Upgrade to SI Premium - Free Trial

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

October 18, 2018 8:15 AM

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

Highlights of the Third Quarter of 2018:

Performance MetricQ3Q2
Net Income$80.3 million$76.0 million
Total Revenue$205.9 million$194.2 million
Diluted Earnings Per Share$0.46$0.44
ROA2.14%2.13%
ROTCE24.56%24.27%
Margin4.46%4.47%
Loan Origination$987 million$958 million

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

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

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

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

Operating Highlights

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

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

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

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

Financial Condition

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

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

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

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

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

Branches

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

Conference Call

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

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

Non-GAAP Financial Measures

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

General

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

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

FOR MORE INFORMATION CONTACT:

Donna TownsellDirector of Investor RelationsHome BancShares, Inc.(501) 328-4625

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

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

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

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

Home BancShares, Inc.
Consolidated Net Interest Margin
(Unaudited)
Three Months Ended
September 30, 2018 June 30, 2018
Average Income/ Yield/ Average Income/ Yield/
(Dollars in thousands) Balance Expense Rate Balance Expense Rate
ASSETS
Earning assets
Interest-bearing balances due from banks$ 281,115$ 1,2731.80% $ 288,643$ 1,2061.68%
Federal funds sold 524 64.54% 679 127.09%
Investment securities - taxable 1,526,455 9,0112.34% 1,528,613 8,9792.36%
Investment securities - non-taxable - FTE 402,355 4,5074.44% 398,067 4,4764.51%
Loans receivable - FTE 10,909,646 166,7436.06% 10,345,846 153,2915.94%
Total interest-earning assets 13,120,095 181,5405.49% 12,561,848 167,9645.36%
Non-earning assets 1,760,836 1,742,635
Total assets$ 14,880,931 $ 14,304,483
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Interest-bearing liabilities
Savings and interest-bearing transaction accounts$ 6,406,711$ 15,5960.97% $ 6,451,204$ 13,4890.84%
Time deposits 1,661,129 5,8161.39% 1,611,353 4,6751.16%
Total interest-bearing deposits 8,067,840 21,4121.05% 8,062,557 18,1640.90%
Federal funds purchased - - 0.00% 46 - 0.00%
Securities sold under agreement to repurchase 148,791 4721.26% 143,952 3721.04%
FHLB borrowed funds 1,398,738 7,0552.00% 928,357 4,2451.83%
Subordinated debentures 368,501 5,2025.60% 368,309 5,1685.63%
Total interest-bearing liabilities 9,983,870 34,1411.36% 9,503,221 27,9491.18%
Non-interest bearing liabilities
Non-interest bearing deposits 2,512,690 2,496,701
Other liabilities 66,441 53,149
Total liabilities 12,563,001 12,053,071
Shareholders' equity 2,317,930 2,251,412
Total liabilities and shareholders' equity$ 14,880,931 $ 14,304,483
Net interest spread 4.13% 4.18%
Net interest income and margin - FTE $ 147,3994.46% $ 140,0154.47%

Home BancShares, Inc.
Consolidated Net Interest Margin
(Unaudited)
Nine Months Ended
September 30, 2018 September 30, 2017
Average Income/ Yield/ Average Income/ Yield/
(Dollars in thousands) Balance Expense Rate Balance Expense Rate
ASSETS
Earning assets
Interest-bearing balances due from banks$ 271,987$ 3,4081.68% $ 218,324$ 1,5730.96%
Federal funds sold 3,595 240.89% 1,161 91.04%
Investment securities - taxable 1,538,387 26,9602.34% 1,231,619 18,9832.06%
Investment securities - non-taxable - FTE 382,088 12,9814.54% 347,578 14,5065.58%
Loans receivable - FTE 10,529,117 468,3165.95% 7,785,925 332,0725.70%
Total interest-earning assets 12,725,174 511,6895.38% 9,584,607 367,1435.12%
Non-earning assets 1,750,456 1,033,310
Total assets$ 14,475,630 $ 10,617,917
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Interest-bearing liabilities
Savings and interest-bearing transaction accounts$ 6,422,489$ 40,3270.84% $ 4,316,032$ 13,4450.42%
Time deposits 1,595,985 14,0551.18% 1,415,383 7,3860.70%
Total interest-bearing deposits 8,018,474 54,3820.91% 5,731,415 20,8310.49%
Federal funds purchased 41 13.26% - - 0.00%
Securities sold under agreement to repurchase 148,472 1,2201.10% 129,580 5930.61%
FHLB borrowed funds 1,159,973 15,8801.83% 1,155,503 10,7071.24%
Subordinated debentures 368,313 15,3745.58% 258,032 10,2035.29%
Total interest-bearing liabilities 9,695,273 86,8571.20% 7,274,530 42,3340.78%
Non-interest bearing liabilities
Non-interest bearing deposits 2,464,032 1,847,843
Other liabilities 54,731 48,804
Total liabilities 12,214,036 9,171,177
Shareholders' equity 2,261,594 1,446,740
Total liabilities and shareholders' equity$ 14,475,630 $ 10,617,917
Net interest spread 4.18% 4.34%
Net interest income and margin - FTE $ 424,8324.46% $ 324,8094.53%

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

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

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

HBS logo_Medium.JPG

Source: Home BancShares, Inc.

Categories

Press Releases

Next Articles