HOMB Home BancShares Inc

Home BancShares, Inc. (NASDAQ GS: HOMB), parent company of Centennial Bank, released solid second quarter earnings today that included over $1 billion in loan production at an average interest rate of 6.1% and a strong net interest margin that was relatively flat at 4.28%.

Highlights of the Second Quarter of 2019:

Consolidated
Metric	Q2 2019			Q1 2019			Q4 2018
Net Income	$72.2 million			$71.4 million			$71.0 million
Total Revenue	$204.4 million			$203.2 million			$201.3 million
ROA		1.92%			1.92%			1.90%
NIM		4.28%			4.30%			4.30%
Accretion	$9.2 million			$9.1 million			$9.4 million
ROE		12.18%			12.34%			12.05%
ROTCE (non-GAAP)(1)		21.01%			21.53%			21.08%
Diluted Earnings Per Share		$0.43			$0.42			$0.41

Centennial Community Banking

Centennial CFG

Metric

Q2 2019

Q1 2019

Q4 2018

Metric

Q2 2019

Q1 2019

Q4 2018

Net Income

$59.5 million

$58.1 million

$57.7 million

Net Income

$11.2 million

$12.0 million

$12.2 million

Total Revenue

$166.5 million

$166.9 million

$165.9 million

Total Revenue

$32.4 million

$31.1 million

$30.6 million

ROA

1.83%

1.80%

1.77%

ROA

2.77%

3.08%

3.33%

NIM

4.20%

4.20%

4.18%

NIM

5.25%

5.34%

5.50%

Accretion

$8.4 million

$8.3 million

$8.6 million

Accretion

$146,000

$33,000

$33,000

Shore Premier Finance
Metric	Q2 2019			Q1 2019			Q4 2018
Net Income	$1.4 million			$1.3 million			$1.1 million
Total Revenue	$5.4 million			$5.2 million			$4.8 million
ROA		1.27%			1.15%			1.06%
NIM		3.02%			3.04%			3.29%
Accretion		$705,000			$741,000			$812,000

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

“The last three quarters show a strong trend of stability and growth in all our key metrics,” said John Allison, Chairman. “We continue to produce solid results with a positive growth trend,” Allison continued.

“Loan production was very strong during the second quarter,” said Tracy French, Centennial Bank President and Chief Executive Officer. “We saw loan production of over $1 billion dollars at an average interest rate of 6.1% and were able to increase the yield on the loan portfolio by 3 basis points,” added French.

“Our return on assets remains strong and steady at 1.92% as it was in the first quarter,” stated Randy Sims, Chief Executive Officer of Home BancShares. “Diluted earnings per share of $0.43 as compared to $0.42 from last quarter and an impressive efficiency ratio of 39.93% are just a few of the powerful numbers that contributed to another successful quarter for our shareholders,” added Sims.

Operating Highlights

Our net interest margin was 4.28% for the three-month period ended June 30, 2019 compared to 4.30% for the three-month period ended March 31, 2019. The yield on loans was 6.06% and 6.03% for the three months ended June 30, 2019 and March 31, 2019, respectively, as average loans decreased from $11.04 billion to $11.00 billion. Additionally, the rate on interest bearing deposits increased to 1.38% as of June 30, 2019 from 1.34% as of March 31, 2019, with average balances of $8.62 billion and $8.50 billion, respectively. 

During the second quarter of 2019, we experienced a $515,000 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 June 30, 2019 by two basis points.

For the three months ended June 30, 2019 and March 31, 2019, we recognized $9.2 million and $9.1 million, respectively, in total net accretion for acquired loans and deposits.  Purchase accounting accretion on acquired loans was $9.2 million and $9.0 million and average purchase accounting loan discounts were $122.2 million and $131.6 million for the three-month periods ended June 30, 2019 and March 31, 2019, respectively.  Net accretion of time deposit premiums was $30,000 for the quarters ended June 30, 2019 and March 30, 2019, and net average remaining CD premiums were $327,000 and $357,000 for the three-month periods ended June 30, 2019 and March 31, 2019, respectively. 

Net interest income on a fully taxable equivalent basis increased $1.5 million, or 1.04%, to $142.3 million for the three-month period ended June 30, 2019, from $140.8 million for the three-month period ended March 31, 2019.  This increase in net interest income for the three-month period ended June 30, 2019 was the result of a $1.8 million increase in interest income, which was partially offset by a $283,000 increase in interest expense.  The $1.8 million increase in interest income was primarily the result of a $2.0 million increase in loan interest income. The $283,000 increase in interest expense was primarily the result of a $1.7 million increase in interest expense on deposits which was offset by a $1.4 million decrease in interest expense on FHLB and other borrowed funds resulting from the average balance of FHLB and other borrowings decreasing by $227.3 million or 19.60%.

