Home BancShares Inc., which acquired a major East Coast marine lending firm earlier this month, posted record second quarter profits largely on the strength of nearly a billion dollars in loan originations following the Arkansas financial concern’s historic acquisition of a south Florida community bank late last year.
For the period ended June 30, the parent company of Conway-based Centennial Bank reported net income of $76 million, or 44 cents per share, up 52% from $50 million, or 35 cents a year ago. Wall Street had expected the Arkansas regional bank to post first quarter earnings of 44 cents per share on revenue of nearly $167 million, according to Thomson Reuters.
“I have no complaints about our results for this quarter. They were outstanding,” said Home BancShares Chairman John Allison.
Added Home BancShares CEO Randy Sims, “We are once again proud to report our most profitable quarter in the company’s history. We had record net interest income with the majority of the organic loan growth being recorded late in the quarter … This becomes even more impressive considering the recent conversion of Stonegate in February and our ability to quickly reap the dividends of consolidation.”
During the second quarter, Home BancShares closed out a cash-and-stock deal valued at more than $400 million to acquire Shore Premier Finance (SPF) from Richmond, Va.-based Union Bank & Trust. SPF provides financing for high-end sail and power boats and has seen its loan portfolio grow from $60 million in 2014 to $353 million in the first quarter of 2018.
Under terms of the deal, Home BancShares paid out $374.5 million and provided 1.25 million shares of common stock to shareholders of the publicly-held East Coast banking concern. Based on the Arkansas bank’s share price at the close of the deal on July 2, the shares handed over to Union Bank shareholders were valued at $28.1 million.
Centennial said it has notified the Arkansas State Bank Department of plans to establish a new SPF loan production office this month in Chesapeake, Va. SPF, which will be a new division within Centennial, plans to build out a national lending platform focusing on commercial and consumer marine loans, company officials said.
Home BancShares also bolstered its board of directors and executives with key appointments two weeks ago. Veteran Florida banking executive Dave Seleski, the former CEO of Stonegate Bank of Florida that Home BancShares acquired in September 2017 for $820 million, was appointed to the bank’s board of directors. At the close of last year’s deal, Stonegate had $3.1 billion in assets, a loan portfolio of $2.44 billion and deposits valued at $2.6 billion.
Among other key highlights in the second quarter, Home BancShares announced record quarterly loan originations of $957.9 million with a loan yield of 5.66% resulting in $198.8 million of organic loan growth. Total loans receivable were $10.90 billion in the second quarter, while total deposits and assets ended the three month period at $10.74 billion and $14.92 billion, respectively.
The Arkansas regional bank also experienced approximately $198.8 million in organic loan growth, including $140.3 million from the bank’s CFG commercial real estate lending arm which had total loans of $1.65 billion. At the end of the quarter, Home BancShares’ legacy footprint produced approximately 81% of the $957.9 million in loan originations during the second quarter of 2018, bank officials said.
Home BancShares’ stockholders’ equity was $2.31 billion in the second quarter, compared to $2.2 billion at year’s end, an increase of $109.7 million. The increase in stockholders’ equity is primarily associated with the $111.9 million increase in retained earnings as well as the 1.25 million shares issued in the recent SPF acquisition. Those gains were partially offset by $20.2 million of comprehensive loss and the repurchase of $150 million of our common stock during 2018.
Book value per common share was $13.26 at the close of the three-month period, compared to $12.70 on Dec. 31, 2017. Tangible book value per common share was $7.52 for the quarter, up 12.8% from $7.07 at the close of 2017.
During the second quarter of 2018, the Arkansas regional bank opened one branch location in Jonesboro and announced plans to open a loan production office at SPF’s headquarters in Chesapeake, Va., in the third quarter. The Conway banking group has 77 branches in Arkansas, 76 branches in Florida, 5 branches in Alabama and one branch in New York City.
Ahead of Thursday’s opening bell, Home BancShares’ stock was trending up 47 cents at $23.24 per share. The bank’s shares traded down 7% for the year in the range of $20.82 as a low and $25.90 as a high over the past 52 weeks.