HOMB Continues Stable Performance in Second Quarter Delivering Record Net Income Through First Six Months of 2021
07/15/2021 - 08:15 AM
CONWAY, Ark., July 15, 2021 (GLOBE NEWSWIRE) -- Home BancShares, Inc. (NASDAQ GS: HOMB), parent company of Centennial Bank, released quarterly earnings today.
Highlights of the Second Quarter of 2021:
Metric Q2 2021 Q1 2021 Q4 2020 Q3 2020 Q2 2020 Net Income $79.1 million $91.6 million $81.8 million $69.3 million $62.8 million Total Revenue (net) $172.4 million $193.4 million $181.9 million $176.1 million $173.7 million Income (loss) before income taxes $104.1 million $120.5 million $107.7 million $90.4 million $82.1 million Pre-tax, pre-provision, net income (PPNR) (non-GAAP)( 1 ) $99.4 million $120.5 million $107.7 million $104.4 million $102.7 million Pre-tax net income to total revenue (net) 60.42% 62.32% 59.19% 51.32% 47.25% P5NR (Pre-tax, pre-provision, profit percentage) (PPNR to total revenue (net)) (non-GAAP)(1) 57.66% 62.32% 59.19% 59.28% 59.15% ROA 1.81% 2.22% 1.97% 1.66% 1.55% NIM 3.61% 4.02% 4.00% 3.92% 4.11% NIM, excluding PPP loans (non-GAAP)( 1 ) 3.54% 3.87% 3.97% 3.98% 4.16% Purchase Accounting Accretion $5.8 million $5.5 million $5.7 million $7.0 million $7.0 million ROE 11.92% 14.15% 12.72% 10.97% 10.27% ROTCE (non-GAAP)(1) 19.12% 22.90% 20.96% 18.29% 17.40% Diluted Earnings Per Share $0.48 $0.55 $0.50 $0.42 $0.38 Non-Performing Assets to Total Assets 0.35% 0.38% 0.48% 0.47% 0.39% Common Equity Tier 1 Capital 15.0% 14.3% 13.4% 12.6% 12.0% Leverage 10.9% 11.1% 10.8% 10.4% 10.3% Tier 1 Capital 15.6% 14.9% 14.0% 13.2% 12.6% Total Risk-Based Capital 19.5% 18.8% 17.8% 16.9% 16.2% Allowance for Credit Losses to Total Loans 2.36% 2.25% 2.19% 2.12% 1.99% Allowance for Credit Losses to Total Loans, excluding PPP loans (non-GAAP)( 1 ) 2.47% 2.40% 2.33% 2.28% 2.14%
(1) Calculation of this metric and the reconciliation to GAAP are included in the schedules accompanying this release.
“An annualized look at gross revenue and pre-tax, pre-provision, net income (PPNR) shows us on a steady track for the last four years,” said John Allison, Chairman. “Net income for the six-month period ended June 30, 2021 was $170.7 million , or $1.03 earnings per share, which is a record for the Company,” Allison stated. “The continued stable performance our team delivers each quarter brings both a sense of pride and comfort during these unstable economic times,” Allison continued.
“Jamie Dimon recently stated that JP Morgan Chase is effectively ‘stockpiling cash’ with plans to be patient because he believes in being prepared for higher rates and more inflation,” quoted Tracy French, Centennial Bank President and Chief Executive Officer. “One of the hardest things we do is maintain our discipline, and although loan growth might seem a little slow, we too plan to be patient as we do not intend to sell the future of our Company. We won’t be one to reach out in the market for short term gain to create long term pain,” French added.
Operating Highlights
Net income for the three-month period ended June 30, 2021 was $79.1 million , or $0.48 earnings per share. Net income for the six-month period ended June 30, 2021 was $170.7 million , or $1.03 earnings per share, which is a record for the Company.
During the second quarter of 2021, the Company recorded a negative provision for unfunded commitments of $4.8 million , or $0.02 per share. This was primarily due to a single commercial & industrial loan for which a reserve was no longer considered necessary due to the borrower’s current cash flow position. The Company determined that an additional provision for credit losses on loans was not necessary as the current level of the allowance for credit losses was considered adequate as of June 30, 2021.
Our net interest margin was 3.61% for the three-month period ended June 30, 2021 compared to 4.02% for the three-month period ended March 31, 2021. The yield on loans was 5.40% and 5.56% for the three months ended June 30, 2021 and March 31, 2021, respectively, as average loans decreased from $11.02 billion to $10.54 billion . Additionally, the rate on interest bearing deposits decreased to 0.26% as of June 30, 2021 from 0.33% as of March 31, 2021, with average balances of $9.81 billion and $9.55 billion , respectively.
As of June 30, 2021, we had $473.9 million of Paycheck Protection Program (PPP) loans outstanding. These loans are at 1.00% plus the accretion of the origination fee. Excluding PPP loans, our net interest margin (non-GAAP) for the three-month period ended June 30, 2021 was 3.54% .(1) The PPP loans were accretive to the net interest margin by 7 basis points for the three-month period ended June 30, 2021 compared to 15 basis points for the three-month period ended March 31, 2021. This was primarily due to approximately $243.2 million of the Company’s PPP loans being forgiven during the second quarter of 2021 as well as the acceleration of deferred fees for the loans that were forgiven. The $243.2 million of PPP loans forgiven during the second quarter of 2021 were partially offset by $70.7 million in new PPP loan originations and funding during the second quarter of 2021. The deferred fee income decreased from $10.4 million to $6.3 million for the three-month periods ended March 31, 2021 and June 30, 2021, respectively.
The effects of the COVID-19 pandemic continued to create a significant amount of excess liquidity in the market. As a result of this excess liquidity, we had an increase of $966.6 million of average interest-bearing cash balances in the second quarter of 2021 compared to the first quarter of 2021. This excess liquidity diluted the net interest margin by 23 basis points for the three-month period ended June 30, 2021.
