HOMB’s Unwavering Discipline, Strong Margins, Great Efficiency, Hard Work and Smart Investments Led to First Quarter Record Revenue and Profits
04/15/2021 - 08:15 AM
CONWAY, Ark., April 15, 2021 (GLOBE NEWSWIRE) -- Home BancShares, Inc. (NASDAQ GS: HOMB), parent company of Centennial Bank, released record quarterly earnings today.
Highlights of the First Quarter of 2021:
Metric Q1 2021 Q4 2020 Q3 2020 Q2 2020 Q1 2020 Net Income $91.6 million $81.8 million $69.3 million $62.8 million $ 507,000 Total Revenue (net) $193.4 million $181.9 million $176.1 million $173.7 million $162.7 million Income (loss) before income taxes $120.5 million $107.7 million $90.4 million $82.1 million ($2.4 million ) Pre-tax net income, excluding provision for credit losses (PPNR) (non-GAAP)(1) $120.5 million $107.7 million $104.4 million $102.7 million $92.2 million Pre-tax net income to total revenue (net) 62.32 % 59.19 % 51.32 % 47.25 % -1.49 % P5NR (Pre-tax, pre-provision, profit percentage) (PPNR to total revenue (net)) (non-GAAP)(1) 62.32 % 59.19 % 59.28 % 59.15 % 56.67 % ROA 2.22 % 1.97 % 1.66 % 1.55 % 0.01 % ROA (pre-tax net income, excluding provision for credit losses) (non-GAAP)(1) 2.92 % 2.60 % 2.50 % 2.53 % 2.45 % ROA, excluding provision for credit losses 2.22 % 1.97 % 1.91 % 1.92 % 1.87 % (non-GAAP)(1) NIM 4.02 % 4.00 % 3.92 % 4.11 % 4.22 % NIM, excluding PPP loans (non-GAAP)(1) 3.87 % 3.97 % 3.98 % 4.16 % 4.22 % Purchase Accounting Accretion $5.5 million $5.7 million $7.0 million $7.0 million $7.6 million ROE 14.15 % 12.72 % 10.97 % 10.27 % 0.08 % ROTCE (non-GAAP)(1) 22.90 % 20.96 % 18.29 % 17.40 % 0.14 % Diluted Earnings Per Share $ 0.55 $ 0.50 $ 0.42 $ 0.38 $ 0.00 Non-Performing Assets to Total Assets 0.38 % 0.48 % 0.47 % 0.39 % 0.44 % Common Equity Tier 1 Capital 14.30 % 13.40 % 12.60 % 12.00 % 11.50 % Leverage 11.10 % 10.80 % 10.40 % 10.30 % 10.80 % Tier 1 Capital 14.90 % 14.00 % 13.20 % 12.60 % 12.10 % Total Risk-Based Capital 18.80 % 17.80 % 16.90 % 16.20 % 15.70 % Allowance for Credit Losses to Total Loans 2.25 % 2.19 % 2.12 % 1.99 % 2.01 % Allowance for Credit Losses to Total Loans, excluding PPP loans (non-GAAP)(1) 2.40 % 2.33 % 2.29 % 2.15 % 2.01 %
(1) Calculation of this metric and the reconciliation to GAAP are included in the schedules accompanying this release.
“Approximately $11 billion in loans at a yield of 5.56% including accretion, PPP income, and event income; a 36.60% efficiency ratio; a ‘never give up’ approach to charge-offs; starting to reap the benefits of investments; along with a record $91.6 million in net income is paying off handsomely for HOMB shareholders,” said John Allison, Chairman.
“Great results come down to customer service and extreme discipline. We communicate with our customers and we helped them through the PPP process and that results in a long-term trusting partnership,” said Tracy French, Centennial Bank President and Chief Executive Officer.
Operating Highlights
Net income and earnings per share were quarterly records for the Company. Net income increased $9.8 million , or 11.99% , to $91.6 million for the three-month period ended March 31, 2021, from $81.8 million for the three-month period ended December 31, 2020. Earnings per share increased $0.05 per share, or 10.00% , to $0.55 per share for the three-month period ended March 31, 2021, from $0.50 per share for the three-month period ended December 31, 2020.
During the first quarter of 2021, the Company did not record any credit loss expense. The Company’s provisioning model is closely tied to unemployment rate projections which have continued to improve since the fourth quarter of 2020. 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 March 31, 2021. In addition, the Company determined that the current level of the unfunded commitment reserve was adequate and no additional provision for unfunded commitments was necessary.
Our net interest margin was 4.02% for the three-month period ended March 31, 2021 compared to 4.00% for the three-month period ended December 31, 2020. The yield on loans was 5.56% and 5.33% for the three months ended March 31, 2021 and December 31, 2020, respectively, as average loans decreased from $11.46 billion to $11.02 billion . Additionally, the rate on interest bearing deposits decreased to 0.33% as of March 31, 2021 from 0.44% as of December 31, 2020, with average balances of $9.55 billion and $9.59 billion , respectively.
