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Home BancShares, Inc. Announces Record Net Income of $50.1 Million

CONWAY, Ark., July 20, 2017 (GLOBE NEWSWIRE) -- Home BancShares, Inc. (NASDAQ:HOMB), parent company of Centennial Bank, today announced a record quarterly profit of $50.1 million for the second quarter of 2017 compared to $43.5 million, for the same quarter in 2016.  Diluted earnings per share for the second quarter of 2017 was $0.35 per share compared to $0.31 per share for 2016, representing an increase of $0.04 per share or 12.9% for the second quarter of 2017 when compared to the same quarter in the prior year.  Excluding merger expenses, diluted earnings per share for the second quarter of 2017 remained $0.35 per share.

“Our second quarter earnings excluding merger expenses are $50.7 million, which is $3.3 million or 7%, higher than the previous record quarterly earnings reported for Home BancShares,” said John Allison, Chairman.  “We are proud of this earnings performance for the second quarter of 2017 reaching an impressive diluted earnings per share excluding merger expenses of $0.35 per share.”

“Now that we have completed the systems conversions for both of the first quarter of 2017 acquisitions, we can speed up the process of improving the financial metrics to maximize returns to our shareholders,” added Tracy French, Centennial Bank President and Chief Executive Officer.  “We are also making preparations for the completion of our acquisition of Stonegate Bank, which is anticipated to close late in the third quarter or early in the fourth quarter of 2017, subject to both shareholder and regulatory approvals.”

“We have again, for the twenty-fifth consecutive quarter, reported the most profitable quarter in the Company’s history,” said Randy Sims, Home BancShares, Inc. Chief Executive Officer.  “In addition to the excellent earnings previously mentioned, we are happy to report record net interest income for the second quarter of 2017 plus continued improvement to our non-performing asset portfolio.”

Operating Highlights

Accretion yield increased approximately $850,000 from $7.6 million for the first quarter of 2017 to $8.5 million for second quarter of 2017.  Each quarter we perform credit impairment tests on the loans acquired in our acquisitions.  During our second quarter 2017 impairment testing, several pools were determined to have a material projected credit improvement. The additional accretion income from the recently acquired loan portfolios combined with this projected credit improvement, resulted in a comparable level of scheduled accretion.  The net increase of recognized accretion income when compared to the first quarter of 2017 is primarily due to pay-off accretion increasing from $1.9 million to $2.6 million. 

Net interest margin, on a fully taxable equivalent basis, was 4.50% for the quarter just ended compared to 4.83% for the same quarter in 2016 and compared to 4.70% for the first quarter of 2017.  The net interest margin, excluding accretion yield decreased when comparing the first quarter of 2017 to the second quarter of 2017 at 4.32% and 4.11%, respectively.  The decrease in net interest margin is primarily the result of the addition of $300 million of 5.625% fixed-to-floating rate subordinated notes on April 3, 2017.  The subordinated notes added approximately $4.2 million of interest expense when compared to the prior quarter. Consequently, the addition of the subordinated notes negatively impacted net interest margin by 15 basis points.  Also, the Company made a strategic decision to keep excess cash liquidity on the books during the second quarter of 2017 resulting in a negative impact to the net interest margin of 7 basis points.

During the second quarter of 2017, the Company recorded a provision for loan loss of $387,000 compared to $5.7 million in the second quarter of 2016.  Since the second quarter of 2016 the Company has seen both an improvement in asset quality and a decline in loan growth.  Non-performing loans for the second quarter of 2016 and 2017 were, $59.7 million and $46.9 million, respectively, for an improvement of $12.8 million.  Loan growth was $169.9 million for the second quarter of 2016 while there was a $15.2 million decline in loans for the second quarter of 2017.  For the second quarter of 2017, net charge-offs were $560,000 compared to net charge-offs of $3.7 million for the second quarter of 2016.

The Company reported $24.4 million of non-interest income for the second quarter of 2017, compared to $21.8 million for the second quarter of 2016.  The most important components of the second quarter non-interest income were $8.6 million from other service charges and fees, $6.0 million from service charges on deposits accounts, $3.8 million from mortgage lending income, and $2.8 million from other income.  

Non-interest expense for the second quarter of 2017 was $51.0 million compared to $47.6 million for the second quarter of 2016.  Non-interest expense excluding merger expenses for the second quarter of 2017 was $51.8 million compared to $47.6 million for the second quarter of 2016, an increase of $4.2 million.  This increase excluding merger expenses is primarily the result of an increase in the costs associated with asset growth from the acquisitions in the first quarter of 2017 combined with approximately $664,000 of growth in non-interest expense related to the Centennial Commercial Finance Group (“Centennial CFG”).  For the second quarter of 2017, our core efficiency ratio was 37.29% which has increased from the 36.84% reported for second quarter of 2016.  This increase is primarily the result of our recently completed acquisitions not yet up to our Company’s legacy efficiency metrics. 