Purchase accounting accretion on acquired loans was $5.8 million and $5.5 million and average purchase accounting loan discounts were $38.6 million and $43.9 million for the three-month periods ended June 30, 2021 and March 31, 2021, respectively. Net amortization of time deposit premiums was $30,000 per quarter and net average remaining time deposit premiums were $85,000 and $115,000 for the three-month periods ended June 30, 2021 and March 31, 2021, respectively.
Net interest income on a fully taxable equivalent basis was $143.1 million for the three-month period ended June 30, 2021 and $149.9 million for the three-month period ended March 31, 2021. This decrease in net interest income for the three-month period ended June 30, 2021 was the result of an $8.2 million decrease in interest income, which was partially offset by a $1.3 million decrease in interest expense. The $8.2 million decrease in interest income was primarily the result of a $9.2 million decrease in loan interest income, which was partially offset by a $727,000 net increase in investment income and a $297,000 increase in interest-bearing balances due from banks. The $1.3 million decrease in interest expense was primarily the result of a decrease in interest expense on deposits.
The Company reported $31.1 million of non-interest income for the second quarter of 2021. The most important components of the second quarter non-interest income were $9.7 million from other service charges and fees, $6.2 million from mortgage lending income, $5.1 million from service charges on deposit accounts, $3.0 million from other income, $2.6 million from dividends from FHLB, FRB, FNBB and other, and a $1.3 million adjustment for the increase in fair market value of marketable securities. Included in the $2.6 million in dividends from FHLB, FRB, FNBB and other were $2.2 million in special dividends from equity investments. The Company is still currently involved in these investments; however, past performance does not guarantee future performance.
Non-interest expense for the second quarter of 2021 was $73.0 million . The most important components of the second quarter non-interest expense were $42.5 million from salaries and employee benefits, $15.6 million in other expense and $9.0 million in occupancy and equipment expenses. For the second quarter of 2021, our efficiency ratio was 41.08% .
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Financial Condition
Total loans receivable were $10.20 billion at June 30, 2021 compared to $10.78 billion at March 31, 2021. Total deposits were $13.89 billion at June 30, 2021 compared to $13.51 billion at March 31, 2021. Total assets were $17.63 billion at June 30, 2021 compared to $17.24 billion at March 31, 2021.
During the second quarter 2021, the Company experienced approximately $579.3 million in loan decline. Centennial CFG experienced $41.1 million of organic loan growth and had loans of $1.56 billion at June 30, 2021. Our legacy footprint experienced $447.9 million in organic loan decline and $172.5 million in PPP loan decline during the quarter.
Non-performing loans to total loans was 0.58% as of June 30, 2021 compared to 0.59% as of March 31, 2021. Non-performing assets to total assets decreased from 0.38% as of March 31, 2021 to 0.35% as of June 30, 2021. Net charge-offs were $2.5 million for both the first and second quarter of 2021.
Non-performing loans at June 30, 2021 were $22.4 million , $31.8 million , $380,000, $1.6 million and $2.7 million in the Arkansas, Florida, Alabama, Shore Premier Finance and Centennial CFG markets, respectively, for a total of $58.9 million . Non-performing assets at June 30, 2021 were $23.2 million , $32.9 million , $424,000, $1.6 million and $2.8 million in the Arkansas, Florida, Alabama, Shore Premier Finance and Centennial CFG markets, respectively, for a total of $60.9 million .
The Company’s allowance for credit losses on loans was $240.5 million at June 30, 2021, or 2.36% of total loans, compared to the allowance for credit losses of $242.9 million , or 2.25% of total loans, at March 31, 2021. The Company’s allowance for credit losses on loans to total loans, excluding PPP loans (non-GAAP), was 2.47% (1) at June 30, 2021. As of June 30, 2021 and March 31, 2021, the Company’s allowance for credit losses on loans was 407.99% and 383.47% of its total non-performing loans, respectively.
Stockholders’ equity was $2.70 billion at June 30, 2021 compared to $2.65 billion at March 31, 2021, an increase of approximately $51.0 million . The increase in stockholders’ equity was primarily associated with the $56.0 million increase in retained earnings and a $9.7 million increase in accumulated other comprehensive income, which was partially offset by net stock repurchases and share-based compensation activity of $14.7 million . Book value per common share was $16.39 at June 30, 2021 compared to $16.02 at March 31, 2021. Tangible book value per common share (non-GAAP) was $10.31(1) at June 30, 2021 compared to $9.95(1) at March 31, 2021, an increase of 14.51% on an annualized basis. ______________________________
Branches
The Company currently has 76 branches in Arkansas, 78 branches in Florida, 5 branches in Alabama and one branch in New York City.
Conference Call
Management will conduct a conference call to review this information at 1:00 p.m. CT (2:00 ET) on Thursday, July 15, 2021. We encourage all participants to pre-register for the conference call using the following link: https://dpregister.com/sreg/10157552/e986b17690 . Callers who pre-register will be given dial-in instructions and a unique PIN to gain immediate access to the live call. Participants may pre-register now, or at any time prior to the call, and will immediately receive simple instructions via email. The Home BancShares conference call will also be automatically scheduled as an event in your Outlook calendar.
Those without internet access or unable to pre-register may dial in and listen to the live call by calling 1-877-508-9586 and asking for the Home BancShares conference call. A replay of the call will be available by calling 1-877-344-7529, Passcode: 10157552, which will be available until July 22, 2021 at 10:59 p.m. CT (11:59 ET). Internet access to the call will be available live or in recorded version on the Company’s website at www.homebancshares.com under “Investor Relations” for 12 months.
Non-GAAP Financial Measures
This press release contains financial information determined by methods other than in accordance with generally accepted accounting principles (GAAP). The Company’s management uses these non-GAAP financial measures–including net income (earnings), as adjusted; pre-tax, pre-provision, net income (PPNR); pre-tax, pre-provision, profit percentage; diluted earnings per common share, as adjusted; return on average assets, as adjusted; return on average assets excluding intangible amortization; return on average common equity, as adjusted; return on average tangible common equity; return on average tangible common equity excluding intangible amortization; return on average tangible common equity, as adjusted; efficiency ratio, as adjusted; net interest margin, excluding PPP loans; allowance for credit losses to total loans, excluding PPP loans; tangible book value per common share and tangible common equity to tangible assets–to provide meaningful supplemental information regarding our performance. These measures typically adjust GAAP performance measures to include the tax benefit associated with revenue items that are tax-exempt, as well as adjust income available to common shareholders for certain significant items or transactions (including the effect of the PPP loans) that management believes are not indicative of the Company’s primary business operating results. Since the presentation of these GAAP performance measures and their impact differ between companies, management believes presentations of these non-GAAP financial measures provide useful supplemental information that is essential to a proper understanding of the operating results of the Company’s business. These non-GAAP disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found in the tables of this release.