Centennial Commercial Finance Group (“Centennial CFG”) net interest margin was 5.25% for the quarter just ended compared to 5.34% for the quarter ended March 31, 2019. Centennial CFG net interest margin for the second quarter of 2019 includes average interest earning assets of $1.59 billion and net interest income of $20.9 million, compared to average interest earning assets of $1.55 billion and net interest income of $20.4 million for the quarter ended March 31, 2019.

Centennial Community Banking (excluding Centennial CFG and Shore Premier Finance) net interest margin was 4.20% for the quarter just ended as well as for the quarter ended March 31, 2019. The net interest margin for the second quarter of 2019 includes average interest earning assets of $11.29 billion and net interest income of $118.1 million, compared to average interest earning assets of $11.31 billion and net interest income of $117.2 million for the first quarter of 2019. 

During the second quarter of 2019, the Company recorded a $1.3 million provision for loan loss, but no provision was recorded during the first quarter of 2019.  The Company continues to see strong asset quality.  Non-performing loans to total loans was 0.57% as of June 30, 2019 compared to 0.58% as of March 31, 2019. Non-performing assets to total assets was 0.51% as of June 30, 2019 compared to 0.52% as of March 31, 2019. For the second quarter of 2019, net charge-offs were $1.6 million compared to net charge-offs of $2.4 million for the first quarter of 2019.

The Company reported $23.1 million of non-interest income for the second quarter of 2019, compared to $23.7 million for the first quarter of 2019. The most important components of the second quarter non-interest income were $8.2 million from other service charges and fees, $6.3 million from service charges on deposits accounts, $3.5 million from mortgage lending income, $2.1 million from other income and $1.1 million from dividends from the FHLB, FRB, FNBB & other equity investments.  The Company exceeded $10 billion in assets during the first quarter of 2017 and became subject to the Durbin Amendment to the Dodd-Frank Act interchange fee restrictions beginning in the third quarter of 2018. The Durbin Amendment negatively impacted debit card and ATM fees beginning in the second half of 2018. The Company estimates quarterly interchange fees are approximately $3.0 million dollars lower as a result of the Durbin Amendment.

Non-interest expense for the second quarter of 2019 was $67.6 million compared to $69.1 million for the first quarter of 2019.  The most important components of the second quarter non-interest expense were $38.0 million from salaries and employee benefits, $17.0 million in other expense and $8.9 million in occupancy and equipment expenses.  Non-interest expense for the first quarter of 2019 included $900,000 related to an outsourced special project and $897,000 in hurricane expense associated with Hurricane Michael which made landfall in Mexico Beach, Florida on October 10, 2018.  For the second quarter of 2019, our efficiency ratio improved to 39.93% compared to 41.01% reported for the first quarter of 2019. 

Financial Condition

Total loans receivable were $11.05 billion at June 30, 2019 compared to $11.07 billion at December 31, 2018.  Total deposits were $11.35 billion at June 30, 2019 compared to $10.90 billion at December 31, 2018.  Total assets were $15.29 billion at June 30, 2019 compared to $15.30 billion at December 31, 2018.

During the second quarter 2019, the Company experienced approximately $74.2 million in organic loan growth. Centennial CFG experienced $146.1 million of organic loan growth and had loans of $1.67 billion at June 30, 2019.  Centennial Community Banking experienced approximately $77.8 million in organic loan decline.   Additionally, Shore Premier Finance experienced $5.8 million of organic loan growth and had loans of $442.1 million at June 30, 2019.

Non-performing loans at June 30, 2019 were $20.0 million, $37.1 million, $3.3 million, $2.4 million and zero in the Arkansas, Florida, Alabama, Shore Premier Finance and Centennial CFG markets, respectively, for a total of $62.8 million.  Non-performing assets at June 30, 2019 were $26.6 million, $45.3 million, $3.3 million, $2.4 million and zero in the Arkansas, Florida, Alabama, Shore Premier Finance and Centennial CFG markets, respectively, for a total of $77.5 million. 

The Company’s allowance for loan losses was $106.1 million at June 30, 2019, or 0.96% of total loans, compared to $108.8 million, or 0.98% of total loans, at December 31, 2018. As of June 30, 2019, and December 31, 2018, the Company’s allowance for loan losses was 168.9% and 169.4% of its total non-performing loans, respectively.

Stockholders’ equity was $2.42 billion at June 30, 2019 compared to $2.35 billion at December 31, 2018, an increase of $71.5 million. The increase in stockholders’ equity is primarily associated with the $101.8 million increase in retained earnings and the $28.6 million increase in comprehensive income which were partially offset by the repurchase of $64.4 million of our common stock during 2019.  Book value per common share was $14.46 at June 30, 2019 compared to $13.76 at December 31, 2018.  Tangible book value per common share (non-GAAP) was $8.50 at June 30, 2019 compared to $7.90 at December 31, 2018, an annualized increase of 15.3%. 

