Home Bancshares’ profitable winning streak continues on strong loan portfolio growth

by Wesley Brown ([email protected]) 78 views 

Conway-based Home BancShares Inc., parent company of Centennial Bank, continued its quarterly earnings streak as the regional Arkansas bank saw organic loan growth of more than $90 million in third quarter and boosted total assets just below the $10 billion mark.

For the period ended Sept. 30, Home BancShares earnings jumped to $43.6 million, or 31 cents per share, up 28.3% from $35.7 million, or 26 cents per share for the same quarter in 2015. Excluding the $3.8 million of FDIC loss share buy-out expense, third quarter earnings improved to 33 cents per share, two cents better than Wall Street expectations, according to Thomson Reuters.

“We are pleased with the earnings performance this quarter, excluding expenses incurred to buy-out the FDIC loss share portfolio,” Home BancShares Chairman John Allison said in a statement. “We continue to see growth in loans and earnings and are committed to finding more efficient ways to provide exceptional service to our customers.”

According to Home BancShares officials, the record earnings for the three-month period ended Sept. 30 continues the fast-growing bank’s consecutive winning streak of profitable quarters that has lasted more than five years.

“The third quarter of 2016 marked the twenty-second consecutive quarter we have successively reported the most profitable quarter in the Company’s history,” said Randy Sims, CEO of Home BancShares Inc. “During the third quarter of 2016, we again improved our core efficiency ratio, reaching 36.51%. Our Company continues to search for opportunities to not only maximize our efficiencies but also increase earnings for the benefit of the shareholders.”

In an effort to achieve efficiencies primarily from several post-recession acquisitions, the Conway-based banking group added deposit operations to its loan production office in New York City and opened one branch location in Davie, Fla. The publicly-traded Arkansas financial group now has 77 branches in Arkansas, 59 branches in Florida, 6 branches in Alabama and one branch in New York City. During the fourth quarter, bank officials said the company plans to close one Arkansas location.

With assets now topping $9.76 billion, Home BancShares moves even closer to 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 milestone $10 billion mark in late 2015 and now has assets exceeding $12.3 billion. Pine Bluff-based Simmons First is also nearing the regulatory landmark with reported assets of more than $8.1 billion.

Following are some key financial highlights for Home BancShares in the third quarter.
• During the third quarter of 2016, Home Bancshares recorded a provision for loan loss of $5.5 million compared to $7.1 million in the third quarter of 2015. The $5.5 million of provision for loan loss is a reflection of the organic loan growth and net charge-offs for the third quarter of 2016.

• The Arkansas bank reported $22 million of non-interest income for the third quarter of 2016, compared to $16.5 million for the third quarter of 2015. The most important components of the third quarter non-interest income were $7.5 million from other service charges and fees, $6.5 million from service charges on deposits accounts, $3.9 million from mortgage lending income and $1.6 million from other income.

• Non-interest expense for the third quarter of 2016 was $51 million compared to $44.6 million for the third 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 $3.8 million FDIC loss-share buy-out expense recognized during the third quarter of 2016.

• Total loans receivable were $7.11 billion at Sept. 30, compared to $6.64 billion at Dec. 31, 2015. Total deposits were $6.84 billion versus $9.76 billion at the end of fiscal 2015.

• Stockholders’ equity was $1.3 billion at Sept. 30, 2016 compared to $1.2 billion at Dec. 31, 2015, an increase of $96.3 million.  Book value per common share was $9.22 at September 30, 2016 compared to $8.55 (split adjusted) at Dec. 31, 2015.

Shares of Home BancShares (NASDAQ: HOMB) closed in Wednesday’s session at $20.52, up 41 cents, or 2%. The company’s stock has traded in the range of $16.93 per share and $23.75 per share during the past 52 weeks.

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