General
This release may contain forward-looking statements regarding the Company’s plans, expectations, goals and outlook for the future. Statements in this press release that are not historical facts should be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements of this type speak only as of the date of this news release. By nature, forward-looking statements involve inherent risk and uncertainties. Various factors could cause actual results to differ materially from those contemplated by the forward-looking statements. These factors include, but are not limited to, the following: economic conditions, credit quality, interest rates, loan demand, real estate values and unemployment; disruptions, uncertainties and related effects on our business and operations as a result of the ongoing coronavirus (COVID-19) pandemic and measures that have been or may be implemented or imposed in response to the pandemic, including the impact on, among other things, credit quality and liquidity; the ability to identify, complete and successfully integrate new acquisitions; legislative and regulatory changes and risks and expenses associated with current and future legislation and regulations, including those in response to the COVID-19 pandemic; technological changes and cybersecurity risks; the effects of changes in accounting policies and practices; changes in governmental monetary and fiscal policies; political instability; competition from other financial institutions; potential claims, expenses and other adverse effects related to current or future litigation, regulatory examinations or other government actions; changes in the assumptions used in making the forward-looking statements; and other factors described in reports we file with the Securities and Exchange Commission (the “SEC”), including those factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on February 26, 2021.
Home BancShares, Inc. is a bank holding company, headquartered in Conway, Arkansas. Its wholly-owned subsidiary, Centennial Bank, provides a broad range of commercial and retail banking plus related financial services to businesses, real estate developers, investors, individuals and municipalities. Centennial Bank has branch locations in Arkansas, Florida, South Alabama and New York City. The Company’s common stock is traded through the NASDAQ Global Select Market under the symbol “HOMB.”
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Home BancShares, Inc. Consolidated End of Period Balance Sheets (Unaudited)
Jun. 30, Mar. 31, Dec. 31, Sep. 30, Jun. 30, (In thousands) 2021 2021 2020 2020 2020 ASSETS Cash and due from banks $ 182,226 $ 218,814 $ 242,173 $ 144,197 $ 185,047 Interest-bearing deposits with other banks 2,759,027 2,259,734 1,021,615 899,140 1,030,609 Cash and cash equivalents 2,941,253 2,478,548 1,263,788 1,043,337 1,215,656 Investment securities - available-for-sale, net of allowance for credit losses 3,053,712 2,539,123 2,473,781 2,361,900 2,238,005 Loans receivable 10,199,175 10,778,493 11,220,721 11,691,470 11,955,743 Allowance for credit losses (240,451 ) (242,932 ) (245,473 ) (248,224 ) (238,340 ) Loans receivable, net 9,958,724 10,535,561 10,975,248 11,443,246 11,717,403 Bank premises and equipment, net 278,502 278,620 278,614 280,364 279,498 Foreclosed assets held for sale 1,969 3,004 4,420 4,322 6,292 Cash value of life insurance 104,132 103,599 103,519 102,989 102,443 Accrued interest receivable 48,725 55,495 60,528 72,599 80,274 Deferred tax asset, net 72,273 77,145 70,249 75,167 74,333 Goodwill 973,025 973,025 973,025 973,025 973,025 Core deposit and other intangibles 27,886 29,307 30,728 32,149 33,569 Other assets 166,991 166,814 164,904 160,660 174,908 Total assets $ 17,627,192 $ 17,240,241 $ 16,398,804 $ 16,549,758 $ 16,895,406 LIABILITIES AND STOCKHOLDERS’ EQUITY Liabilities Deposits: Demand and non-interest-bearing $ 4,076,570 $ 3,859,722 $ 3,266,753 $ 3,207,967 $ 3,413,727 Savings and interest-bearing transaction accounts 8,744,900 8,477,208 8,212,240 8,011,200 7,970,979 Time deposits 1,069,871 1,175,664 1,246,797 1,718,299 1,793,230 Total deposits 13,891,341 13,512,594 12,725,790 12,937,466 13,177,936 Securities sold under agreements to repurchase 150,540 162,929 168,931 158,447 162,858 FHLB and other borrowed funds 400,000 400,000 400,000 403,428 531,432 Accrued interest payable and other liabilities 118,415 148,999 127,999 139,485 161,095 Subordinated debentures 370,707 370,515 370,326 370,133 369,939 Total liabilities 14,931,003 14,595,037 13,793,046 14,008,959 14,403,260 Stockholders’ equity Common stock 1,645 1,651 1,651 1,652 1,652 Capital surplus 1,501,615 1,516,286 1,520,617 1,520,103 1,518,631 Retained earnings 1,163,810 1,107,818 1,039,370 980,699 932,856 Accumulated other comprehensive income 29,119 19,449 44,120 38,345 39,007 Total stockholders’ equity 2,696,189 2,645,204 2,605,758 2,540,799 2,492,146 Total liabilities and stockholders’ equity $ 17,627,192 $ 17,240,241 $ 16,398,804 $ 16,549,758 $ 16,895,406
Home BancShares, Inc. Consolidated Statements of Income (Unaudited)