Financial Condition

Total loans receivable were $7.83 billion at June 30, 2017 compared to $7.39 billion at December 31, 2016.  Total deposits were $7.77 billion at June 30, 2017 compared to $6.94 billion at December 31, 2016.  Total assets were $10.87 billion at June 30, 2017 compared to $9.81 billion at December 31, 2016.

During the first quarter of 2017, the Company acquired $446.3 million of loans, net of purchase accounting discounts. From December 31, 2016 to June 30, 2017, the Company produced approximately $525,000 of organic loan growth.  Centennial CFG produced $40.3 million of net organic loan growth during the first six months of 2017 while the legacy footprint experienced significant net payoffs during the first six months of 2017, resulting in a decline of $39.8 million.

From March 31, 2017 to June 30, 2017, the Company experienced an organic decline in loans receivable of approximately $15.2 million.  Centennial CFG produced $67.7 million of organic loan growth during the second quarter of 2017 while the legacy footprint experienced significant payoffs during the second quarter of 2017, resulting in a decline of $82.9 million.  Centennial CFG had loans of $1.15 billion at June 30, 2017.

Non-performing loans at June 30, 2017 were $22.0 million, $24.6 million, $306,000 and zero in the Arkansas, Florida, Alabama and Centennial CFG markets, respectively, for a total of $46.9 million.  Non-performing loans as a percent of total loans were 0.60% as of June 30, 2017 compared to 0.85% as of December 31, 2016.  Non-performing assets at June 30, 2017 were $33.4 million, $31.3 million, $947,000 and zero in the Arkansas, Florida and Alabama and Centennial CFG markets, respectively, for a total of $65.7 million.  Non-performing assets as a percent of total assets were 0.60% as of June 30, 2017 compared to 0.81% as of December 31, 2016.  

The Company’s allowance for loan losses was $80.1 million at June 30, 2017, or 1.02% of total loans, compared to $80.0 million, or 1.08% of total loans, at December 31, 2016.  This decrease is primarily the result of acquiring $446.3 million of loans during the first quarter of 2017 which do not have an associated allowance for loan losses as a result of purchase accounting.  As of June 30, 2017 and December 31, 2016, the Company’s allowance for loan losses was 171% and 127% of its total non-performing loans, respectively.

Stockholders’ equity was $1.48 billion at June 30, 2017 compared to $1.33 billion at December 31, 2016, an increase of $148.5 million.  Book value per common share was $10.32 at June 30, 2017 compared to $9.45 at December 31, 2016.  Tangible book value per common share was $7.23 at June 30, 2017 compared to $6.63 at December 31, 2016 for an annualized increase of 18.2%. 

Branches

In an effort to achieve efficiencies primarily from our acquisitions, during the second quarter, the Company closed one branch in Sarasota, Florida and two branches in Ft. Lauderdale, Florida.  During the second quarter of 2017, the Company opened a branch location in Clearwater, Florida and a loan production office in Los Angeles under the management of Centennial CFG.  The Company currently has 76 branches in Arkansas, 64 branches in Florida, 6 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 20, 2017.  We encourage all participants to pre-register for the conference call using the following link: http://dpregister.com/10109971.  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: 10109971, which will be available until July 27, 2017 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 excluding non-fundamental items, return on average assets excluding intangible amortization, return on average assets excluding non-fundamental items, return on average common equity excluding intangible amortization, core efficiency ratio, non-GAAP net interest margin, 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 non-fundamental items or non-recurring 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 core 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, including, but not limited to, economic conditions, credit quality, interest rates, loan demand, the ability to successfully integrate new acquisitions and changes in the assumptions used in making the forward-looking statements, could cause actual results to differ materially from those contemplated by the forward-looking statements. Additional information on factors that might affect Home BancShares, Inc.'s financial results is included in its Annual Report on Form 10-K for the year ended December 31, 2016 filed with the Securities and Exchange Commission (the “SEC”) on February 28, 2017.

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.” 


