Home Bancshares’ quarterly net income declined from a year ago, but was still a strong $72.8 million in the third quarter of 2019. The Conway-based financial firm reported $80.3 million in net income in the third quarter of 2018.
A volatile interest rate environment and organic loan decline attributed for some of the overall net income fall-off from a year ago. Still, there were plenty of positives on the Home Bancshares’ books.
“Book value per common share was $14.80 at September 30, 2019 compared to $13.44 at September 30, 2018, an annual increase of 10.1%, and tangible book value per common share (non-GAAP) was $8.83 at September 30, 2019 compared to $7.68 at September 30, 2018, an annual increase of 15.0%,” said Home Bancshares Chairman John Allison.
“We made the strategic decision to participate in a stock repurchase program, although it is dilutive to tangible book,” Allison continued. “If we had not bought back stock, our year-over-year increase in tangible book value would have been 20.2%. These are numbers I am very proud of,” Allison added.
Highlights for Home Bancshares, the parent company of Centennial Bank, included:
- Total loans receivable were $10.77 billion at September 30, 2019 compared to $11.07 billion at December 31, 2018.
- Total deposits were $11.05 billion at September 30, 2019 compared to $10.90 billion at December 31, 2018.
- Total assets were $14.90 billion at September 30, 2019 compared to $15.30 billion at December 31, 2018.
- Net interest margin was 4.32% for the three-month period ended September 30, 2019 compared to 4.28% for the three-month period ended June 30, 2019.
“During the third quarter 2019, the company experienced approximately $281.2 million in organic loan decline. Centennial CFG experienced $170.9 million of organic loan decline and had loans of $1.50 billion at September 30, 2019. Our legacy footprint experienced $110.3 million in organic loan decline during the quarter,” the bank reported.
“Our Net Interest Margin has held the course in 2019, at 4.32% for the third quarter as compared to 4.28% in the second quarter and 4.30% in the first quarter,” said Tracy French, Centennial Bank President and Chief Executive Officer. “I think this speaks to the discipline within this company and is a performance metric we are very proud of,” French added.
Other highlights included:
- Net interest income on a fully taxable equivalent basis increased $1.9 million, or 1.35%, to $144.2 million for the three-month period ended September 30, 2019, from $142.3 million for the three-month period ended June 30, 2019.
- The company reported $24.7 million of non-interest income for the third quarter of 2019, compared to $23.1 million for the second quarter of 2019.
- Stockholders’ equity was $2.47 billion at September 30, 2019 compared to $2.35 billion at December 31, 2018, an increase of approximately $120.0 million.
Officials noted that during the third quarter of 2019, the state of Florida reduced its corporate income tax rate from 5.50% to 4.458% for the tax years January 1, 2019 through December 31, 2021.
“Because of this reduction, our third quarter income taxes were reduced by $763,000 of which $497,000 was related to the first six months of 2019,” Home Bancshares officials said.
Also, during the third quarter of 2019, the company made a strategic decision to surrender $47.5 million of its underperforming separate account bank owned life insurance (BOLI).
“When a BOLI contract is surrendered, the gains within the policy become taxable and a 10% IRS penalty is levied on the gain. As a result of the BOLI decision, the company recorded a $3.7 million tax expense related to this transaction,” bank officials noted.
Home Bancshares has 77 branches in Arkansas, 76 branches in Florida, five branches in Alabama and one branch in New York City.
Shares of Home Bancshares closed Wednesday (Oct. 16) at $18.84. The company’s stock has traded between a low of $15.35 and a high of $21.20 per share during the last year.