Quarter Ended Six Months Ended Jun. 30, Mar. 31, Dec. 31, Sep. 30, Jun. 30, Jun. 30, Jun. 30, (In thousands) 2021 2021 2020 2020 2020 2021 2020 Interest income Loans $ 141,684 $ 150,917 $ 153,407 $ 154,787 $ 158,996 $ 292,601 $ 317,144 Investment securities Taxable 7,185 6,253 6,900 7,227 8,693 13,438 18,469 Tax-exempt 4,905 5,071 4,979 4,367 3,698 9,976 6,812 Deposits - other banks 707 410 270 252 211 1,117 1,327 Federal funds sold - - - - - - 21 Total interest income 154,481 162,651 165,556 166,633 171,598 317,132 343,773 Interest expense Interest on deposits 6,434 7,705 10,596 13,200 15,116 14,139 39,314 Federal funds purchased - - - - - - 13 FHLB borrowed funds 1,896 1,875 1,917 2,235 2,656 3,771 5,354 Securities sold under agreements to repurchase 107 190 208 237 260 297 722 Subordinated debentures 4,792 4,793 4,810 4,823 4,899 9,585 9,978 Total interest expense 13,229 14,563 17,531 20,495 22,931 27,792 55,381 Net interest income 141,252 148,088 148,025 146,138 148,667 289,340 288,392 Provision for credit losses - loans - - - 14,000 11,441 - 98,264 Provision for credit loss - unfunded commitments (4,752 ) - - - 9,214 (4,752 ) 16,989 Total credit loss expense (4,752 ) - - 14,000 20,655 (4,752 ) 115,253 Net interest income after provision for credit losses 146,004 148,088 148,025 132,138 128,012 294,092 173,139 Non-interest income Service charges on deposit accounts 5,116 5,002 5,544 4,910 4,296 10,118 10,927 Other service charges and fees 9,659 7,608 8,425 8,539 7,666 17,267 13,722 Trust fees 444 522 420 378 397 966 835 Mortgage lending income 6,202 8,167 10,071 10,177 6,196 14,369 8,817 Insurance commissions 478 492 366 271 533 970 1,211 Increase in cash value of life insurance 537 502 534 548 558 1,039 1,118 Dividends from FHLB, FRB, FNBB & other 2,646 8,609 967 3,433 230 11,255 8,072 Gain on SBA loans 1,149 - 304 - - 1,149 341 (Loss) gain on branches, equipment and other assets, net (23 ) (29 ) 217 (27 ) 54 (52 ) 136 Gain on OREO, net 619 401 150 470 235 1,020 512 Gain on securities, net - 219 - - - 219 - Fair value adjustment for marketable securities 1,250 5,782 4,271 (1,350 ) 919 7,032 (4,899 ) Other income 3,043 8,001 2,616 2,602 3,939 11,044 7,158 Total non-interest income 31,120 45,276 33,885 29,951 25,023 76,396 47,950 Non-interest expense Salaries and employee benefits 42,462 42,059 43,022 41,511 40,088 84,521 79,417 Occupancy and equipment 9,042 9,237 9,801 9,566 10,172 18,279 19,045 Data processing expense 5,893 5,870 5,171 4,921 4,614 11,763 8,940 Other operating expenses 15,585 15,700 16,247 15,714 16,084 31,285 34,030 Total non-interest expense 72,982 72,866 74,241 71,712 70,958 145,848 141,432 Income (loss) before income taxes 104,142 120,498 107,669 90,377 82,077 224,640 79,657 Income tax expense (benefit) 25,072 28,896 25,875 21,057 19,250 53,968 16,323 Net income $ 79,070 $ 91,602 $ 81,794 $ 69,320 $ 62,827 $ 170,672 $ 63,334
Home BancShares, Inc. Selected Financial Information (Unaudited)
Quarter Ended Six Months Ended (Dollars and shares in thousands, Jun. 30, Mar. 31, Dec. 31, Sep. 30, Jun. 30, Jun. 30, Jun. 30, except per share data) 2021 2021 2020 2020 2020 2021 2020 PER SHARE DATA Diluted earnings per common share $ 0.48 $ 0.55 $ 0.50 $ 0.42 $ 0.38 $ 1.03 $ 0.38 Diluted earnings per common share, as adjusted, excluding fair value adjustment for marketable securities, special dividend from equity investment, gain on securities, recoveries on historic losses, branch write-off expense, outsourced special project expense & merger and acquisition expenses (non-GAAP)(1) 0.46 0.47 0.48 0.41 0.38 0.93 0.39 Basic earnings per common share 0.48 0.55 0.50 0.42 0.38 1.03 0.38 Dividends per share - common 0.14 0.14 0.14 0.13 0.13 0.28 0.26 Book value per common share 16.39 16.02 15.78 15.38 15.09 16.39 15.09 Tangible book value per common share (non-GAAP)(1) 10.31 9.95 9.70 9.30 8.99 10.31 8.99 STOCK INFORMATION Average common shares outstanding 164,781 165,257 165,119 165,200 165,163 165,018 165,588 Average diluted shares outstanding 165,226 165,446 165,119 165,200 165,163 165,314 165,588 End of period common shares outstanding 164,488 165,141 165,095 165,163 165,206 164,488 165,206 ANNUALIZED PERFORMANCE METRICS Return on average assets 1.81 % 2.22 % 1.97 % 1.66 % 1.55 % 2.01 % 0.81 % Return on average assets excluding fair value adjustment for marketable securities, special dividend from equity investment, gain on securities, recoveries on historic losses, branch write-off expense, outsourced special project expense & merger and acquisition expenses: (ROA, as adjusted) (non-GAAP)(1) 1.75 % 1.88 % 1.90 % 1.63 % 1.55 % 1.81 % 0.82 % Return on average assets excluding intangible amortization (non-GAAP)(1) 1.95 % 2.39 % 2.13 % 1.80 % 1.68 % 2.16 % 0.90 % Return on average common equity 11.92 % 14.15 % 12.72 % 10.97 % 10.27 % 13.02 % 5.16 % Return on average common equity excluding fair value adjustment for marketable securities, special dividend from equity investment, gain on securities, recoveries on historic losses, branch write-off expense, outsourced special project expense & merger and acquisition expenses: (ROE, as adjusted) (non-GAAP)(1) 11.54 % 11.96 % 12.23 % 10.76 % 10.28 % 11.75 % 5.20 % Return on average tangible common equity (non-GAAP)(1) 19.12 % 22.90 % 20.96 % 18.29 % 17.40 % 20.98 % 8.68 % Return on average tangible common equity excluding intangible amortization (non-GAAP)(1) 19.38 % 23.16 % 21.22 % 18.56 % 17.70 % 21.24 % 8.98 % Return on average tangible common equity excluding fair value adjustment for marketable securities, special dividend from equity investment, gain on securities, recoveries on historic losses, branch write-off expense, outsourced special project expense & merger and acquisition expenses: (ROTCE, as adjusted) (non-GAAP)(1) 18.51 % 19.35 % 20.15 % 17.93 % 17.41 % 18.92 % 8.75 %
(1) Calculation of this metric and the reconciliation to GAAP are included in the schedules accompanying this release.