   
 Home BancShares, Inc.   
 Consolidated End of Period Balance Sheets   
 (Unaudited)   
               
      Jun. 30,         Mar. 31,        Dec. 31,         Sep. 30,        Jun. 30,     
 (In thousands)        2017         2017         2016         2016         2016     
               
ASSETS              
               
 Cash and due from banks    $   147,041     $   163,662     $   123,758     $   123,126     $   136,632    
 Interest-bearing deposits with other banks        313,447         253,427         92,891         173,034         48,762    
  Cash and cash equivalents        460,488         417,089         216,649         296,160         185,394    
 Federal funds sold        -          1,700         1,550         1,850         525    
 Investment securities - available-for-sale        1,400,431         1,250,590         1,072,920         1,233,269         1,221,778    
 Investment securities - held-to-maturity        254,161         276,599         284,176         275,544         287,725    
 Loans receivable        7,834,475         7,849,645         7,387,699         7,112,291         7,022,156    
 Allowance for loan losses        (80,138 )       (80,311 )       (80,002 )       (76,370 )       (74,341 )  
  Loans receivable, net        7,754,337         7,769,334         7,307,697         7,035,921         6,947,815    
 Bank premises and equipment, net        207,071         212,813         205,301         208,137         207,932    
 Foreclosed assets held for sale        18,789         17,315         15,951         17,053         17,778    
 Cash value of life insurance        97,684         97,223         86,491         86,230         85,889    
 Accrued interest receivable        32,445         32,413         30,838         29,398         28,548    
 Deferred tax asset, net        68,368         67,063         61,298         56,435         61,613    
 Goodwill        420,941         420,941         377,983         377,983         377,983    
 Core deposit and other intangibles        21,019         21,885         18,311         19,073         19,835    
 Other assets        136,494         132,503         129,300         127,185         139,311    
  Total assets    $   10,872,228     $   10,717,468     $   9,808,465     $   9,764,238     $   9,582,126    
               
LIABILITIES AND STOCKHOLDERS' EQUITY              
               
Liabilities              
 Deposits:               
  Demand and non-interest-bearing    $   1,957,677     $   1,862,996     $   1,695,184     $   1,717,467     $   1,645,472    
  Savings and interest-bearing transaction accounts        4,335,456         4,274,194         3,963,241         3,792,229         3,678,546    
  Time deposits        1,474,255         1,430,017         1,284,002         1,330,597         1,388,930    
  Total deposits        7,767,388         7,567,207         6,942,427         6,840,293         6,712,948    
 Federal funds purchased        -          -          -          -          -     
 Securities sold under agreements to repurchase        133,741         123,793         121,290         109,350         111,072    
 FHLB and other borrowed funds        1,099,478         1,455,040         1,305,198         1,420,369         1,380,889    
 Accrued interest payable and other liabilities        37,751         69,125         51,234         37,382         51,476    
 Subordinated debentures        357,838         60,735         60,826         60,826         60,826    
  Total liabilities        9,396,196         9,275,900         8,480,975         8,468,220         8,317,211    
               
 Stockholders' equity               
 Common stock        1,431         1,434         1,405         1,405         1,404    
 Capital surplus        940,821         948,982         869,737         866,310         863,560    
 Retained earnings        527,338         490,142         455,948         419,999         389,014    
 Accumulated other comprehensive income        6,442         1,010         400         8,304         10,937    
  Total stockholders' equity        1,476,032         1,441,568         1,327,490         1,296,018         1,264,915    
  Total liabilities and stockholders' equity    $   10,872,228     $   10,717,468     $   9,808,465     $   9,764,238     $   9,582,126    
               

/EIN News/ --  

 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)     2017         2017          2016       2016       2016       2017      2016     
                                                               
 Interest income                                                               
  Loans      $   112,732     $   105,762       $   103,113       $   102,953     $   100,415     $   218,494   $   197,328    
  Investment securities                     
  Taxable          6,434         5,478           5,068           5,583         5,145         11,912       10,595    
  Tax-exempt          2,966         2,944           3,059           2,720         2,823         5,910       5,638    
  Deposits - other banks          727         308           146           117         106         1,035       208    
  Federal funds sold          4         2           2           2         1         6       5    
                     
 Total interest income          122,863         114,494           111,388           111,375         108,490         237,357       213,774    
                     
 Interest expense                     
  Interest on deposits          6,810         5,486           4,398           4,040         3,854         12,296       7,488    
  Federal funds purchased          -          -            -            -          1         -        2    
  FHLB borrowed funds          3,710         3,589           3,201           3,139         3,074         7,299       6,144    
  Securities sold under agreements to repurchase          196         165           153           142         134         361       279    
  Subordinated debentures          4,795         439           429           401         386         5,234       763    
                     
 Total interest expense          15,511         9,679           8,181           7,722         7,449         25,190       14,676    
                     
 Net interest income          107,352         104,815           103,207           103,653         101,041         212,167       199,098    
  Provision for loan losses          387         3,914           1,703           5,536         5,692         4,301       11,369    
 Net interest income after                     
  provision for loan losses          106,965         100,901           101,504           98,117         95,349         207,866       187,729    
                     
