Quarterly income, revenue down at Home BancShares; bank chairman touts cash position

Home BancShares Chairman John Allison noted in the bank holding company’s first quarter earnings report that the company has more than $3.5 billion in cash to ride out “volatile” economic conditions and any negative impacts from an expected rise in interest rates.

The Conway-based financial company on Thursday (April 21) reported first quarter net income of $64.9 million, down 29% compared with $91.6 million in the first quarter of 2021. The 40 cents earnings per share beat the analysts’ consensus estimate of 38 cents. Home BancShares is the parent company of Centennial Bank.

First quarter revenue of $161.8 million was also below the $193.4 million in the first quarter of 2021, but was just above the consensus estimate of $161.39 million.

“The first quarter brought about record high wholesale prices, rising interest rates, future recession fears and global unrest, thus creating one of the most volatile quarters on record during my business career,” Allison noted in the statement. “We like how we have positioned ourselves in the market with over $3.5 billion in excess cash, and with rising interest rates, it seems as though we have played the chess game very well so far. We believe the Fed will be forced to continue raising rates at a faster pace in the near term. As a result, we could be poised to start deploying some of the cash in the remainder of the year.”

The volatile conditions have not prevented the bank from growing its cash position in the past 12 months. The bank’s cash and cash equivalents totaled $3.619 billion at the end of the first quarter, well above the $2.478 billion at the same period in 2021.

Home BancShares enters the second quarter by closing April 1 on its previously announced $918 million deal to acquire Amarillo-based Happy Bancshares. As of March 31, Happy had $6.76 billion in total assets, $3.6 billion in loans, and $5.85 billion in deposits.

Following are other key details in Thursday’s earnings report.
• Interest income in the quarter was $144.903 million, down 11% compared with the $162.651 million in interest income in the same quarter of 2021.
• Return on assets, a closely-watched metric in the banking sector, was 1.43% at the end of the quarter, down from 2.22% compared with the same period in 2021.
• Total assets at the end of the first quarter was $18.617 billion, more than the $17.24 billion at the end of the same quarter in 2021.
• Total deposits at the end of the first quarter was $14.58 billion, more than the $13.512 billion at the end of the same quarter in 2021.
• Loans receivable at the end of the quarter totaled $10.052 billion, down from $10.778 billion at the end of the same quarter in 2021.
• Of the total loans receivable, $7.281 billion were tied to real estate, down from $7.83 billion at the end of the same quarter in 2021.

Home BancShares has 76 branches in Arkansas, 78 branches in Florida, 62 branches in Texas, 5 branches in Alabama and one branch in New York City.

The company’s shares (HOMB: NASDAQ) closed Wednesday at $23.32. During the past 52 weeks the share price has ranged between $29.76 and $20.69.