Home BancShares, Inc. Selected Financial Information (Unaudited)
Quarter Ended Six Months Ended Jun. 30, Mar. 31, Dec. 31, Sep. 30, Jun. 30, Jun. 30, Jun. 30, (Dollars in thousands) 2021 2021 2020 2020 2020 2021 2020 Efficiency ratio 41.08 % 36.60 % 39.64 % 39.56 % 39.67 % 38.71 % 40.83 % Efficiency ratio, as adjusted (non-GAAP)(1) 42.06 % 40.67 % 40.67 % 40.08 % 39.38 % 41.35 % 40.34 % Net interest margin - FTE 3.61 % 4.02 % 4.00 % 3.92 % 4.11 % 3.81 % 4.17 % Net interest margin - FTE, excluding PPP loans (non-GAAP)(1) 3.54 % 3.87 % 3.97 % 3.98 % 4.16 % 3.70 % 4.19 % Fully taxable equivalent adjustment $ 1,810 $ 1,857 $ 1,778 $ 1,576 $ 1,434 $ 3,667 $ 2,661 Total revenue (net) 172,372 193,364 181,910 176,089 173,690 365,736 336,342 Pre-tax, pre-provision, net income (PPNR) (non-GAAP)(1) 99,390 120,498 107,669 104,377 102,732 219,888 194,910 Pre-tax net income to total revenue (net) 60.42 % 62.32 % 59.19 % 51.32 % 47.25 % 61.42 % 23.68 % P5NR (Pre-tax, pre-provision, profit percentage) (PPNR to total revenue (net)) (non-GAAP)(1) 57.66 % 62.32 % 59.19 % 59.28 % 59.15 % 60.12 % 57.95 % Total purchase accounting accretion 5,797 5,485 5,736 6,957 7,036 11,282 14,683 Average purchase accounting loan discounts 38,568 43,940 49,563 55,835 62,822 41,218 66,105 OTHER OPERATING EXPENSES Advertising $ 1,194 $ 1,046 $ 1,076 $ 902 $ 795 $ 2,240 $ 2,021 Merger and acquisition expenses - - - - - - 711 Amortization of intangibles 1,421 1,421 1,421 1,420 1,486 2,842 3,003 Electronic banking expense 2,616 2,238 2,282 2,426 2,054 4,854 3,769 Directors’ fees 414 383 359 429 412 797 836 Due from bank service charges 273 249 254 259 239 522 462 FDIC and state assessment 1,108 1,363 1,493 1,607 1,846 2,471 3,394 Insurance 787 781 795 766 711 1,568 1,457 Legal and accounting 1,058 846 790 1,235 1,278 1,904 2,197 Other professional fees 1,796 1,613 1,528 1,661 1,735 3,409 4,961 Operating supplies 465 487 440 460 553 952 1,088 Postage 292 338 315 328 313 630 640 Telephone 365 346 347 321 310 711 634 Other expense 3,796 4,589 5,147 3,900 4,352 8,385 8,857 Total other operating expenses $ 15,585 $ 15,700 $ 16,247 $ 15,714 $ 16,084 $ 31,285 $ 34,030
(1) Calculation of this metric and the reconciliation to GAAP are included in the schedules accompanying this release.
Home BancShares, Inc. Selected Financial Information (Unaudited)
Jun. 30, Mar. 31, Dec. 31, Sep. 30, Jun. 30, (Dollars in thousands) 2021 2021 2020 2020 2020 BALANCE SHEET RATIOS Total loans to total deposits 73.42 % 79.77 % 88.17 % 90.37 % 90.73 % Common equity to assets 15.30 % 15.34 % 15.89 % 15.35 % 14.75 % Tangible common equity to tangible assets (non-GAAP)(1) 10.20 % 10.12 % 10.41 % 9.88 % 9.35 % LOANS RECEIVABLE Real estate Commercial real estate loans Non-farm/non-residential $ 4,144,375 $ 4,289,142 $ 4,429,060 $ 4,342,141 $ 4,325,795 Construction/land development 1,541,482 1,612,973 1,562,298 1,748,928 1,818,151 Agricultural 126,293 113,382 114,431 89,476 105,554 Residential real estate loans Residential 1-4 family 1,316,485 1,437,546 1,536,257 1,665,628 1,730,716 Multifamily residential 332,256 377,661 536,538 491,380 482,635 Total real estate 7,460,891 7,830,704 8,178,584 8,337,553 8,462,851 Consumer 824,938 839,819 864,690 883,568 851,344 Commercial and industrial 1,612,826 1,794,787 1,896,442 2,161,818 2,228,816 Agricultural 69,152 65,017 66,869 85,365 80,023 Other 231,368 248,166 214,136 223,166 332,709 Loans receivable $ 10,199,175 $ 10,778,493 $ 11,220,721 $ 11,691,470 $ 11,955,743 Paycheck Protection Program (PPP) loans (net of discounts) (included in total loans receivable) 473,894 646,382 675,225 825,362 819,154 ALLOWANCE FOR CREDIT LOSSES Balance, beginning of period $ 242,932 $ 245,473 $ 248,224 $ 238,340 $ 228,923 Loans charged off 3,023 3,047 3,040 4,599 2,582 Recoveries of loans previously charged off 542 506 289 483 558 Net loans charged off 2,481 2,541 2,751 4,116 2,024 Provision for credit losses - loans - - - 14,000 11,441 Balance, end of period $ 240,451 $ 242,932 $ 245,473 $ 248,224 $ 238,340 Net charge-offs to average total loans 0.09 % 0.09 % 0.10 % 0.14 % 0.07 % Allowance for credit losses to total loans 2.36 % 2.25 % 2.19 % 2.12 % 1.99 % Allowance for credit losses to total loans, excluding PPP loans 2.47 % 2.40 % 2.33 % 2.28 % 2.14 % NON-PERFORMING ASSETS Non-performing loans Non-accrual loans $ 55,269 $ 59,142 $ 64,528 $ 65,148 $ 52,074 Loans past due 90 days or more 3,667 4,209 9,610 8,635 7,824 Total non-performing loans 58,936 63,351 74,138 73,783 59,898 Other non-performing assets Foreclosed assets held for sale, net 1,969 3,004 4,420 4,322 6,292 Other non-performing assets - - - 247 247 Total other non-performing assets 1,969 3,004 4,420 4,569 6,539 Total non-performing assets $ 60,905 $ 66,355 $ 78,558 $ 78,352 $ 66,437 Allowance for credit losses for loans to non-performing loans 407.99 % 383.47 % 331.10 % 336.42 % 397.91 % Non-performing loans to total loans 0.58 % 0.59 % 0.66 % 0.63 % 0.50 % Non-performing assets to total assets 0.35 % 0.38 % 0.48 % 0.47 % 0.39 %
(1) Calculation of this metric and the reconciliation to GAAP is included in the schedules accompanying this release.