 Non-interest income                     
  Service charges on deposit accounts          5,966         5,982           6,442           6,527         6,151         11,948       12,080    
  Other service charges and fees          8,576         8,917           7,611           7,504         7,968         17,493       15,085    
  Trust fees          309         456           329           365         359         765       763    
  Mortgage lending income          3,750         2,791           4,123           3,932         3,481         6,541       6,344    
  Insurance commissions          465         545           488           534         617         1,010       1,274    
  Increase in cash value of life insurance          463         310           320           344         353         773       748    
  Dividends from FHLB, FRB, Bankers' Bank & other          472         1,149           944           808         719         1,621       1,339    
  Gain on acquisitions          -          3,807           -            -          -          3,807       -     
  Gain on sale of SBA loans          387         188           645           364         79         575       79    
  Gain (loss) on sale of branches, equipment and
  other assets, net 
        431         (56 )         (1 )         (86 )       840         375       787    
  Gain (loss) on OREO, net          393         121           159           132         (941 )       514       (845 )  
  Gain (loss) on securities, net          380         423           644           -          15         803       25    
  FDIC indemnification accretion/(amortization), net          -          -            -            -          (410 )       -        (772 )  
  Other income          2,825         1,837           2,124           1,590         2,541         4,662       4,302    
                     
 Total non-interest income          24,417         26,470           23,828           22,014         21,772         50,887       41,209    
                     
 Non-interest expense                     
  Salaries and employee benefits          28,034         27,421           26,944           25,623         25,437         55,455       49,395    
  Occupancy and equipment          7,034         6,681           6,281           6,668         6,509         13,715       13,180    
  Data processing expense          2,863         2,723           2,278           2,791         2,766         5,586       5,430    
  Other operating expenses          13,072         18,316           11,991           15,944         12,875         31,388       25,230    
                     
 Total non-interest expense          51,003         55,141           47,494           51,026         47,587         106,144       93,235    
                     
 Income before income taxes          80,379         72,230           77,838           69,105         69,534         152,609       135,703    
  Income tax expense          30,282         25,374           29,248           25,485         26,025         55,656       50,767    
 Net income      $   50,097     $   46,856       $   48,590       $   43,620     $   43,509     $   96,953   $   84,936    
                     

 

 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)       2017         2017         2016         2016         2016           2017         2016     
                                                             
PER SHARE DATA                                                            
                                                             
Diluted earnings per common share   $   0.35     $   0.33     $   0.35     $   0.31     $   0.31       $   0.68     $   0.60    
Diluted earnings per common share excluding gain on
  acquisitions, merger expenses, reduced provision for loan
  losses as a result of a significant loan recovery & FDIC loss
  share buy-out expense (non-GAAP)(1)
      0.35         0.33         0.33         0.33         0.31           0.68         0.60    
Basic earnings per common share       0.35         0.33         0.35         0.31         0.31           0.68         0.61    
Dividends per share - common       0.0900         0.0900         0.0900         0.0900         0.0875           0.1800         0.1625    
Book value per common share       10.32         10.05         9.45         9.22         9.01           10.32         9.01    
Tangible book value per common share (non-GAAP)(1)       7.23         6.96         6.63         6.40         6.18           7.23         6.18    
                     
                     
STOCK INFORMATION                    
                     
Average common shares outstanding       143,282         141,785         140,465         140,436         140,382           142,538         140,386    
Average diluted shares outstanding       144,116         142,492         140,781         140,703         140,608           143,270         140,667    
End of period common shares outstanding       143,071         143,442         140,472         140,490         140,382           143,071         140,382    
                     
                     
ANNUALIZED PERFORMANCE METRICS                    
                     
Return on average assets     1.86 %     1.86 %     1.98 %     1.81 %     1.83 %       1.86 %     1.81 %  
Return on average assets excluding intangible
  amortization (non-GAAP)(1)
    1.96 %     1.96 %     2.08 %     1.91 %     1.93 %       1.96 %     1.91 %  
Return on average assets excluding intangible amortization,
  provision for loan losses, merger expenses, gain on
  acquisitions, reduced provision for loan losses as a result of a
  significant loan recovery, loss on FDIC loss share buyout and
  income taxes (Core ROA) (non-GAAP)(1)
    3.19 %     3.31 %     3.23 %     3.43 %     3.33 %       3.25 %     3.30 %  
Return on average common equity     13.83 %     13.85 %     14.79 %     13.62 %     14.11 %       13.84 %     13.94 %  
Return on average tangible common equity excluding
  intangible amortization (non-GAAP)(1)
    20.09 %     20.08 %     21.45 %     20.01 %     21.01 %       20.09 %     20.90 %  
Efficiency ratio     37.48 %     40.76 %     36.19 %     39.41 %     37.52 %       39.12 %     37.51 %  
Core efficiency ratio (non-GAAP)(1)     37.29 %     36.96 %     35.97 %     36.51 %     36.84 %       37.13 %     36.88 %  
Net interest margin - FTE     4.50 %     4.70 %     4.75 %     4.86 %     4.83 %       4.60 %     4.82 %  
Fully taxable equivalent adjustment   $   2,016     $   2,011     $   2,108     $   1,869     $   1,974       $   4,027     $   3,947    
Total revenue       147,280         140,964         135,216         133,389         130,262           288,244         254,983    
                     