As of March 31, 2021, we had $667.3 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 March 31, 2021 was 3.87% .(1) The PPP loans had a 12-basis point accretive impact to the yield on loans, and the PPP loans were accretive to the net interest margin by 16 basis points. This was primarily due to approximately $313.8 million of the Company’s PPP loans being forgiven during the first quarter of 2021 as well as the acceleration of deferred fees for the loans that were forgiven. The $313.8 million of PPP loans forgiven during the first quarter of 2021 were partially offset by $289.4 million in new PPP loans originated during the first quarter of 2021. The deferred fee income increased from $6.9 million to $10.4 million for the three-month periods ended December 31, 2020 and March 31, 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 $581.4 million of average interest-bearing cash balances in the first quarter of 2021 compared to the fourth quarter of 2020. This excess liquidity diluted the net interest margin by 16 basis points.
Purchase accounting accretion on acquired loans was $5.5 million and $5.7 million and average purchase accounting loan discounts were $43.9 million and $49.6 million for the three-month periods ended March 31, 2021 and December 31, 2020, respectively. Net amortization of time deposit premiums was $30,000 per quarter and net average remaining time deposit premiums were $115,000 and $146,000 for the three-month periods ended March 31, 2021 and December 31, 2020, respectively.
Net interest income on a fully taxable equivalent basis increased $142,000 , or 0.09% , to $149.9 million for the three-month period ended March 31, 2021, from $149.8 million for the three-month period ended December 31, 2020. This increase in net interest income for the three-month period ended March 31, 2021 was the result of a $3.0 million decrease in interest expense, which was partially offset by a $2.8 million decrease in interest income. The $3.0 million decrease in interest expense was primarily the result of a $2.9 million decrease in interest expense on deposits and a $42,000 decrease in interest expense on FHLB borrowings. The $2.8 million decrease in interest income was primarily the result of a $2.5 million decrease in loan interest income, and a $465,000 net decrease in investment income.
The Company reported $45.3 million of non-interest income for the first quarter of 2021. The most important components of the first quarter non-interest income were $8.6 million from dividends from FHLB, FRB, FNBB and other, $8.2 million from mortgage lending income, $7.6 million from other service charges and fees, a $5.8 million adjustment for the increase in fair market value of marketable securities, $5.0 million from service charges on deposit accounts, and $8.0 million from other income. Included in the $8.6 million in dividends from FHLB, FRB, FNBB and other was $8.1 million in special dividends from equity investments. The Company is still currently involved in these investments; however, past performance does not guarantee future performance. The $8.0 million in other income includes a $5.1 million recovery on historic losses.
Mortgage lending income was $8.2 million for the three-month period ended March 31, 2021, compared to $10.1 million for the three-month period ended December 31, 2020. The housing market continues to benefit from the current low interest rate environment; however, the decrease in mortgage lending income from the fourth quarter of 2020 is the result of normal seasonal fluctuations and harsher winter weather in several of our markets.
Non-interest expense for the first quarter of 2021 was $72.9 million . The most important components of the first quarter non-interest expense were $42.1 million from salaries and employee benefits, $15.7 million in other expense and $9.2 million in occupancy and equipment expenses. For the first quarter of 2021, our efficiency ratio was 36.60% .
Financial Condition
Total loans receivable were $10.78 billion at March 31, 2021 compared to $11.22 billion at December 31, 2020. Total deposits were $13.51 billion at March 31, 2021 compared to $12.73 billion at December 31, 2020. Total assets were $17.24 billion at March 31, 2021 compared to $16.40 billion at December 31, 2020.
During the first quarter 2021, the Company experienced approximately $442.2 million in loan decline. Centennial CFG experienced $17.6 million of organic loan decline and had loans of $1.52 billion at March 31, 2021. Our legacy footprint experienced $400.2 million in organic loan decline and $24.4 million in PPP loan decline during the quarter.
Non-performing loans to total loans was 0.59% as of March 31, 2021 compared to 0.66% as of December 31, 2020. Non-performing assets to total assets decreased from 0.48% as of December 31, 2020 to 0.38% as of March 31, 2021. For the first quarter of 2021, net charge-offs were $2.5 million compared to net charge-offs of $2.8 million for the fourth quarter of 2020.
Non-performing loans at March 31, 2021 were $23.0 million , $35.1 million , $516,000 , $2.0 million and $2.8 million in the Arkansas, Florida, Alabama, Shore Premier Finance and Centennial CFG markets, respectively, for a total of $63.4 million . Non-performing assets at March 31, 2021 were $24.9 million , $36.1 million , $550,000 , $2.0 million and $2.8 million in the Arkansas, Florida, Alabama, Shore Premier Finance and Centennial CFG markets, respectively, for a total of $66.4 million .
The Company’s allowance for credit losses on loans was $242.9 million at March 31, 2021, or 2.25% of total loans, compared to the allowance for credit losses of $245.5 million , or 2.19% of total loans, at December 31, 2020. The Company’s allowance for credit losses on loans to total loans, excluding PPP loans (non-GAAP), was 2.40% (1) at March 31, 2021. As of March 31, 2021 and December 31, 2020, the Company’s allowance for credit losses on loans was 383.47% and 331.10% of its total non-performing loans, respectively.