Home BancShares, Inc. Consolidated Net Interest Margin (Unaudited)
Three Months Ended June 30, 2021 March 31, 2021 Average Income/ Yield/ Average Income/ Yield/ (Dollars in thousands) Balance Expense Rate Balance Expense Rate ASSETS Earning assets Interest-bearing balances due from banks $ 2,577,101 $ 707 0.11 % $ 1,610,463 $ 410 0.10 % Federal funds sold 51 - 0.00 % 119 - 0.00 % Investment securities - taxable 1,909,485 7,185 1.51 % 1,637,061 6,253 1.55 % Investment securities - non-taxable - FTE 864,416 6,527 3.03 % 848,158 6,732 3.22 % Loans receivable - FTE 10,541,466 141,872 5.40 % 11,023,139 151,113 5.56 % Total interest-earning assets 15,892,519 156,291 3.94 % 15,118,940 164,508 4.41 % Non-earning assets 1,598,840 1,599,950 Total assets $ 17,491,359 $ 16,718,890 LIABILITIES AND SHAREHOLDERS’ EQUITY Liabilities Interest-bearing liabilities Savings and interest-bearing transaction accounts $ 8,684,726 $ 3,960 0.18 % $ 8,338,791 $ 4,716 0.23 % Time deposits 1,123,287 2,474 0.88 % 1,209,431 2,989 1.00 % Total interest-bearing deposits 9,808,013 6,434 0.26 % 9,548,222 7,705 0.33 % Federal funds purchased - - 0.00 % - - 0.00 % Securities sold under agreement to repurchase 157,570 107 0.27 % 159,697 190 0.48 % FHLB borrowed funds 400,000 1,896 1.90 % 400,000 1,875 1.90 % Subordinated debentures 370,613 4,792 5.19 % 370,421 4,793 5.25 % Total interest-bearing liabilities 10,736,196 13,229 0.49 % 10,478,340 14,563 0.56 % Non-interest bearing liabilities Non-interest bearing deposits 3,966,968 3,480,050 Other liabilities 128,048 134,882 Total liabilities 14,831,212 14,093,272 Shareholders’ equity 2,660,147 2,625,618 Total liabilities and shareholders’ equity $ 17,491,359 $ 16,718,890 Net interest spread 3.45 % 3.85 % Net interest income and margin - FTE $ 143,062 3.61 % $ 149,945 4.02 %
Home BancShares, Inc. Consolidated Net Interest Margin (Unaudited)
Six Months Ended June 30, 2021 June 30, 2020 Average Income/ Yield/ Average Income/ Yield/ (Dollars in thousands) Balance Expense Rate Balance Expense Rate ASSETS Earning assets Interest-bearing balances due from banks $ 2,096,452 $ 1,117 0.11 % $ 542,066 $ 1,327 0.49 % Federal funds sold 84 - 0.00 % 2,609 21 1.62 % Investment securities - taxable 1,774,026 13,438 1.53 % 1,690,083 18,469 2.20 % Investment securities - non-taxable - FTE 856,332 13,259 3.12 % 417,919 8,981 4.32 % Loans receivable - FTE 10,780,972 292,985 5.48 % 11,399,178 317,636 5.60 % Total interest-earning assets 15,507,866 320,799 4.17 % 14,051,855 346,434 4.96 % Non-earning assets 1,599,393 1,674,486 Total assets $ 17,107,259 $ 15,726,341 LIABILITIES AND SHAREHOLDERS’ EQUITY Liabilities Interest-bearing liabilities Savings and interest-bearing transaction accounts $ 8,512,714 $ 8,677 0.21 % $ 7,346,281 $ 23,621 0.65 % Time deposits 1,166,121 5,462 0.94 % 1,899,673 15,693 1.66 % Total interest-bearing deposits 9,678,835 14,139 0.29 % 9,245,954 39,314 0.86 % Federal funds purchased - - 0.00 % 3,132 13 0.83 % Securities sold under agreement to repurchase 158,628 297 0.38 % 146,404 722 0.99 % FHLB borrowed funds 400,000 3,771 1.90 % 637,940 5,354 1.69 % Subordinated debentures 370,518 9,585 5.22 % 369,749 9,978 5.43 % Total interest-bearing liabilities 10,607,981 27,792 0.53 % 10,403,179 55,381 1.07 % Non-interest bearing liabilities Non-interest bearing deposits 3,724,854 2,724,537 Other liabilities 131,446 128,102 Total liabilities 14,464,281 13,255,818 Shareholders’ equity 2,642,978 2,470,523 Total liabilities and shareholders’ equity $ 17,107,259 $ 15,726,341 Net interest spread 3.64 % 3.89 % Net interest income and margin - FTE $ 293,007 3.81 % $ 291,053 4.17 %
Home BancShares, Inc. Non-GAAP Reconciliations (Unaudited)