                     
OTHER OPERATING EXPENSES                    
                     
Advertising   $   812     $   698     $   910     $   866     $   733       $   1,510     $   1,556    
Merger and acquisition expenses       789         6,727         433         -          -            7,516         -     
FDIC loss share buy-out expense       -          -          -          3,849         -            -          -     
Amortization of intangibles       866         804         762         762         763           1,670         1,608    
Electronic banking expense       1,654         1,519         1,621         1,428         1,237           3,173         2,693    
Directors' fees       324         313         294         292         289           637         564    
Due from bank service charges       456         420         393         319         337           876         642    
FDIC and state assessment       1,182         1,288         1,097         1,502         1,446           2,470         2,892    
Insurance       543         578         563         553         544           1,121         1,077    
Legal and accounting       474         627         442         583         658           1,101         1,181    
Other professional fees       1,233         1,153         943         1,137         1,044           2,386         1,969    
Operating supplies       477         467         466         437         419           944         855    
Postage       295         286         269         269         260           581         546    
Telephone       398         324         360         449         455           722         942    
Other expense       3,569         3,112         3,438         3,498         4,690           6,681         8,705    
                                                             
  Total other operating expenses    $   13,072     $   18,316     $   11,991     $   15,944     $   12,875       $   31,388     $   25,230    
                                                             
                                                             
 (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)     
                 
     Jun. 30,   Mar. 31,   Dec. 31,   Sep. 30,   Jun. 30,     
 (Dollars in thousands)       2017         2017         2016         2016         2016       
                 
BALANCE SHEET RATIOS                
                 
Total loans to total deposits     100.86 %     103.73 %     106.41 %     103.98 %     104.61 %    
Common equity to assets     13.58 %     13.45 %     13.53 %     13.27 %     13.20 %    
Tangible common equity to tangible assets (non-GAAP)(1)     9.91 %     9.72 %     9.89 %     9.60 %     9.44 %    
                 
                 
LOANS RECEIVABLE                
                 
Real estate                
  Commercial real estate loans                
  Non-farm/non-residential   $   3,368,663     $   3,462,773     $   3,153,121     $   2,954,618     $   2,884,162      
  Construction/land development       1,315,309         1,217,519         1,135,843         1,065,204         1,068,544      
  Agricultural       78,260         79,940         77,736         77,556         78,535      
  Residential real estate loans                
  Residential 1-4 family       1,513,888         1,493,133         1,356,136         1,264,384         1,262,416      
  Multifamily residential       398,781         404,815         340,926         328,089         395,352      
Total real estate       6,674,901         6,658,180         6,063,762         5,689,851         5,689,009      
Consumer       38,424         41,893         41,745         42,487         48,933      
Commercial and industrial       994,827         1,013,403         1,123,213         1,225,043         1,130,776      
Agricultural       69,697         69,307         74,673         73,413         69,666      
Other       56,626         66,862         84,306         81,497         83,772      
  Loans receivable   $   7,834,475     $   7,849,645     $   7,387,699     $   7,112,291     $   7,022,156      
                                                       
Discount for credit losses on purchased loans   $   95,627     $   104,464     $   100,148     $   108,017     $   120,910      
Purchased loans, net of discount for credit losses
  on purchased loans
      1,355,922         1,375,210         1,125,599         1,368,305         1,597,903      
                 
                 
ALLOWANCE FOR LOAN LOSSES                
                 
Balance, beginning of period   $   80,311     $   80,002     $   76,370     $   74,341     $   72,306      
Loans charged off       1,405         4,706         4,836         4,351         4,367      
Recoveries of loans previously charged off       845         1,101         6,765         844         710      
  Net loans (recovered)/charged off       560         3,605         (1,929 )       3,507         3,657      
Provision for loan losses       387         3,914         1,703         5,536         5,692      
Balance, end of period   $   80,138     $   80,311     $   80,002     $   76,370     $   74,341      
                                                       
Net (recoveries) charge-offs to average total loans     0.03 %     0.19 %     -0.11 %     0.20 %     0.21 %    
Allowance for loan losses to total loans     1.02 %     1.02 %     1.08 %     1.07 %     1.06 %    
                 