Branches

The Company currently has 77 branches in Arkansas, 76 branches in Florida, 5 branches in Alabama and one branch in New York City.

Conference Call

Management will conduct a conference call to review this information at 1:00 p.m. CT (2:00 ET) on Thursday, July 18, 2019.  We encourage all participants to pre-register for the conference call using the following link:  http://dpregister.com/10132572.  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: 10132572, which will be available until July 25, 2019 at 10:59 p.m. CT (11:59 ET).  Internet access to the call will be available live or in recorded version on the Company's website at www.homebancshares.com under “Investor Relations” for 12 months.

Non-GAAP Financial Measures

This press release contains financial information determined by methods other than in accordance with generally accepted accounting principles (GAAP). The Company’s management uses these non-GAAP financial measures--including net income (earnings), as adjusted; diluted earnings per common share, as adjusted; return on average assets, as adjusted; return on average common equity, as adjusted; return on average tangible common equity; return on average tangible common equity, as adjusted; efficiency ratio, as adjusted, 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)
		Jun. 30,				Mar. 31,				Dec. 31,				Sep. 30,				Jun. 30,
(In thousands)			2019				2019				2018				2018				2018
ASSETS
Cash and due from banks		$	183,745			$	141,027			$	175,024			$	208,681			$	197,658
Interest-bearing deposits with other banks			373,557				421,443				482,915				323,376				298,085
Cash and cash equivalents			557,302				562,470				657,939				532,057				495,743
Federal funds sold			1,075				1,700				325				500				500
Investment securities - available-for-sale			2,053,939				2,013,123				1,785,862				1,744,430				1,718,704
Investment securities - held-to-maturity			-				-				192,776				199,266				204,401
Loans receivable			11,053,129				10,978,935				11,071,879				10,832,815				10,897,970
Allowance for loan losses			(106,066	)			(106,357	)			(108,791	)			(110,191	)			(111,516	)
Loans receivable, net			10,947,063				10,872,578				10,963,088				10,722,624				10,786,454
Bank premises and equipment, net			278,821				279,012				233,261				233,652				234,634
Foreclosed assets held for sale			13,734				14,466				13,236				13,507				17,853
Cash value of life insurance			149,708				149,353				148,621				148,014				147,281
Accrued interest receivable			48,992				50,288				48,945				48,909				45,682
Deferred tax asset, net			58,517				64,061				73,275				79,548				78,435
Goodwill			958,408				958,408				958,408				958,408				956,418
Core deposit and other intangibles			39,723				41,310				42,896				44,484				46,101
Other assets			180,293				172,732				183,806				187,339				191,914
Total assets		$	15,287,575			$	15,179,501			$	15,302,438			$	14,912,738			$	14,924,120
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Deposits:
Demand and non-interest-bearing		$	2,575,696			$	2,519,175			$	2,401,232			$	2,482,857			$	2,523,553
Savings and interest-bearing transaction accounts			6,774,162				6,650,181				6,624,407				6,420,951				6,573,902
Time deposits			1,997,458				1,898,096				1,874,139				1,720,930				1,638,578
Total deposits			11,347,316				11,067,452				10,899,778				10,624,738				10,736,033
Securities sold under agreements to repurchase			142,541				152,239				143,679				142,146				139,750
FHLB and other borrowed funds			899,447				1,105,175				1,472,393				1,363,851				1,309,950
Accrued interest payable and other liabilities			107,695				124,172				67,912				72,381				55,971
Subordinated debentures			369,170				368,979				368,790				368,596				368,403
Total liabilities			12,866,169				12,818,017				12,952,552				12,571,712				12,610,107
Stockholders' equity
Common stock			1,675				1,682				1,707				1,741				1,745
Capital surplus			1,550,999				1,560,994				1,609,810				1,668,106				1,693,337
Retained earnings			853,964				803,629				752,184				701,900				642,540
Accumulated other comprehensive (loss) income			14,768				(4,821	)			(13,815	)			(30,721	)			(23,609	)
Total stockholders' equity			2,421,406				2,361,484				2,349,886				2,341,026				2,314,013
Total liabilities and stockholders' equity		$	15,287,575			$	15,179,501			$	15,302,438			$	14,912,738			$	14,924,120

 