Quarter Ended Six Months Ended (Dollars and shares in thousands, Jun. 30, Mar. 31, Dec. 31, Sep. 30, Jun. 30, Jun. 30, Jun. 30, except per share data) 2021 2021 2020 2020 2020 2021 2020 EARNINGS, AS ADJUSTED GAAP net income available to common shareholders (A) $ 79,070 $ 91,602 $ 81,794 $ 69,320 $ 62,827 $ 170,672 $ 63,334 Pre-tax adjustments Fair value adjustment for marketable securities (1,250 ) (5,782 ) (4,271 ) 1,350 (919 ) (7,032 ) 4,899 Special dividend from equity investment (2,200 ) (8,073 ) - (3,181 ) - (10,273 ) (7,004 ) Gain on securities - (219 ) - - - (219 ) - Recoveries on historic losses - (5,107 ) - - - (5,107 ) - Branch write-off expense - - - - 981 - 981 Outsourced special project expense - - - - - - 1,092 Merger and acquisition expenses - - - - - - 711 Total pre-tax adjustments (3,450 ) (19,181 ) (4,271 ) (1,831 ) 62 (22,631 ) 679 Tax-effect of adjustments (902 ) (5,013 ) (1,116 ) (479 ) 16 (5,915 ) 177 Total adjustments after-tax (B) (2,548 ) (14,168 ) (3,155 ) (1,352 ) 46 (16,716 ) 502 Earnings, as adjusted (C) $ 76,522 $ 77,434 $ 78,639 $ 67,968 $ 62,873 $ 153,956 $ 63,836 Average diluted shares outstanding (D) 165,226 165,446 165,119 165,200 165,163 165,314 165,588 GAAP diluted earnings per share: (A/D) $ 0.48 $ 0.55 $ 0.50 $ 0.42 $ 0.38 $ 1.03 $ 0.38 Adjustments after-tax: (B/D) (0.02 ) (0.08 ) (0.02 ) (0.01 ) - (0.10 ) 0.01 Diluted earnings per common share, as adjusted, excluding fair value adjustment for marketable securities, special dividend from equity investment, gain on securities, recoveries on historic losses, branch write-off expense, outsourced special project expense & merger and acquisition expenses: (C/D) $ 0.46 $ 0.47 $ 0.48 $ 0.41 $ 0.38 $ 0.93 $ 0.39 ANNUALIZED RETURN ON AVERAGE ASSETS Return on average assets: (A/G) 1.81 % 2.22 % 1.97 % 1.66 % 1.55 % 2.01 % 0.81 % Return on average assets excluding fair value adjustment for marketable securities, special dividend from equity investment, gain on securities, recoveries on historic losses, branch write-off expense, outsourced special project expense & merger and acquisition expenses: (ROA, as adjusted) ((A+F)/G) 1.75 % 1.88 % 1.90 % 1.63 % 1.55 % 1.81 % 0.82 % Return on average assets excluding intangible amortization: ((A+E)/(G-H)) 1.95 % 2.39 % 2.13 % 1.80 % 1.68 % 2.16 % 0.90 % GAAP net income available to common shareholders (A) $ 79,070 $ 91,602 $ 81,794 $ 69,320 $ 62,827 $ 170,672 $ 63,334 Amortization of intangibles (D) 1,421 1,421 1,421 1,420 1,486 2,842 3,003 Amortization of intangibles after-tax (E) 1,049 1,049 1,049 1,049 1,098 2,098 2,218 Adjustments after-tax (F) (2,548 ) (14,168 ) (3,155 ) (1,352 ) 46 (16,716 ) 502 Average assets (G) 17,491,359 16,718,890 16,493,066 16,594,495 16,319,206 17,107,259 15,726,341 Average goodwill, core deposits & other intangible assets (H) 1,001,598 1,003,011 1,004,432 1,005,864 1,007,307 1,002,301 1,003,156
Home BancShares, Inc. Non-GAAP Reconciliations (Unaudited)
Quarter Ended Six Months Ended Jun. 30, Mar. 31, Dec. 31, Sep. 30, Jun. 30, Jun. 30, Jun. 30, (Dollars in thousands) 2021 2021 2020 2020 2020 2021 2020 ANNUALIZED RETURN ON AVERAGE COMMON EQUITY Return on average common equity: (A/D) 11.92 % 14.15 % 12.72 % 10.97 % 10.27 % 13.02 % 5.16 % Return on average common equity excluding fair value adjustment for marketable securities, special dividend from equity investment, gain on securities, recoveries on historic losses, branch write-off expense, outsourced special project expense & merger and acquisition expenses: (ROE, as adjusted) ((A+C)/D) 11.54 % 11.96 % 12.23 % 10.76 % 10.28 % 11.75 % 5.20 % Return on average tangible common equity: (A/(D-E)) 19.12 % 22.90 % 20.96 % 18.29 % 17.40 % 20.98 % 8.68 % Return on average tangible common equity excluding intangible amortization: (B/(D-E)) 19.38 % 23.16 % 21.22 % 18.56 % 17.70 % 21.24 % 8.98 % Return on average tangible common equity excluding fair value adjustment for marketable securities, special dividend from equity investment, gain on securities, recoveries on historic losses, branch write-off expense, outsourced special project expense & merger and acquisition expenses: (ROTCE, as adjusted) ((A+C)/(D-E)) 18.51 % 19.35 % 20.15 % 17.93 % 17.41 % 18.92 % 8.75 % GAAP net income available to common shareholders (A) $ 79,070 $ 91,602 $ 81,794 $ 69,320 $ 62,827 $ 170,672 $ 63,334 Earnings excluding intangible amortization (B) 80,119 92,651 82,843 70,369 63,925 172,770 65,553 Adjustments after-tax (C) (2,548 ) (14,168 ) (3,155 ) (1,352 ) 46 (16,716 ) 502 Average common equity (D) 2,660,147 2,625,618 2,557,251 2,513,792 2,459,941 2,642,978 