                 
NON-PERFORMING ASSETS                
                 
Non-performing loans                
  Non-accrual loans   $   32,426     $   43,810     $   47,182     $   39,353     $   36,660      
  Loans past due 90 days or more       14,442         15,388         15,942         20,737         22,998      
  Total non-performing loans       46,868         59,198         63,124         60,090         59,658      
Other non-performing assets                
  Foreclosed assets held for sale, net       18,789         17,315         15,951         17,053         17,778      
  Other non-performing assets       3         3         3         -          -       
  Total other non-performing assets       18,792         17,318         15,954         17,053         17,778      
  Total non-performing assets   $   65,660     $   76,516     $   79,078     $   77,143     $   77,436      
                 
Allowance for loan losses for loans to non-performing loans     170.99 %     135.67 %     126.74 %     127.09 %     124.61 %    
Non-performing loans to total loans     0.60 %     0.75 %     0.85 %     0.84 %     0.85 %    
Non-performing assets to total assets     0.60 %     0.71 %     0.81 %     0.79 %     0.81 %    
                 
                 
 (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, 2017     March 31, 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      $   303,997   $   727   0.96 %   $   170,500   $   308   0.73 %
  Federal funds sold          1,427       4   1.12 %       1,182       2   0.69 %
  Investment securities - taxable          1,256,202       6,434   2.05 %       1,110,166       5,478   2.00 %
  Investment securities - non-taxable - FTE          346,708       4,812   5.57 %       347,085       4,786   5.59 %
  Loans receivable - FTE          7,829,615       112,902   5.78 %       7,585,565       105,931   5.66 %
  Total interest-earning assets          9,737,949       124,879   5.14 %       9,214,498       116,505   5.13 %
  Non-earning assets          1,055,821           984,346    
  Total assets      $  10,793,770       $  10,198,844    
                   
LIABILITIES AND SHAREHOLDERS' EQUITY                  
 Liabilities                   
  Interest-bearing liabilities                   
  Savings and interest-bearing transaction accounts      $   4,292,389   $   4,313   0.40 %   $   4,138,813   $   3,377   0.33 %
  Time deposits          1,443,228       2,497   0.69 %       1,357,300       2,109   0.63 %
  Total interest-bearing deposits          5,735,617       6,810   0.48 %       5,496,113       5,486   0.40 %
  Federal funds purchased          -        -    0.00 %       -        -    0.00 %
  Securities sold under agreement to repurchase          128,661       196   0.61 %       124,094       165   0.54 %
  FHLB borrowed funds          1,177,510       3,710   1.26 %       1,373,217       3,589   1.06 %
  Subordinated debentures          351,659       4,795   5.47 %       60,819       439   2.93 %
  Total interest-bearing liabilities          7,393,447       15,511   0.84 %       7,054,243       9,679   0.56 %
  Non-interest bearing liabilities                   
  Non-interest bearing deposits         1,899,865           1,716,452    
  Other liabilities          47,359           56,419    
  Total liabilities          9,340,671           8,827,114    
 Shareholders' equity          1,453,099           1,371,730    
  Total liabilities and shareholders' equity      $  10,793,770       $  10,198,844    
 Net interest spread            4.30 %         4.57 %
 Net interest income and margin - FTE          $   109,368   4.50 %       $   106,826   4.70 %
                   

 

 Home BancShares, Inc.   
 Consolidated Net Interest Margin   
 (Unaudited)   
                     
       Six Months Ended   
       June 30, 2017     June 30, 2016   
       Average     Income/    Yield/     Average     Income/    Yield/   
 (Dollars in thousands)       Balance     Expense     Rate    Balance     Expense     Rate  
                                         
ASSETS                                        
 Earning assets                                         
  Interest-bearing balances due from banks      $   237,617   $   1,035   0.88 %   $   110,842   $   208   0.38 %  
  Federal funds sold          1,305       6   0.93 %       2,279       5   0.44 %  
  Investment securities - taxable          1,183,588       11,912   2.03 %       1,173,843       10,595   1.82 %  
  Investment securities - non-taxable - FTE          346,895       9,598   5.58 %       335,539       9,209   5.52 %  
  Loans receivable - FTE          7,708,264       218,833   5.72 %       6,849,394       197,704   5.80 %  
  Total interest-earning assets          9,477,669       241,384   5.14 %       8,471,897       217,721   5.17 %  
  Non-earning assets          1,020,474           974,726      
  Total assets      $  10,498,143       $   9,446,623      
                     