Home BancShares, Inc.
Consolidated Statements of Income
(Unaudited)
		Quarter Ended																		Six Months Ended
		Jun. 30,				Mar. 31,			Dec. 31,				Sep. 30,				Jun. 30,			Jun. 30,				Jun. 30,
(In thousands)			2019				2019			2018				2018			2018				2019			2018
Interest income
Loans		$	165,816			$	163,848		$	163,201			$	166,334			$	152,996		$	329,664			$	301,061
Investment securities
Taxable			10,650				10,706			9,873				9,011				8,979			21,356				17,949
Tax-exempt			3,183				3,379			3,456				3,427				3,368			6,562				6,374
Deposits - other banks			1,628				1,543			1,241				1,273				1,206			3,171				2,135
Federal funds sold			10				11			9				6				12			21				18
Total interest income			181,287				179,487			177,780				180,051				166,561			360,774				327,537
Interest expense
Interest on deposits			29,709				28,006			25,207				21,412				18,164			57,715				32,970
Federal funds purchased			-				-			-				-				-			-				1
FHLB borrowed funds			4,722				6,118			6,474				7,055				4,245			10,840				8,825
Securities sold under agreements to repurchase			630				634			602				472				372			1,264				748
Subordinated debentures			5,239				5,259			5,215				5,202				5,168			10,498				10,172
Total interest expense			40,300				40,017			37,498				34,141				27,949			80,317				52,716
Net interest income			140,987				139,470			140,282				145,910				138,612			280,457				274,821
Provision for loan losses			1,325				-			-				-				2,722			1,325				4,322
Net interest income after
provision for loan losses			139,662				139,470			140,282				145,910				135,890			279,132				270,499
Non-interest income
Service charges on deposit accounts			6,259				6,401			7,004				6,992				6,780			12,660				12,855
Other service charges and fees			8,177				6,563			7,598				9,041				9,797			14,740				19,952
Trust fees			391				403			290				437				379			794				825
Mortgage lending income			3,457				2,435			2,554				3,691				3,477			5,892				6,134
Insurance commissions			515				609			442				463				526			1,124				1,205
Increase in cash value of life insurance			740				736			737				735				730			1,476				1,384
Dividends from FHLB, FRB, FNBB & other			1,149				3,505			1,992				1,288				1,600			4,654				2,477
Gain (loss) on SBA loans			355				241			75				47				262			596				444
Gain (loss) on branches, equipment and   other assets, net			(129	)			79			(25	)			(102	)			-			(50	)			7
Gain (loss) on OREO, net			58				206			114				836				1,046			264				1,451
Other income			2,094				2,494			2,726				2,419				3,076			4,588				6,744
Total non-interest income			23,066				23,672			23,507				25,847				27,673			46,738				53,478
Non-interest expense
Salaries and employee benefits			37,976				37,836			36,230				37,825				34,476			75,812				69,490
Occupancy and equipment			8,853				8,823			8,310				8,148				8,519			17,676				17,502
Data processing expense			3,838				3,970			3,642				3,461				3,339			7,808				7,325
Other operating expenses			16,957				18,428			23,090				16,689				16,894			35,385				32,291
Total non-interest expense			67,624				69,057			71,272				66,123				63,228			136,681				126,608
Income before income taxes			95,104				94,085			92,517				105,634				100,335			189,189				197,369
Income tax expense			22,940				22,735			21,487				25,350				24,310			45,675				48,280
Net income		$	72,164			$	71,350		$	71,030			$	80,284			$	76,025		$	143,514			$	149,089

 

