Earnings up for Home BancShares, down for Simmons

by The City Wire staff ([email protected]) 22 views 

Editor’s note: Roby Brock, with our content partner Talk Business, wrote this report. He can be reached at [email protected]

Two Arkansas-based financial institutions reported earnings this morning (Oct. 20) providing insight into the latest drivers of bank profitability.

Home BancShares, Inc., parent company of Centennial Bank, reported third quarter net income of $14.3 million, or 43 cents diluted earnings per common share. One year ago, the Conway-based bank posted a third quarter profit of $9.6 million, or 31 cents per share. The consensus estimate of analysts was 48 cents per share.

The bank has been on an acquisition spree in Florida during the past year-and-a-half, which has boosted bank assets and its loan portfolio. It is clearly not done with prospective purchases.

"The company has achieved yet another historically record quarter during the third quarter of 2011," said John Allison, Home Bancshares Chairman. "Even with our repayment of TARP during the third quarter, our strong capital levels are sustained considerably above the regulators’ capital requirements. With this in mind, we are able to maintain the position of taking advantage of opportunistic FDIC deals as they become available."

Home BancShares’ officials also disclosed that net interest margins improved 40 basis points during the third quarter versus a year ago, and they reported improvements in non-performing assets and loans.

Shares of Home BancShares (NASDAQ: HOMB) closed Thursday at $23.15, up 11 cents. During the past 52 weeks the price has ranged between a $25 high and a $19.88 low.

Pine Bluff-based Simmons First National Corp. declared third quarter net income of $7.3 million, or diluted earnings per share of 42 cents per share. That was a slight decline from one year ago when the bank posted a $7.6 million profit, or 44 cents per share.

The consensus estimate of analysts was 38 cents per share.

"The primary driver for this slight decrease is a $2.0 million reduction of premiums on the sale of student loans, which we anticipated," said Simmons First CEO J. Thomas May. "Beginning with the 2010-2011 school year, the private sector was excluded from originating government-guaranteed student loans as a result of the irrational decision by the administration and Congress."

May also expressed disappointment in loan demand, pending regulations, and low interest rates.

"While we remain disappointed with the lack of loan demand throughout our markets, it was expected based on the economy and it is likely to continue throughout 2011. Considering the negative impact on non-interest income created by regulatory and legislative actions, coupled with the negative impact of historically low interest rates on margins, we are pleased with our third quarter earnings performance," May said.

Shares of Simmons (NASDAQ: SFNC) closed Thursday at $25.08, up 62 cents. During the past 52 weeks the price has ranged between a $30.16 high and a $18.71 low.

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