LIABILITIES AND SHAREHOLDERS' EQUITY                    
 Liabilities                     
  Interest-bearing liabilities                     
  Savings and interest-bearing transaction accounts      $   4,216,025   $   7,690   0.37 %   $   3,635,782   $   4,159   0.23 %  
  Time deposits          1,400,501       4,606   0.66 %       1,393,307       3,329   0.48 %  
  Total interest-bearing deposits          5,616,526       12,296   0.44 %       5,029,089       7,488   0.30 %  
  Federal funds purchased          -        -    0.00 %       470       2   0.86 %  
  Securities sold under agreement to repurchase          126,390       361   0.58 %       122,373       279   0.46 %  
  FHLB borrowed funds          1,274,823       7,299   1.15 %       1,385,461       6,144   0.89 %  
  Subordinated debentures          207,043       5,234   5.10 %       60,826       763   2.52 %  
  Total interest-bearing liabilities          7,224,782       25,190   0.70 %       6,598,219       14,676   0.45 %  
  Non-interest bearing liabilities                     
  Non-interest bearing deposits         1,808,660           1,562,725      
  Other liabilities          52,062           60,505      
  Total liabilities          9,085,504           8,221,449      
 Shareholders' equity          1,412,639           1,225,174      
  Total liabilities and shareholders' equity      $  10,498,143       $   9,446,623      
 Net interest spread            4.44 %         4.72 %  
 Net interest income and margin - FTE          $   216,194   4.60 %       $   203,045   4.82 %  
                     

 

 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)       2017         2017         2016         2016         2016         2017         2016     
                                                           
EARNINGS EXCLUDING NON-FUNDAMENTAL ITEMS                                                          
                                                           
GAAP net income available to common shareholders (A)   $   50,097     $   46,856     $   48,590     $   43,620     $   43,509     $   96,953     $   84,936    
Non-fundamental items                    
Gain on acquisitions       -          (3,807 )       -          -          -          (3,807 )       -     
Merger and acquisition expenses       789         6,727         433         -          -          7,516         -     
FDIC loss share buy-out expense       -          -          -          3,849         -          -          -     
Reduced provision for loan losses as a result of a
  significant loan recovery
      -          -          (4,457 )       -          -          -          -     
Total non-fundamental items       789         2,920         (4,024 )       3,849         -          3,709         -     
Tax-effect of non-fundamental items(2)       199         2,382         (1,578 )       1,510         -          2,581         -     
Non-fundamental items after-tax (B)       590         538         (2,446 )       2,339         -          1,128         -     
Earnings excluding non-fundamental items (C)   $   50,687     $   47,394     $   46,144     $   45,959     $   43,509     $   98,081     $   84,936    
                                                           
Average diluted shares outstanding (D)       144,116         142,492         140,781         140,703         140,608         143,270         140,667    
     
GAAP diluted earnings per share: A/D   $   0.35     $   0.33     $   0.35     $   0.31     $   0.31     $   0.68     $   0.60    
Non-fundamental items after-tax: B/D       -          -          (0.02 )       0.02         -          -          -     
Diluted earnings per common share excluding gain on
  acquisitions, merger expenses, reduced provision for loan
  losses as a result of a significant loan recovery & FDIC loss
  share buy-out expense: C/D
  $   0.35     $   0.33     $   0.33     $   0.33     $   0.31     $   0.68     $   0.60    
                                                                     
                     
ANNUALIZED RETURN ON AVERAGE ASSETS                    
                     
 Return on average assets: A/G      1.86 %     1.86 %     1.98 %     1.81 %     1.83 %     1.86 %     1.81 %  
 Return on average assets excluding intangible
  amortization: (A+C)/(G-H) 
    1.96 %     1.96 %     2.08 %     1.91 %     1.93 %     1.96 %     1.91 %  
Return on average assets excluding intangible amortization,
  provision for loan losses, merger expenses, gain on
  acquisitions, reduced provision for loan losses as a result of a
  significant loan recovery, loss on FDIC loss share buyout and
  income taxes (Core ROA): (A+B+D+E+F)/(G-H)
    3.19 %     3.31 %     3.23 %     3.43 %     3.33 %     3.25 %     3.30 %  
                     
 GAAP net income available to common shareholders (A)    $   50,097     $   46,856     $   48,590     $   43,620     $   43,509     $   96,953     $   84,936    
 Amortization of intangibles (B)        866         804         762         762         763         1,670         1,608    
 Amortization of intangibles after-tax (C)        526         489         463         463         464         1,015         977    
 Provision for loan losses (D)        387         3,914         1,703         5,536         5,692         4,301         11,369    
 Total non-fundamental items (E)        789         2,920         (4,024 )       3,849         -          3,709         -     
 Income tax expense (F)        30,282         25,374         29,248         25,485         26,025         55,656         50,767    
 Average assets (G)        10,793,770         10,198,844         9,777,148         9,602,363         9,562,624         10,498,143         9,446,623    
 Average goodwill, core deposits & other intangible assets (H)        442,380         415,699         396,662         397,429         398,184         429,113         398,581    
                     
