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:

MetricQ3 2019Q2 2019Q1 2019Q4 2018Q3 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