2,470,523 Average goodwill, core deposits & other intangible assets (E) 1,001,598 1,003,011 1,004,432 1,005,864 1,007,307 1,002,301 1,003,156 EFFICIENCY RATIO & P5NR Efficiency ratio: ((D-F)/(B+C+E)) 41.08 % 36.60 % 39.64 % 39.56 % 39.67 % 38.71 % 40.83 % Efficiency ratio, as adjusted: ((D-F-H)/(B+C+E-G)) 42.06 % 40.67 % 40.67 % 40.08 % 39.38 % 41.35 % 40.34 % Pre-tax net income to total revenue (net) (A/(B+C)) 60.42 % 62.32 % 59.19 % 51.32 % 47.25 % 61.42 % 23.68 % Pre-tax, pre-provision, net income (PPNR) (B+C-D) $ 99,390 $ 120,498 $ 107,669 $ 104,377 $ 102,732 $ 219,888 $ 194,910 P5NR (Pre-tax, pre-provision, profit percentage) PPNR to total revenue (net) (B+C-D)/(B+C) 57.66 % 62.32 % 59.19 % 59.28 % 59.15 % 60.12 % 57.95 % Pre-tax net income (A) $ 104,142 $ 120,498 $ 107,669 $ 90,377 $ 82,077 $ 224,640 $ 79,657 Net interest income (B) 141,252 148,088 148,025 146,138 148,667 289,340 288,392 Non-interest income (C) 31,120 45,276 33,885 29,951 25,023 76,396 47,950 Non-interest expense (D) 72,982 72,866 74,241 71,712 70,958 145,848 141,432 Fully taxable equivalent adjustment (E) 1,810 1,857 1,778 1,576 1,434 3,667 2,661 Amortization of intangibles (F) 1,421 1,421 1,421 1,420 1,486 2,842 3,003 Adjustments: Non-interest income: Fair value adjustment for marketable securities $ 1,250 $ 5,782 $ 4,271 $ (1,350 ) $ 919 $ 7,032 $ (4,899 ) Gain (loss) on OREO 619 401 150 470 235 1,020 512 Gain (loss) on branches, equipment and other assets, net (23 ) (29 ) 217 (27 ) 54 (52 ) 136 Special dividend from equity investment 2,200 8,073 - 3,181 - 10,273 7,004 Gain (loss) on securities - 219 - - - 219 - Recoveries on historic losses - 5,107 - - - 5,107 - Total non-interest income adjustments (G) $ 4,046 $ 19,553 $ 4,638 $ 2,274 $ 1,208 $ 23,599 $ 2,753 Non-interest expense: Branch write-off expense $ - $ - $ - $ - $ 981 $ - $ 981 Merger Expenses - - - - - - 711 Outsourced special project expense - - - - - - 1,092 Total non-interest expense adjustments (H) $ - $ - $ - $ - $ 981 $ - $ 2,784
Home BancShares, Inc. Non-GAAP Reconciliations (Unaudited)
Quarter Ended Six Months Ended Jun. 30, Mar. 31, Dec. 31, Sep. 30, Jun. 30, Jun. 30, Jun. 30, (Dollars in thousands) 2021 2021 2020 2020 2020 2021 2020 ANNUALIZED NET INTEREST MARGIN Net interest margin: (A/C) 3.61 % 4.02 % 4.00 % 3.92 % 4.11 % 3.81 % 4.17 % Net interest margin, excluding PPP loans: (B/D) 3.54 % 3.87 % 3.97 % 3.98 % 4.16 % 3.70 % 4.19 % Net interest income - FTE (A) $ 143,062 $ 149,945 $ 149,803 $ 147,714 $ 150,101 $ 293,007 $ 291,053 PPP loan interest & discount accretion income 7,802 11,878 8,841 5,943 4,450 19,680 4,450 Net interest income - FTE, excluding PPP loans (B) $ 135,260 $ 138,067 $ 140,962 $ 141,771 $ 145,651 $ 273,327 $ 286,603 Average interest-earning assets (C) $ 15,892,519 $ 15,118,940 $ 14,900,381 $ 14,975,146 $ 14,678,465 $ 15,507,866 $ 14,051,855 Average PPP loans 581,371 633,790 775,861 821,977 585,946 607,436 292,973 Average interest-earning assets, excluding PPP loans (D) $ 15,311,148 $ 14,485,150 $ 14,124,520 $ 14,153,169 $ 14,092,519 $ 14,900,430 $ 13,758,882 Jun. 30, Mar. 31, Dec. 31, Sep. 30, Jun. 30, 2021 2021 2020 2020 2020 TANGIBLE BOOK VALUE PER COMMON SHARE Book value per common share: (A/B) $ 16.39 $ 16.02 $ 15.78 $ 15.38 $ 15.09 Tangible book value per common share: ((A-C-D)/B) 10.31 9.95 9.70 9.30 8.99 Total stockholders’ equity (A) $ 2,696,189 $ 2,645,204 $ 2,605,758 $ 2,540,799 $ 2,492,146 End of period common shares outstanding (B) 164,488 165,141 165,095 165,163 165,206 Goodwill (C) 973,025 973,025 973,025 973,025 973,025 Core deposit and other intangibles (D) 27,886 29,307 30,728 32,149 33,569 TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS Equity to assets: (B/A) 15.30 % 15.34 % 15.89 % 15.35 % 14.75 % Tangible common equity to tangible assets: ((B-C-D)/(A-C-D)) 10.20 % 10.12 % 10.41 % 9.88 % 9.35 % Total assets (A) $ 17,627,192 $ 17,240,241 $ 16,398,804 $ 16,549,758 $ 16,895,406 Total stockholders’ equity (B) 2,696,189 2,645,204 2,605,758 2,540,799 2,492,146 Goodwill (C) 973,025 973,025 973,025 973,025 973,025 Core deposit and other intangibles (D) 27,886 29,307 30,728 32,149 33,569