Home BancShares, Inc.
Selected Financial Information
(Unaudited)
		Quarter Ended																Six Months Ended
	Jun. 30,				Mar. 31,			Dec. 31,			Sep. 30,			Jun. 30,				Jun. 30,			Jun. 30,
(Dollars and shares in thousands, except per share data)		2019			2019			2018			2018			2018				2019			2018
PER SHARE DATA
Diluted earnings per common share		$	0.43		$	0.42		$	0.41		$	0.46		$	0.44			$	0.85		$	0.86
Diluted earnings per common share, as adjusted, excluding   special dividend from equity investment, merger expenses,   hurricane expenses & outsourced special project expense   (non-GAAP)(1)			0.43			0.42			0.44			0.46			0.44				0.85			0.86
Basic earnings per common share			0.43			0.42			0.41			0.46			0.44				0.85			0.86
Dividends per share - common			0.1300			0.1200			0.1200			0.1200			0.1100				0.2500			0.2200
Book value per common share			14.46			14.04			13.76			13.44			13.26				14.46			13.26
Tangible book value per common share (non-GAAP)(1)			8.50			8.10			7.90			7.68			7.52				8.50			7.52
STOCK INFORMATION
Average common shares outstanding			167,791			169,592			173,023			174,440			173,403				168,686			173,581
Average diluted shares outstanding			167,791			169,592			173,311			174,867			173,936				168,686			174,168
End of period common shares outstanding			167,466			168,173			170,720			174,135			174,511				167,466			174,511
ANNUALIZED PERFORMANCE METRICS
Return on average assets			1.92%			1.92%			1.90%			2.14%			2.13%				1.92%			2.11%
Return on average assets excluding special dividend from   equity investment, merger expenses, hurricane expenses &   outsourced special project expense (ROA, as adjusted)   (non-GAAP)(1)			1.92%			1.91%			2.03%			2.14%			2.13%				1.91%			2.11%
Return on average assets excluding intangible   amortization (non-GAAP)(1)			2.09%			2.09%			2.07%			2.33%			2.32%				2.09%			2.30%
Return on average common equity			12.18%			12.34%			12.05%			13.74%			13.54%				12.26%			13.46%
Return on average common equity excluding special dividend from   equity investment, merger expenses, hurricane expenses &   outsourced special project expense: (ROE, as adjusted)   (non-GAAP)(1)			12.18%			12.30%			12.86%			13.74%			13.54%				12.24%			13.46%
Return on average tangible common equity (non-GAAP)(1)			21.01%			21.53%			21.08%			24.20%			23.90%				21.26%			23.92%
Return on average tangible common equity excluding intangible   amortization (non-GAAP)(1)			21.35%			21.88%			21.43%			24.56%			24.27%				21.61%			24.30%
Return on average tangible common equity excluding special   dividend from equity investment, merger expenses, hurricane   expenses & outsourced special project expense:   (ROTCE, as adjusted) (non-GAAP)(1)			21.01%			21.45%			22.50%			24.20%			23.90%				21.23%			23.92%
Efficiency ratio			39.93%			41.01%			42.18%			37.23%			36.74%				40.47%			37.28%
Efficiency ratio, as adjusted (non-GAAP)(1)			39.92%			40.52%			38.28%			37.39%			36.97%				40.21%			37.44%
Net interest margin - FTE			4.28%			4.30%			4.30%			4.46%			4.47%				4.29%			4.47%
Fully taxable equivalent adjustment		$	1,319		$	1,367		$	1,412		$	1,489		$	1,403			$	2,686		$	2,612
Total revenue			204,353			203,159			201,287			205,898			194,234				407,512			381,015
Total purchase accounting accretion			9,240			9,055			9,432			10,744			10,669				18,295			21,276
Average purchase accounting loan discounts			122,197			131,596			141,244			151,377			153,624				126,871			159,443
OTHER OPERATING EXPENSES
Advertising		$	1,095		$	1,051		$	1,214		$	1,154		$	1,142			$	2,146		$	2,104
Merger and acquisition expenses			-			-			6,013			-			-				-			-
Amortization of intangibles			1,587			1,586			1,587			1,617			1,624				3,173			3,250
Electronic banking expense			1,851			1,903			1,969			1,947			1,828				3,754			3,706
Directors' fees			392			434			319			314			318				826			648
Due from bank service charges			282			238			289			253			242				520			461
FDIC and state assessment			1,655			1,710			1,869			2,293			2,788				3,365			4,396
Hurricane expense			-			897			470			-			-				897			-
Insurance			661			697			737			762			714				1,358			1,601
Legal and accounting			989			981			1,151			761			858				1,970			1,636
Other professional fees			2,306			2,812			1,465			1,748			1,601				5,118			3,240
Operating supplies			505			536			510			510			602				1,041			1,202
Postage			293			326			325			311			323				619			667
Telephone			306			303			324			337			371				609			744
Other expense			5,035			4,954			4,848			4,682			4,483				9,989			8,636
Total other operating expenses		$	16,957		$	18,428		$	23,090		$	16,689		$	16,894			$	35,385		$	32,291
(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)
		Jun. 30,			Mar. 31,			Dec. 31,			Sep. 30,			Jun. 30,
(Dollars in thousands)		2019			2019			2018			2018			2018
