Home Bancshares posts record 3Q profit of $80 million on continued loan growth

Home Bancshares Inc. posted a record quarterly profit of $80.3 million as the Conway-based regional banking group continued to benefit from loan growth across the company’s expanding Southeast U.S. footprint.

For the period ended Sept. 30, the parent company of Centennial Bank reported third quarter earnings of $80.3 million, or 46 cents per share, compared to year ago earnings of $76 million or 44 cents per share. Total revenue jumped 6% to $205.9 million, compared to $194.2 million a year ago.

“We are once again proud to report our most profitable quarter in the Company’s history,” said Home Bancshares CEO Randy Sims. “We continue to control expenses and are pleased to report another strong efficiency ratio of 37.23%.”

Home Bancshares third quarter earnings in 2017 included a reserve fund related to last year’s Hurricane Irma, a Category 4 hurricane that hit landfall in September 2017. That fund accrued $33.4 million of pre-tax hurricane expenses a year ago, along with $18.2 million of merger expenses associated with the Stonegate acquisition of $20.8 million and other expenses. As a result, the Conway regional bank’s three-month financial bounty represent an increase of $33.8 million or 72.8% compared to last year’s hurricane and acquisition-adjusted results. Wall Street had expected the bank to report third quarter earnings of 45 cents per share on revenue of $172.4 million, according to Thomson Reuters.

Home Bancshares’ executive team cheered the third quarter results as the bank moved forward from completion of its $400 million cash-and-stock deal earlier this summer to acquire Shore Premier Finance, a high-end East Coast financier of sail and powers boat that is now a new division within Centennial Bank.

Company Chairman Johnny Allison noted that because of the Arkansas bank reaching the $10 billion asset threshold following its Stonegate acquisition a year ago, Home Bancshares has incurred additional expenses related to the Dodd-Frank Act’s “Durbin amendment” stress test that limits transaction fees imposed on debit card merchants. The amendment, named after U.S. Sen. Richard Durbin, D-Ill., and introduced in 2010, proposed to restrict these interchange fees, which averaged 44 cents per transaction based on 1% to 3% of the transaction amount, to 12 cents per transaction for banks with $10 billion or more in assets.

“I am very proud to report that in our first quarter of swimming upstream with Durbin and (bank) expenses, Home Bancshares was still able to report record quarterly net income of $80.3 million and record quarterly loan originations of $987 million,” said Allison.

As highlighted, among the bank’s highlights in the third quarter, Home Bancshares announced record quarterly loan originations of $987 million. However, the bank experienced approximately $67.5 million in organic loan decline in the three-month period with Centennial accruing  $175.1 million of organic loan decline on loans of $1.47 billion.

“Our legacy footprint produced approximately $107.6 million in organic loan growth during the quarter,” bank officials said.

Total loans receivable for the quarter $10.83 billion compared to $10.33 billion at year-end. The company’s allowance for loan losses was $110.2 million through the third quarter, or 1.02% of total loans, compared to $110.3 million, or 1.07% of total loans, at the close of 2017.

Home Bancshares’ net interest margin, on a fully taxable equivalent basis, was 4.46% for the quarter just ended compared to 4.40% for the same quarter in 2017. Total deposits grew $10.62 billion, while total assets closed out the quarter at $14.91 billion. Home Bancshares’ stockholders’ equity was $2.34 billion in the third quarter, an increase of $136.7 million compared to year-ending totals.

During the fourth quarter of 2018, Home Bancshares officials said they plan to open a loan production office in Dallas. The bank has 77 branches in Arkansas, 76 branches in Florida, 5 branches in Alabama and one branch in New York City.