Home Bancshares posts third consecutive record quarter despite pandemic

Home Bancshares, parent company for Centennial Bank, posted strong fourth quarter earnings as the Conway-based financial institution recorded its third straight record quarter despite the coronavirus pandemic.

Net income was $81.8 million in the fourth quarter, up from $73.3 million one year ago. Earnings per share were 50 cents compared to 44 cents in 2019’s fourth quarter. Home Bancshares blew past consensus estimates of 41 cents earnings per share for the quarter.

Quarterly revenue climbed higher from last year’s $167.8 million to $181.9 million during the fourth quarter of 2020.

Year-over-year, Home Bancshares profitability fell significantly due to the COVID-19 crisis. Total net income in 2020 was $214.4 million compared to 2019 net income of $289.7 million. In the first quarter of 2020, Home Bancshares made a number of preventative accounting adjustments to shore up the bank’s reserves and potential losses, including a one-time $71.7 million provision for credit concerns related to COVID-19’s impact.

During the fourth quarter of 2020, the company did not record any credit loss expense, it said. As of December 31, 2020, Home Bancshares reported $691.7 million of Paycheck Protection Program (PPP) loans outstanding.

“While 2020 was dark in many ways, the lights were definitely on at Home Bancshares,” said Home Bancshares Chairman John Allison. “Q1 was an anomaly with the implementation of CECL [Current Expected Credit Losses], but it was followed up with record numbers in quarters two, three and four, and for that, I couldn’t be more pleased.”

“Fifty cents earnings per share is a record I’m particularly proud of,” Allison added.

“Our talented team of bankers delivered record net income for the quarter of $81.8 million and our income before income taxes came in strong at $107.7 million,” said CEO Tracy French. “During one of the hardest years for business and the economy, I’m proud of how our bankers worked to assist their customers in their time of need while still churning out impressive best in class numbers throughout the year.”

Other highlights from the quarter include:

• Net interest income increased $2.1 million, or 1.4%, to $149.8 million for the three-month period ended December 31, 2020, from $147.7 million for the three-month period ended September 30, 2020.
• The company reported $33.9 million of non-interest income for the fourth quarter of 2020. Non-interest income for the fourth quarter of 2020 included a $4.3 million adjustment for the increase in fair market value of marketable securities.
• Net interest margin was 4.00% for the three-month period ended December 31, 2020 compared to 3.92% for the three-month period ended September 30, 2020.
• Yield on loans was 5.33% and 5.24% for the three months ended December 31, 2020 and September 30, 2020, respectively, as average loans decreased from $11.76 billion to $11.46 billion.
• The rate on interest bearing deposits decreased to 0.44% as of December 31, 2020 from 0.54% as of September 30, 2020, with average balances of $9.59 billion and $9.68 billion, respectively.

Home Bancshares stock (NASDAQ: HOMB) was trading at $21.32 per share around midday. The company’s share price has traded as low as $9.71 and as high as $21.95 during the past year.