BALANCE SHEET RATIOS
Total loans to total deposits			97.41%			99.20%			101.58%			101.96%			101.51%
Common equity to assets			15.84%			15.56%			15.36%			15.70%			15.51%
Tangible common equity to tangible assets (non-GAAP)(1)			9.96%			9.60%			9.43%			9.62%			9.42%
LOANS RECEIVABLE
Real estate
Commercial real estate loans
Non-farm/non-residential		$	4,495,558		$	4,623,174		$	4,806,684		$	4,685,827		$	4,734,315
Construction/land development			1,930,838			1,649,303			1,546,035			1,550,910			1,662,199
Agricultural			85,045			76,092			76,433			72,930			77,053
Residential real estate loans
Residential 1-4 family			1,852,784			1,947,119			1,975,586			1,982,666			1,960,841
Multifamily residential			523,789			538,098			560,475			608,608			540,526
Total real estate			8,888,014			8,833,786			8,965,213			8,900,941			8,974,934
Consumer			455,554			448,093			443,105			428,192			417,499
Commercial and industrial			1,515,357			1,505,773			1,476,331			1,303,841			1,287,637
Agricultural			80,621			58,966			48,562			58,644			55,768
Other			113,583			132,317			138,668			141,197			162,132
Loans receivable		$	11,053,129		$	10,978,935		$	11,071,879		$	10,832,815		$	10,897,970
Discount for credit losses on purchased loans		$	98,672		$	106,617		$	113,648		$	120,849		$	129,903
Purchased loans, net of discount for credit losses   on purchased loans			2,469,579			2,712,315			2,900,284			3,081,695			3,522,753
ALLOWANCE FOR LOAN LOSSES
Balance, beginning of period		$	106,357		$	108,791		$	110,191		$	111,516		$	110,212
Loans charged off			2,279			3,391			1,814			2,501			2,132
Recoveries of loans previously charged off			663			957			414			1,176			714
Net loans (recovered)/charged off			1,616			2,434			1,400			1,325			1,418
Provision for loan losses			1,325			-			-			-			2,722
Balance, end of period		$	106,066		$	106,357		$	108,791		$	110,191		$	111,516
Net (recoveries) charge-offs to average total loans			0.06%			0.09%			0.05%			0.05%			0.05%
Allowance for loan losses to total loans			0.96%			0.97%			0.98%			1.02%			1.02%
NON-PERFORMING ASSETS
Non-performing loans
Non-accrual loans		$	52,841		$	49,616		$	47,083		$	36,198		$	37,082
Loans past due 90 days or more			9,961			14,577			17,159			20,267			19,696
Total non-performing loans			62,802			64,193			64,242			56,465			56,778
Other non-performing assets
Foreclosed assets held for sale, net			13,734			14,466			13,236			13,507			17,853
Other non-performing assets			947			947			497			405			3
Total other non-performing assets			14,681			15,413			13,733			13,912			17,856
Total non-performing assets		$	77,483		$	79,606		$	77,975		$	70,377		$	74,634
Allowance for loan losses for loans to non-performing loans			168.89%			165.68%			169.35%			195.15%			196.41%
Non-performing loans to total loans			0.57%			0.58%			0.58%			0.52%			0.52%
Non-performing assets to total assets			0.51%			0.52%			0.51%			0.47%			0.50%
(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
		June 30, 2019									March 31, 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		$	298,821		$	1,628		2.19%			$	272,410		$	1,543		2.30%
Federal funds sold			1,596			10		2.51%				1,491			11		2.99%
Investment securities - taxable			1,640,883			10,650		2.60%				1,595,605			10,706		2.72%
Investment securities - non-taxable - FTE			379,437			4,177		4.42%				390,754			4,424		4.59%
Loans receivable - FTE			11,000,926			166,141		6.06%				11,036,503			164,170		6.03%
Total interest-earning assets			13,321,663			182,606		5.50%				13,296,763			180,854		5.52%
Non-earning assets			1,776,937									1,782,909
Total assets		$	15,098,600								$	15,079,672
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Interest-bearing liabilities
Savings and interest-bearing transaction accounts		$	6,677,683		$	20,637		1.24%			$	6,596,895		$	19,537		1.20%
Time deposits			1,943,320			9,072		1.87%				1,903,373			8,469		1.80%
Total interest-bearing deposits			8,621,003			29,709		1.38%				8,500,268			28,006		1.34%
Securities sold under agreement to repurchase			144,478			630		1.75%				150,803			634		1.71%
FHLB borrowed funds			932,365			4,722		2.03%				1,159,629			6,118		2.14%
Subordinated debentures			369,076			5,239		5.69%				368,884			5,259		5.78%
Total interest-bearing liabilities			10,066,922			40,300		1.61%				10,179,584			40,017		1.59%
Non-interest bearing liabilities
Non-interest bearing deposits			2,553,060									2,439,520
Other liabilities			101,900									115,911
Total liabilities			12,721,882									12,735,015
Shareholders' equity			2,376,718									2,344,657
Total liabilities and shareholders' equity		$	15,098,600								$	15,079,672
Net interest spread								3.89%									3.93%
Net interest income and margin - FTE					$	142,306		4.28%						$	140,837		4.30%

