Home Bancshares first quarter earnings jump 33%, assets near $10 billion milestone (UPDATED)

by Wesley Brown ([email protected]) 81 views 

Editor’s note: This article has been updated to include additional news regarding former Arkansas Gov. Mike Beebe’s addition to Home Bancshares board and a two-for-one stock split.


Conway-based Home Bancshares continues to execute on its fast-track growth operations plan as the bank holding company posted a 33% increase in its first quarter earnings and saw its 20th straight quarter of profit growth, company officials announced before the opening of trade on Thursday (April 21).

For the period ended March 31, Home Bancshares – parent company to Centennial Bank – earnings jumped to $41.4 million, or 59 cents per share, compared to $31.1 million or 46 cents per share for the same quarter in 2014. Banking analysts forecasted that the Arkansas bank would report first quarter earnings of 57 cents per share, according to Thomson Reuters.

“As anticipated, the Company has started the year with another outstanding quarter,” said Home Bancshares Chairman John Allison. “During the first quarter of 2016, we have continued to achieve and, in some cases, exceed our internal goals. We organically grew loans by $212.8 million while further improving the core efficiency ratio to 37.52%. We are well-positioned and committed to making 2016 another remarkable year of maximizing the returns to our shareholders.”

Added Home Bancshares CEO Randy Sims: “We are happy to report the first quarter of 2016 as the twentieth consecutive quarter reporting the most profitable quarter in the company’s history. The 10.7%, or $4.0 million increase in earnings over our previously reported record quarterly earnings is an impressive accomplishment.”

Last year, Home Bancshares completed the FDIC-assisted acquisition of Doral Bank in the Florida Panhandle and Florida Business BancGroup Inc., the parent company of Bay Cities Bank based in Tampa, Fla. The Bay Cities deal, valued at $101.6 million, was completed in October. Florida Business BancGroup operated 6 branch locations and a loan production office in the Tampa Bay area and in Sarasota, Fla.

During the first quarter, bank officials said they received approval to open a deposit-only branch location in New York City in the second quarter of this year. In an effort to achieve efficiencies primarily from the acquisitions, Home Bancshares said it closed two Arkansas locations and two Florida locations during the first quarter of 2016 and has plans to close one Florida location during the second quarter of 2016.

The bank has 77 branches in Arkansas, 59 branches in Florida, 6 branches in Alabama and a loan production office in New York City.

Total deposits were $6.58 billion at March 31, 2016 compared to $6.44 billion at Dec. 31, 2015. Total assets were $9.4 billion at March 31, 2016 compared to $9.29 billion at Dec. 31, 2015.

With assets nearing $10 billion, Home Bancshares is poised in 2016 to reach the important banking milestone established by the Dodd-Frank Wall Street Reform and Consumer Protection act as the regulatory baseline between super-community banks and larger regional banking groups. Little Rock-based Bank of the Ozarks topped the $10 billion mark in late 2015 and now has assets exceeding $11 billion. Simmons First, which also released its first quarter earnings report on Thursday, has assets of more than $8 billion.

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 Arkansas bank recorded a provision for loan loss of $5.7 million in the first quarter of 2016, compared to $3.8 million in the first quarter of 2015. This increase of $1.9 million is primarily a result of the $212.8 million organic loan growth generated during the first quarter of 2016 compared to $18.5 million generated in the first quarter of 2015.

• The bank reported $19.4 million of non-interest income for the first quarter of 2016, compared to $14.7 million for the first quarter of 2015. The most important components of the first quarter non-interest income were $7.1 million from other service charges and fees.

• Non-interest expense, excluding merger expenses for the first quarter of 2016 was $45.6 million compared to $39.3 million for the first quarter of 2015. This increase is primarily associated with the establishment of the Centennial Commercial Finance Group in New York City during the second quarter of 2015, the acquisition of FBBI during the fourth quarter of 2015 and write-downs on vacant properties from closed branches.

• Stockholders’ equity was $1.23 billion at March 31, 2016 compared to $1.2 billion at December 31, 2015, an increase of $28 million.  Book value per common share was $17.49 at March 31, 2016 compared to $17.11 at Dec. 31, 2015.

Shares of Home Bancshares (NASDAQ: HOMB) closed in Wednesday up 44 cents at $43.11. The company’s stock has traded in the range of $32.31 per share and $47.50 per share during the past 52 weeks.

Former Arkansas Gov. Mike Beebe (D) was named to the board of directors of Conway-based Home Bancshares on Thursday (April 21). The bank holding company, parent to Centennial Bank, also announced a 40% increase in its annual dividend and a two-for-one stock split.

“We continue to attract highly valued talent to our organization, including the addition of Mike Beebe to our board of directors,” said John Allison, Home Bancshares Chairman. “Our board aims to maintain both relevant skill sets and experience among its members, and we’re confident Mr. Beebe’s broad leadership experience, ability to collaborate and his long-time development and knowledge of business make him an excellent addition to what is already a strong and diverse board.”

Beebe is also a board member of Springdale-based Tyson Foods.

“Being from Arkansas, Home BancShares is one of the companies I’ve followed since its inception,” Beebe said. “I’ve been impressed with the tremendous growth this company has achieved throughout the years under the leadership of not only John Allison, but also the entire Home BancShares board of directors. It’s an honor to be selected to serve the company’s shareholders alongside these board members and become a part of the company’s growth story.”

Beebe was the Governor of the state of Arkansas from 2007 to 2015 and the state’s Attorney General from 2003 to 2007, prior to which he served as a state senator for 20 years. Beebe, an attorney, lives in Searcy and is an Arkansas State University graduate with a B.A. in political science and earned his J.D. from the University of Arkansas.

Earlier Thursday, Home Bancshares reported record first quarter earnings of $41.4 million, a 33% increase and the bank’s 20th straight quarter of profit growth. Its assets are nearing the $10 billion threshold.

The board of directors announced at Home Bancshares annual shareholders meeting that it has declared a regular $0.175 per share quarterly cash dividend payable June 1, 2016, to shareholders of record May 11, 2016. The cash dividend represents a $0.05 per share, or 40%, increase over the $0.125 cash dividend paid during the second quarter of 2015 and is a 16.7% increase over the $0.15 per share cash dividend paid during the first quarter of 2016.

In addition, the board of directors has declared a two-for-one stock split of its common stock payable in the form of a 100% stock dividend. The two-for-one stock split is payable June 8, 2016, to shareholders of record May 18, 2016.

The company currently has approximately 70,190,000 shares of common stock outstanding. After the stock split, the current number of shares of common stock outstanding will increase to approximately 140,380,000 shares.

Home Bancshares’ stock (NASDAQ: HOMB) closed at $42.50 on Thursday. The bank’s shares have traded between $32.31 and $47.50 during the last year.

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