average assets excluding intangible amortization: ((A+C)/(E-F))     2.10 %   2.09 %   2.09 %   2.07 %   2.33 %     2.09 %   2.31 %
                 
GAAP net income available to common shareholders (A)   $ 72,763   $ 72,164   $ 71,350   $ 71,030   $ 80,284     $ 216,277   $ 229,373  
Amortization of intangibles (B)     1,587     1,587     1,586     1,587     1,617       4,760     4,867  
Amortization of intangibles after-tax (C)     1,177     1,177     1,177     1,172     1,194       3,531     3,595  
Adjustments after-tax (D)     1,471     252     (5 )   4,789     -       1,718     -  
Average assets (E)     14,993,232     15,098,600     15,079,672     14,838,979     14,880,931       15,056,852     14,475,630  
Average goodwill, core deposits & other intangible assets (F)     997,309     998,898     1,000,494     1,002,070     1,001,843       998,889     984,639  
                 

 

Home BancShares, Inc.
Non-GAAP Reconciliations
(Unaudited)
                   
    Quarter Ended   Nine Months Ended
(Dollars and shares in thousands,     Sep. 30,     Jun. 30,     Mar. 31,     Dec. 31,     Sep. 30,       Sep. 30,     Sep. 30,  
except per share data)     2019     2019     2019     2018     2018       2019     2018  
                                               
ANNUALIZED RETURN ON AVERAGE COMMON EQUITY                                              
                   
Return on average common equity: (A/D)     11.84 %   12.18 %   12.34 %   12.05 %   13.74 %     12.12 %   13.56 %
Return on average common equity excluding FDIC Small Bank                                              
Assessment Credit, Florida tax savings, BOLI redemption tax, special dividend from equity investment, merger expenses, hurricane expenses & outsourced special project expense: (ROE, as adjusted) ((A+C)/D)     12.08 %   12.22 %   12.34 %   12.86 %   13.74 %     12.21 %   13.56 %
Return on average tangible common equity: (A/(D-E))     20.04 %   21.01 %   21.53 %   21.08 %   24.20 %     20.84 %   24.02 %
Return on average tangible common equity excluding intangible                                              
amortization: (B/(D-E))     20.36 %   21.35 %   21.88 %   21.43 %   24.56 %     21.18 %   24.39 %
Return on average tangible common equity excluding FDIC Small                                              
Bank Assessment Credit, Florida tax savings, BOLI redemption tax, special dividend from equity investment, merger expenses, hurricane expenses & outsourced special project expense: (ROTCE, as adjusted) ((A+C)/(D-E))     20.45 %   21.08 %   21.53 %   22.50 %   24.20 %     21.00 %   24.02 %
                                               
GAAP net income available to common shareholders (A)   $ 72,763   $ 72,164   $ 71,350   $ 71,030   $ 80,284     $ 216,277   $ 229,373  
Earnings excluding intangible amortization (B)     73,940     73,341     72,527     72,202     81,478       219,808     232,968  
Adjustments after-tax (C)     1,471     252     (5 )   4,789     -       1,718     -  
Average common equity (D)     2,437,820     2,376,718     2,344,657     2,338,802     2,317,930       2,386,740     2,261,594  
Average goodwill, core deposits & other intangible assets (E)     997,309     998,898     1,000,494     1,002,070     1,001,843       998,889     984,639  
                                               
                                               
EFFICIENCY RATIO                                              
                                               
Efficiency ratio: ((C-E)/(A+B+D))     39.16 %   39.93 %   41.01 %   42.18 %   37.23 %     40.03 %   37.26 %
Efficiency ratio, as adjusted: ((C-E-G)/(A+B+D-F))     40.60 %   39.92 %   40.52 %   38.28 %   37.39 %     40.35 %   37.43 %
                                               
Net interest income (A)   $ 142,977   $ 140,987   $ 139,470   $ 140,282   $ 145,910     $ 423,434   $ 420,731  
Non-interest income (B)     24,749     23,066     23,672     23,507     25,847       71,487     79,325  
Non-interest expense (C)     67,764     67,624     69,057     71,272     66,123       204,445     192,731  
Fully taxable equivalent adjustment (D)     1,247     1,319     1,367     1,412     1,489       3,933     4,101  
Amortization of intangibles (E)     1,587     1,587     1,586     1,587     1,617       4,760     4,867  
                                               
Adjustments:                                              
Non-interest income:                                              
Special dividend from equity investment   $ -   $ -   $ 2,134   $ -   $ -     $ 2,134   $ -  
Gain (loss) on OREO     334     58     206     114     836       598     2,287  
Gain (loss) on branches, equipment and other assets, net     12     (129 )   79     (25 )   (102 )     (38 )   (95 )
 Total non-interest income adjustments (F)   $ 346   $ (71 ) $ 2,419   $ 89   $ 734     $ 2,694   $ 2,192  
                                               
Non-interest expense:                                              
FDIC Small Bank Assessment Credit   $ (2,291 ) $ -   $ -   $ -   $ -     $ (2,291 ) $ -  
Merger Expenses     -     -     -     6,013     -       -     -  
Hurricane damage expense     -     -     897     470     -       897     -  
  Outsourced special project expense     -     -     900     -     -       900     -  
 Total non-interest expense adjustments (G)   $ (2,291 ) $ -   $ 1,797   $ 6,483   $ -     $ (494 ) $ -  
                                               

 

Home BancShares, Inc.
Non-GAAP Reconciliations
(Unaudited)
             
      Sep. 30,     Jun. 30,     Mar. 31,     Dec. 31,     Sep. 30,  
(Dollars in thousands)     2019     2019     2019     2018     2018  
                                 
TANGIBLE BOOK VALUE PER COMMON SHARE                                
             
Book value per common share: (A/B)   $ 14.80   $ 14.46   $ 14.04   $ 13.76   $ 13.44  
Tangible book value per common share: ((A-C-D)/B)     8.83     8.50     8.10     7.90     7.68  
             
Total stockholders' equity (A)   $ 2,469,389   $ 2,421,406   $ 2,361,484   $ 2,349,886   $ 2,341,026  
End of period common shares outstanding (B)     166,860     167,466     168,173     170,720     174,135  
Goodwill (C)   $ 958,408   $ 958,408   $ 958,408   $ 958,408   $ 958,408  
Core deposit and other intangibles (D)     38,136     39,723     41,310     42,896     44,484  
                                 
                                 
TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS                                
                                 
Equity to assets: (B/A)     16.57 %   15.84 %   15.56 %   15.36 %   15.70 %
Tangible common equity to tangible assets: ((B-C-D)/(A-C-D))     10.59 %   9.96 %   9.60 %   9.43 %   9.62 %
             
Total assets (A)   $ 14,901,935   $ 15,287,575   $ 15,179,501   $ 15,302,438   $ 14,912,738  
Total stockholders' equity (B)     2,469,389     2,421,406     2,361,484     2,349,886     2,341,026  
Goodwill (C)     958,408     958,408     958,408     958,408     958,408  
Core deposit and other intangibles (D)     38,136     39,723     41,310     42,896     44,484  
             

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