 

Home BancShares, Inc.
Consolidated Net Interest Margin
(Unaudited)
		Six Months Ended
		June 30, 2019									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		$	285,688		$	3,171		2.24%			$	267,347		$	2,135		1.61%
Federal funds sold			1,544			21		2.74%				5,156			18		0.70%
Investment securities - taxable			1,618,369			21,356		2.66%				1,544,451			17,949		2.34%
Investment securities - non-taxable - FTE			385,064			8,602		4.50%				371,788			8,473		4.60%
Loans receivable - FTE			11,018,616			330,310		6.05%				10,335,699			301,574		5.88%
Total interest-earning assets			13,309,281			363,460		5.51%				12,524,441			330,149		5.32%
Non-earning assets			1,779,908									1,745,179
Total assets		$	15,089,189								$	14,269,620
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Interest-bearing liabilities
Savings and interest-bearing transaction accounts		$	6,637,512		$	40,174		1.22%			$	6,430,509		$	24,731		0.78%
Time deposits			1,923,457			17,541		1.84%				1,562,873			8,239		1.06%
Total interest-bearing deposits			8,560,969			57,715		1.36%				7,993,382			32,970		0.83%
Federal funds purchased			-			-		0.00%				62			1		3.25%
Securities sold under agreement to repurchase			147,623			1,264		1.73%				148,310			748		1.02%
FHLB borrowed funds			1,045,370			10,840		2.09%				1,038,612			8,825		1.71%
Subordinated debentures			368,981			10,498		5.74%				368,217			10,172		5.57%
Total interest-bearing liabilities			10,122,943			80,317		1.60%				9,548,583			52,716		1.11%
Non-interest bearing liabilities
Non-interest bearing deposits			2,496,604									2,439,299
Other liabilities			108,866									48,779
Total liabilities			12,728,413									12,036,661
Shareholders' equity			2,360,776									2,232,959
Total liabilities and shareholders' equity		$	15,089,189								$	14,269,620
Net interest spread								3.91%									4.21%
Net interest income and margin - FTE					$	283,143		4.29%						$	277,433		4.47%

 

Home BancShares, Inc.
Non-GAAP Reconciliations
(Unaudited)
	Quarter Ended																Six Months Ended
(Dollars and shares in thousands,	Jun. 30,			Mar. 31,			Dec. 31,			Sep. 30,			Jun. 30,				Jun. 30,			Jun. 30,
except per share data)		2019			2019			2018			2018			2018				2019			2018
EARNINGS, AS ADJUSTED
GAAP net income available to common shareholders (A)	$	72,164		$	71,350		$	71,030		$	80,284		$	76,025			$	143,514		$	149,089
Adjustments
Special dividend from equity investment		-			(2,134	)		-			-			-				(2,134	)		-
Merger and acquisition expenses		-			-			6,013			-			-				-			-
Hurricane expenses		-			897			470			-			-				897			-
Outsourced special project expense		-			900			-			-			-				900			-
Total adjustments		-			(337	)		6,483			-			-				(337	)		-
Tax-effect of adjustments		-			(88	)		1,694			-			-				(88	)		-
Adjustments after-tax (B)		-			(249	)		4,789			-			-				(249	)		-
Earnings, as adjusted (C)	$	72,164		$	71,101		$	75,819		$	80,284		$	76,025			$	143,265		$	149,089
Average diluted shares outstanding (D)		167,791			169,592			173,311			174,867			173,936				168,686			174,168
GAAP diluted earnings per share: (A/D)	$	0.43		$	0.42		$	0.41		$	0.46		$	0.44			$	0.85		$	0.86
Adjustments after-tax: (B/D)		-			-			0.03			-			-				-			-
Diluted earnings per common share excluding special dividend from   equity investment, merger expenses, hurricane expenses &   outsourced special project expense: (C/D)	$	0.43		$	0.42		$	0.44		$	0.46		$	0.44			$	0.85		$	0.86
ANNUALIZED RETURN ON AVERAGE ASSETS
Return on average assets: (A/F)		1.92%			1.92%			1.90%			2.14%			2.13%				1.92%			2.11%
Return on average assets excluding special dividend from   equity investment, merger expenses, hurricane expenses &   outsourced special project expense: (ROA, as adjusted)   ((A+E)/F)		1.92%			1.91%			2.03%			2.14%			2.13%				1.91%			2.11%
Return on average assets excluding intangible   amortization: ((A+C)/(F-G))		2.09%			2.09%			2.07%			2.33%			2.32%				2.09%			2.30%
GAAP net income available to common shareholders (A)	$	72,164		$	71,350		$	71,030		$	80,284		$	76,025			$	143,514		$	149,089
Amortization of intangibles (B)		1,587			1,586			1,587			1,617			1,624				3,173			3,250
Amortization of intangibles after-tax (C)		1,172			1,172			1,172			1,194			1,200				2,344			2,401
Total adjustments (D)		-			(337	)		6,483			-			-				(337	)		-
Adjustments after-tax (E)		-			(249	)		4,789			-			-				(249	)		-
Average assets (F)		15,098,600			15,079,672			14,838,979			14,880,931			14,304,483				15,089,189			14,269,620
Average goodwill, core deposits & other intangible assets (G)		998,898			1,000,494			1,002,070			1,001,843			975,345				999,692			975,895

 

