Home Bancshares Reports Record Profits On Loan Growth, Earnings Jump 19% From 2014

Acquisition-hungry Home Bancshares Inc. kept its lucrative winning streak going during the second quarter as the Conway-based banking group reported its most profitable quarter in history on the bank’s strong loan portfolio, company officials announced on Thursday.

For the three month quarterly period, quarterly earnings jumped 19% to $33.9 million, or 50 cents per share, compared to $28.4 million or 43 cents per share for the same quarter in 2014. Excluding items related to intangible amortization, the fast-growing regional bank reported second quarter earnings of 51 cents per share compared to year ago earnings of 44 cents per share.

“I’m pleased to report the non-covered loan portfolio has increased $569.0 million since the first quarter. Excluding the acquisition of $289.1 million of national commercial real estate loans, our momentum for generating non-covered organic loan growth was great this quarter, growing non-covered loans organically by a record $279.9 million,” said Home Bancshares Chairman John Allison. “As a result of our strong capital position, we are adequately prepared to continue entertaining strategic opportunities in areas within and surrounding our existing footprint and supporting loan growth in our legacy organization.”

Home Bancshares CEO Randy Sims also applauded the bank’s strong second quarter performance. “For the seventeenth consecutive quarter, the second quarter of 2015 has become the most profitable quarter in the company’s history,” said Sims. “Additionally, on July 11, 2015, we completed the systems conversion of Doral Florida and now can speed up the process of improving the financial metrics to maximize returns to our shareholders.”

Besides completing the FDIC-assisted acquisition of Doral Bank in the Florida Panhandle, Home Bancshares and Florida Business BancGroup Inc., parent company of Bay Cities Bank headquartered in Tampa, Fla., announced merger plans in mid-June in a transaction valued at $101.6 million.

Florida Business BancGroup currently operates 6 branch locations and a loan production office in the Tampa Bay area and in Sarasota, Florida. Upon completion of the acquisition, Home Bancshares will have approximately $8.5 billion in total assets.

Key financial highlights for the bank’s first quarter included:

• Net interest income for the second quarter of 2015 increased 9.5% to $85.4 million from $78 million during the second quarter of 2014.
• The company experienced an $814,000 decrease in the provision for loan losses for non-covered loans during the second quarter of 2015 versus 2014. The decrease is primarily a reflection of a slowdown in the migration of the acquired Liberty loans from purchased-loan accounting treatment to originated-loan accounting treatment offset by provisioning for second quarter 2015 organic loan growth.
• The Conway bank reported $17 million of non-interest income for the second quarter of 2015, compared to $11.5 million for the second quarter of 2014.
• Non-interest expense for the second quarter of 2015 was $43.3 million compared to $38.6 million for the second quarter of 2014. This increase was primarily associated with the establishment of the Centennial Commercial Finance Group (Centennial CFG) in New York City.
• Total assets were $8 billion at June 30, 2015 compared to $6.6 billion at March 31, 2014.
• Total deposits were $5.8 billion for the period ended June 30, compared to $5.2 billion for the same period a year ago.

Shares of Home Bancshares were up 29 cents at $38.29 in early trading on Thursday on the Nasdaq stock exchange, just off the Arkansas bank’s 52-week high of $38.38 touched on the previous day. The company’s stock has traded in the range of $27.68 per share and $38.38 per share during the past year.

Home Bancshares officials said in an effort to achieve efficiencies primarily from the acquisitions prior to 2015, the regional bank closed one Arkansas location during the second quarter of 2015 and has plans to close two Arkansas, one Alabama and two Florida locations during the third quarter of 2015.

The Arkansas banking group currently has 82 branches in Arkansas, 59 branches in Florida, 7 branches in Alabama and has opened a loan production office in New York City.