Markets Wired

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