Home BancShares, Inc.
Non-GAAP Reconciliations
(Unaudited)
		Quarter Ended																Six Months Ended
(Dollars and shares in thousands,		Jun. 30,			Mar. 31,			Dec. 31,			Sep. 30,			Jun. 30,				Jun. 30,			Jun. 30,
except per share data)			2019			2019			2018			2018			2018				2019			2018
ANNUALIZED RETURN ON AVERAGE COMMON EQUITY
Return on average common equity: (A/D)			12.18%			12.34%			12.05%			13.74%			13.54%				12.26%			13.46%
Return on average common equity excluding special dividend   from equity investment, merger expenses, hurricane   expenses & outsourced special project expense:   (ROE, as adjusted) ((A+C)/D)			12.18%			12.30%			12.86%			13.74%			13.54%				12.24%			13.46%
Return on average tangible common equity: (A/(D-E))			21.01%			21.53%			21.08%			24.20%			23.90%				21.26%			23.92%
Return on average tangible common equity excluding intangible   amortization: (B/(D-E))			21.35%			21.88%			21.43%			24.56%			24.27%				21.61%			24.30%
Return on average tangible common equity excluding special   dividend from equity investment, merger expenses, hurricane   expenses & outsourced special project expense:   (ROTCE, as adjusted) ((A+C)/(D-E))			21.01%			21.45%			22.50%			24.20%			23.90%				21.23%			23.92%
GAAP net income available to common shareholders (A)		$	72,164		$	71,350		$	71,030		$	80,284		$	76,025			$	143,514		$	149,089
Earnings excluding intagible amortization (B)			73,336			72,522			72,202			81,478			77,225				145,858			151,490
Adjustments after-tax (C)			-			(249	)		4,789			-			-				(249	)		-
Average common equity (D)			2,376,718			2,344,657			2,338,802			2,317,930			2,251,412				2,360,776			2,232,959
Average goodwill, core deposits & other intangible assets (E)			998,898			1,000,494			1,002,070			1,001,843			975,345				999,692			975,895
EFFICIENCY RATIO
Efficiency ratio:  ((C-E)/(A+B+D))			39.93%			41.01%			42.18%			37.23%			36.74%				40.47%			37.28%
Efficiency ratio, as adjusted:  ((C-E-G)/(A+B+D-F))			39.92%			40.52%			38.28%			37.39%			36.97%				40.21%			37.44%
Net interest income (A)		$	140,987		$	139,470		$	140,282		$	145,910		$	138,612			$	280,457		$	274,821
Non-interest income (B)			23,066			23,672			23,507			25,847			27,673				46,738			53,478
Non-interest expense (C)			67,624			69,057			71,272			66,123			63,228				136,681			126,608
Fully taxable equivalent adjustment (D)			1,319			1,367			1,412			1,489			1,403				2,686			2,612
Amortization of intangibles (E)			1,587			1,586			1,587			1,617			1,624				3,173			3,250
Adjustments:
Non-interest income:
Special dividend from equity investment		$	-		$	2,134		$	-		$	-		$	-			$	2,134		$	-
Gain (loss) on OREO			58			206			114			836			1,046				264			1,451
Gain (loss) on branches, equipment and other assets, net			(129	)		79			(25	)		(102	)		-				(50	)		7
Total non-interest income adjustments (F)		$	(71	)	$	2,419		$	89		$	734		$	1,046			$	2,348		$	1,458
Non-interest expense:
Merger Expenses		$	-		$	-		$	6,013		$	-		$	-			$	-		$	-
Hurricane damage expense			-			897			470			-			-				897			-
Outsourced special project expense			-			900			-			-			-				900			-
Total non-interest expense adjustments (G)		$	-		$	1,797		$	6,483		$	-		$	-			$	1,797		$	-

 

Home BancShares, Inc.
Non-GAAP Reconciliations
(Unaudited)
		Jun. 30,			Mar. 31,			Dec. 31,			Sep. 30,			Jun. 30,
(Dollars in thousands)			2019			2019			2018			2018			2018
TANGIBLE BOOK VALUE PER COMMON SHARE
Book value per common share: (A/B)		$	14.46		$	14.04		$	13.76		$	13.44		$	13.26
Tangible book value per common share: ((A-C-D)/B)			8.50			8.10			7.90			7.68			7.52
Total stockholders' equity (A)		$	2,421,406		$	2,361,484		$	2,349,886		$	2,341,026		$	2,314,013
End of period common shares outstanding (B)			167,466			168,173			170,720			174,135			174,511
Goodwill (C)		$	958,408		$	958,408		$	958,408		$	958,408		$	956,418
Core deposit and other intangibles (D)			39,723			41,310			42,896			44,484			46,101
TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS
Equity to assets: (B/A)			15.84%			15.56%			15.36%			15.70%			15.51%
Tangible common equity to tangible assets: ((B-C-D)/(A-C-D))			9.96%			9.60%			9.43%			9.62%			9.42%
Total assets (A)		$	15,287,575		$	15,179,501		$	15,302,438		$	14,912,738		$	14,924,120
Total stockholders' equity (B)			2,421,406			2,361,484			2,349,886			2,341,026			2,314,013
Goodwill (C)			958,408			958,408			958,408			958,408			956,418
Core deposit and other intangibles (D)			39,723			41,310			42,896			44,484			46,101