Home BancShares’ 2Q earnings jump 28%, highest quarterly profit in bank’s history

Conway-based Home BancShares Inc. posted record quarterly profits as the parent company of Centennial Bank continues to grow its loan portfolio across Arkansas and other southern states, bank officials announced before the opening of trade on Thursday (July 21).

For the period ended June 30, Home BancShares earnings jumped to $43.5 million, or 31 cents per share, up 28.3% from $33.9 million or 25 cents per share for the same quarter in 2015. Banking analysts forecasted that the bank would report second quarter earnings of 30 cents per share, according to Thomson Reuters.

“During the second quarter of 2016, we continued our momentum growing both earnings and organic loans,” said Home BancShares Chairman John Allison. “Organic loans grew by $172.5 million for the quarter, while the core efficiency ratio improved again to an impressive 36.84%. Additionally, we are pleased to have crossed another milestone by reporting a quarterly return on assets greater than 1.80% for the second quarter of 2016 at 1.83%.”

According to Home BancShares officials, the record earnings for the three-month period ended June 20 continues the fast-growing bank’s consecutive win streak of 21 straight profitable quarters.

“The company’s second quarter financial results and organic loan growth are excellent considering the amount of loan payoffs during the quarter. This gives us the momentum to seek opportunities to expand our existing footprint or enter new markets,” said Tracy French, Centennial Bank President and CEO. “Because we have the ability to both generate and retain a substantial amount of capital each quarter, this puts us in the enviable position to self-fund the capital we need for organic growth opportunities as they arise.”

During the second quarter, Home BancShares officials said Conway community bank closed and sold its Clermont, Fla., location for a gain of $738,000. In the current quarter, Home BancShares also plans to add deposit operations to its loan production office in New York City and close one Arkansas location. The company has 77 branches in Arkansas, 58 branches in Florida, 6 branches in Alabama plus one branch and one loan production office in New York City.

With assets now topping $9.5 billion, Home BancShares moves even closer to the important banking milestone established by the Dodd-Frank Wall Street Reform and Consumer Protection Act as the regulatory baseline between super-community banks and larger regional banking groups. Little Rock-based Bank of the Ozarks topped the $10 billion mark in late 2015 and now has assets exceeding $12.3 billion. Simmons First is also nearing the regulatory landmark with reported assets of more than $7.5 billion.

Following are some key financial highlights for Home BancShares in the second quarter.
• Total non-covered loans were $6.96 billion at June 30, 2016 compared to $5.4 billion a year ago. Total covered loans were $57.4 million at June 30, 2016 compared to $159.8 million in the same period of 2015.

• Non-interest expense for the second quarter of 2016 was $47.6 million compared to $43.3 million for the second quarter of 2015. This increase is primarily associated with the establishment of the Centennial Commercial Finance Group (“Centennial CFG”) in New York City during the second quarter of 2015, the acquisition of FBBI during the fourth quarter of 2015 and $1.2 million of write-downs on vacant properties from closed branches during the second quarter of 2016, bank officials said.

• Total deposits were $6.71 billion at June 30, 2016, compared to $5.87 billion from a year ago. Total assets were $9.58 billion at June 30, 2016, up 17.7% from $8.07 billion in the second quarter of 2015.

• Stockholders’ equity was $1.26 billion at June 30, 2016 compared to $1.06 billion in the same period a year ago, an increase of $200 million. Book value per common share was $9.01 at June 30, 2016 compared to $8.55 (split adjusted) at Dec. 31, 2015.

• Net interest income for the second quarter of 2016 declined 38.4% to $101.4 million from $164.5 million during the second quarter of 2015.

• The Arkansas regional bank reported $21.7 million of non-interest income for the second quarter of 2016, compared to $31.7 million for the same period of 2015.

Shares of Home BancShares (NASDAQ: HOMB) closed in Wednesday’s session at $20.55, down 15 cents. The company’s stock has traded in the range of $16.93 per share and $23.75 per share during the past 52 weeks.