Quarterly income, revenue down at Home BancShares

Third-quarter net income and total revenue were down for Conway-based Home BancShares compared with the same quarter in 2022. However, earnings per share of 49 cents beat the consensus estimate of 48 cents.

The bank holding company and parent company of Centennial Bank reported Thursday (Oct. 19) third-quarter net income of $98.5 million, down 9.4% compared with $108.7 million in the same quarter of 2022. Total revenue was $245.4 million, down 4.3% compared with the same quarter of 2022 and below the consensus estimate of $249.35 million.

Net income in the first nine months of 2023 reached $306.686 million, well above the $189.575 million in the same period of 2022. Combined interest and non-interest income in the nine-month period was $744.778 million, above the $661.461 million in the same period of 2022.

Bank officials said performance has been pressured in the “current high interest rate environment.” Part of the pressure comes from the types of deposits held by banks.

“The Company has continued to limit its exposure to uninsured deposits and has been actively monitoring this in light of the current banking environment,” noted the Home BancShares earnings report. “As of September 30, 2023, the Company held approximately $7.95 billion in uninsured deposits of which $568.5 million were intercompany subsidiary deposit balances and $2.65 billion were collateralized deposits, for a net position of $4.73 billion. This represents approximately 28.7% of total deposits. In addition, net available liquidity exceeded uninsured and uncollateralized deposits by $1.38 billion.”

Following are other details from the third quarter report.
• Total assets as of Sept. 30 was $21.95 billion, down from $23.157 billion at the same time in 2022.
• Total deposits as of Sept. 30 was $16.15 billion, down from $18.542 billion at the same time in 2022.
• Total loans receivable as of Sept. 30 was $14.271 billion, down from $13.829 billion at the same time in 2022.
• Return on assets, a closely watched metric in the banking sector, as of Sept. 30 was 1.78%, down from 1.81% at the same time in 2022.

A report also posted Thursday by the Federal Deposit Insurance Corp. (FDIC) reviewed higher interest rate pressures on the U.S. banking sector that began in 2022.

“In 2022, higher interest rates boosted net interest income, but banks eventually encountered decelerating loan growth, lower deposits, and increased funding costs by first quarter 2023,” the FDIC report noted.

Home BancShares has 76 branches in Arkansas, 78 branches in Florida, 63 branches in Texas, 5 branches in Alabama and one branch in New York City.

Shares of Home BancShares (NASDAQ: HOMB) closed Wednesday at $21.18 and opened lower in Thursday morning trading. During the past 52 weeks, the share price has ranged between $26.20 and $19.77.