Home Bancshares 2Q earnings top $50 million, quarterly winning streak continues

by Wesley Brown (wesbrocomm@gmail.com) 102 views 

Home Bancshares ended the first half of 2017 with another strong financial performance as the Conway-based banking group continued its string of 25 straight profitable quarters that exceeded the results from the prior three-month period, bank officials announced Thursday (July 20).

For the period ended June 30, Home Bancshares reported second quarter earnings of $50.1 million, or 35 cents per share, compared to $43.5 million, or 31 cents per share, in the same period a year ago. Excluding merger expenses, second quarter earnings were 35 cents per share on revenue of $147.3 million.

Those results were ahead of Wall Street expectations with second quarter earnings of 33 cents per share on revenue of $133.4 million, according to a survey of banking analysts by Thomson Reuters.

“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 company chairman John Allison.

Home Bancshares’ strong second quarter results follow the Arkansas regional banking group’s historic first quarter milestone of crossing the $10 billion asset threshold, which subjects it to increased regulatory measures and a Dodd-Frank Act stress test for larger regional banking groups.

Home Bancshares also announced a deal in late March to merge with Stonegate Bank of Florida in a deal that will boost the Arkansas bank’s asset base to nearly $13.5 billion. The merger-of-equals pact calls for Stonegate to merge into Centennial with Stonegate shareholders receiving $50 million in cash and approximately $699.8 million of Home Bancshares common stock. Also, holders of outstanding Stonegate stock options will receive $28.6 million in cash.

Stonegate, based in the north Miami suburb of Pompano Beach, Fla., has 25 branch locations in Broward and Sarasota counties and other key markets in the Miami area. As of Dec. 31, 2016, Stonegate had $3.1 billion in total assets, $2.5 billion in total loans, and $2.7 billion in deposits. The deal will likely allow the Conway financial group’s Florida operations to outgrow its Arkansas bank’s physical footprint inside the state. Today, the bank’s Centennial subsidiary has 76 branches in Arkansas, 64 branches in Florida, 6 branches in Alabama and one branch in New York City.

In an effort to achieve efficiencies primarily from acquisitions, Home Bancshares’ officials said the Arkansas regional bank closed one branch in Sarasota and two locations in Ft. Lauderdale, Fla. During the second quarter of 2017, the Arkansas bank opened a branch location in Clearwater, Fla., and a loan production office in Los Angeles under the management of Centennial CFG.

“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.”

Pine Bluff-based Simmons First National Corp. is poised to also cross the $10 billion mark in the third quarter of 2017 after it closes on two acquisitions of community banks in Fort Worth, Texas and Stillwater, Okla. Based on current financial metrics, Home Bancshares and Simmons are both expected to have more than $13.5 billion in assets by the end of 2017.

The following are some key financial highlights for Home Bancshares in the second quarter:
• The bank’s net interest income for the second quarter was $107.3 million, an increase of 5.8% from $101.4 million in the same period of 2016. Net interest margin was 4.50% for the quarter just ended compared to 4.83% for the same quarter in 2016.

• In the second quarter, Home Bancshares reported $24.4 million of non-interest income, 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 million from service charges on deposits accounts, $3.8 million from mortgage lending income, and $2.8 million from other income.

• Total loans receivable rose to $7.83 billion in the second quarter, compared to $7.39 billion in the previous quarter. Total deposits and assets were $7.76 billion and $10.87 billion in the second quarter, respectively.

• Stockholders’ equity was $1.48 billion at June 30, compared to $1.33 billion at Dec. 31, 2016, an increase of $148.5 million. Book value per common share was $10.32 in the second quarter, compared to $9.45 at Dec. 31, 2016. Tangible book value per common share was $6.96 at March 31, 2017 compared to $7.23 for an annualized increase of 18.2%.

At the close of business Thursday, Home Bancshares’ stock price (NASDAQ: HOMB) fell 40 cents to $24.50. The Conway bank’s share price has traded in the range between $19.74 and $29.69 over the past 52 weeks.

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