                     
ANNUALIZED RETURN ON AVERAGE COMMON EQUITY                    
                     
 Return on average common equity: A/C      13.83 %     13.85 %     14.79 %     13.62 %     14.11 %     13.84 %     13.94 %  
 Return on average tangible common equity
  excluding intangible amortization: (A+B)/(C-D) 
    20.09 %     20.08 %     21.45 %     20.01 %     21.01 %     20.09 %     20.90 %  
                     
                     
 GAAP net income available to common shareholders (A)    $   50,097     $   46,856     $   48,590     $   43,620     $   43,509     $   96,953     $   84,936    
 Amortization of intangibles after-tax (B)        526         489         463         463         464         1,015         977    
 Average common equity (C)        1,453,099         1,371,730         1,306,571         1,274,077         1,240,080         1,412,639         1,225,174    
 Average goodwill, core deposits & other intangible assets (D)        442,380         415,699         396,662         397,429         398,184         429,113         398,581    
                     
                     
 (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     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)       2017         2017         2016         2016         2016         2017         2016       
                     
EFFICIENCY RATIO                    
                     
 Efficiency ratio:  ((C-E)/(A+B+D))      37.48 %     40.76 %     36.19 %     39.41 %     37.52 %     39.12 %     37.51 %    
 Core efficiency ratio:  ((C-E-G)/(A+B+D-F))      37.29 %     36.96 %     35.97 %     36.51 %     36.84 %     37.13 %     36.88 %    
                                                                         
 Net interest income (A)    $   107,352     $   104,815     $   103,207     $   103,653     $   101,041     $   212,167     $   199,098      
 Non-interest income (B)        24,417         26,470         23,828         22,014         21,772         50,887         41,209      
 Non-interest expense (C)        51,003         55,141         47,494         51,026         47,587         106,144         93,235      
 Fully taxable equivalent adjustment (D)        2,016         2,011         2,108         1,869         1,974         4,027         3,947      
 Amortization of intangibles (E)        866         804         762         762         763         1,670         1,608      
                     
 Non-fundamental items:                     
 Non-interest income:                     
 Gain on acquisition    $   -      $   3,807     $   -      $   -      $   -      $   3,807     $   -       
 Gain (loss) on OREO        393         121         159         132         (941 )       514         (845 )    
 Gain (loss) on SBA        387         188         645         364         79         575         79      
 Gain on sale of branches, equipment & other assets, net        431         (56 )       (1 )       (86 )       840         375         787      
 Gain (loss) on securities        380         423         644         -          15         803         25      
 Recoveries on historic losses        -          -          -          -          925         -          925      
Total non-fundamental non-interest income (F)   $   1,591     $   4,483     $   1,447     $   410     $   918     $   6,074     $   971      
                                                             
 Non-interest expense:                                                             
 Merger Expenses    $   789     $   6,727     $   433     $   -      $   -      $   7,516     $   -       
 FDIC loss share buy-out        -          -          -          3,849         -          -          -       
 Vacant properties write-downs        47         -          369         -          1,194         47         1,914      
Total non-fundamental non-interest expense (G)   $   836     $   6,727     $   802     $   3,849     $   1,194     $   7,563     $   1,914      
                                                             
                                                             
ANNUALIZED NET INTEREST MARGIN                                                            
                     
 Net interest margin: A/C      4.50 %     4.70 %     4.75 %     4.86 %     4.83 %     4.60 %     4.82 %    
 Net interest margin (non-GAAP): B/D      4.11 %     4.32 %     4.31 %     4.25 %     4.24 %     4.21 %     4.23 %    
                     
 Net interest income - FTE (A)    $   109,368     $   106,826     $   105,315     $   105,522     $   103,015     $   216,194     $   203,045      
 Total purchase accounting accretion        8,497         7,652         8,659         11,937         11,017         16,145         21,747      
 Net interest income - FTE (non-GAAP) (B)    $   100,871     $   99,174     $   96,656     $   93,585     $   91,998     $   200,049     $   181,298      
                                                             
 Average interest-earning assets (C)    $   9,737,949     $   9,214,498     $   8,824,468     $   8,646,026     $   8,585,955     $   9,477,669     $   8,471,897      
 Average purchase accounting loan discounts        104,384         102,906         104,783         115,766         135,172         101,403         138,932      
 Average interest-earning assets (non-GAAP) (D)    $   9,842,333     $   9,317,404     $   8,929,251     $   8,761,792     $   8,721,127     $   9,579,072     $   8,610,829      
                                                             

 

 
 Home BancShares, Inc. 
 Non-GAAP Reconciliations 
 (Unaudited) 
             
     Jun. 30,   Mar. 31,   Dec. 31,   Sep. 30,   Jun. 30, 
 (Dollars in thousands)       2017         2017         2016         2016         2016   
             
TANGIBLE BOOK VALUE PER COMMON SHARE            
             
 Book value per common share: A/B    $   10.32     $   10.05     $   9.45     $   9.22