(1) Calculation of this metric and the reconciliation to GAAP are included in the schedules accompanying this release.
Stockholders’ equity was $2.65 billion at March 31, 2021 compared to $2.61 billion at December 31, 2020, an increase of approximately $39.4 million . The increase in stockholders’ equity was primarily associated with the $68.4 million increase in retained earnings which was partially offset by a $24.7 million decrease in accumulated other comprehensive income. Book value per common share was $16.02 at March 31, 2021 compared to $15.78 at December 31, 2020. Tangible book value per common share (non-GAAP) was $9.95 (1) at March 31, 2021 compared to $9.70 (1) at December 31, 2020, an increase of 10.45% 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, April 15, 2021. We encourage all participants to pre-register for the conference call using the following link: https://dpregister.com/sreg/10153260/e502592c38 . 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: 10153260, which will be available until April 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 net income, excluding provision for credit losses; 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 assets (pre-tax net income, excluding provision for credit losses); return on average assets, excluding provision for credit losses; 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)
Mar. 31, Dec. 31, Sep. 30, Jun. 30, Mar. 31, (In thousands) 2021 2020 2020 2020 2020 ASSETS Cash and due from banks $ 218,814 $ 242,173 $ 144,197 $ 185,047 $ 147,200 Interest-bearing deposits with other banks 2,259,734 1,021,615 899,140 1,030,609 424,235 Cash and cash equivalents 2,478,548 1,263,788 1,043,337 1,215,656 571,435 Investment securities - available-for-sale, net of 2,539,123 2,473,781 2,361,900 2,238,005 2,098,000 Loans receivable 10,778,493 11,220,721 11,691,470 11,955,743 11,384,982 Allowance for credit losses (242,932 ) (245,473 ) (248,224 ) (238,340 ) (228,923 ) Loans receivable, net 10,535,561 10,975,248 11,443,246 11,717,403 11,156,059 Bank premises and equipment, net 278,620 278,614 280,364 279,498 281,795 Foreclosed assets held for sale 3,004 4,420 4,322 6,292 8,204 Cash value of life insurance 103,599 103,519 102,989 102,443 103,120 Accrued interest receivable 55,495 60,528 72,599 80,274 50,295 Deferred tax asset, net 77,145 70,249 75,167 74,333 77,110 Goodwill 973,025 973,025 973,025 973,025 973,025 Core deposit and other intangibles 29,307 30,728 32,149 33,569 35,055 Other assets 166,814 164,904 160,660 174,908 177,634 Total assets $ 17,240,241 $ 16,398,804 $ 16,549,758 $ 16,895,406 $ 15,531,732 LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities Deposits: Demand and non-interest-bearing $ 3,859,722 $ 3,266,753 $ 3,207,967 $ 3,413,727 $ 2,425,036 Savings and interest-bearing transaction accounts 8,477,208 8,212,240 8,011,200 7,970,979 7,149,644 Time deposits 1,175,664 1,246,797 1,718,299 1,793,230 1,940,234 Total deposits 13,512,594 12,725,790 12,937,466 13,177,936 11,514,914 Federal funds purchased - - - - - Securities sold under agreements to repurchase 162,929 168,931 158,447 162,858 126,884 FHLB and other borrowed funds 400,000 400,000 403,428 531,432 951,436 Accrued interest payable and other liabilities 148,999 127,999 139,485 161,095 138,479 Subordinated debentures 370,515 370,326 370,133 369,939 369,748 Total liabilities 14,595,037 13,793,046 14,008,959 14,403,260 13,101,461 Stockholders' equity Common stock 1,651 1,651 1,652 1,652 1,651 Capital surplus 1,516,286 1,520,617 1,520,103 1,518,631 1,516,151 Retained earnings 1,107,818 1,039,370 980,699 932,856 891,498 Accumulated other comprehensive income 19,449 44,120 38,345 39,007 20,971 Total stockholders' equity 2,645,204 2,605,758 2,540,799 2,492,146 2,430,271 Total liabilities and stockholders' equity $ 17,240,241 $ 16,398,804 $ 16,549,758 $ 16,895,406 $ 15,531,732
Home BancShares, Inc. Consolidated Statements of Income (Unaudited)
Quarter Ended Three Months Ended Mar. 31, Dec. 31, Sep. 30, Jun. 30, Mar. 31, Mar. 31, Mar. 31, (In thousands) 2021 2020 2020 2020 2020 2021 2020 Interest income Loans $ 150,917 $ 153,407 $ 154,787 $ 158,996 $ 158,148 $ 150,917 $ 158,148 Investment securities Taxable 6,253 6,900 7,227 8,693 9,776 6,253 9,776 Tax-exempt 5,071 4,979 4,367 3,698 3,114 5,071 3,114 Deposits - other banks 410 270 252 211 1,116 410 1,116 Federal funds sold - - - - 21 - 21 Total interest income 162,651 165,556 166,633 171,598 172,175 162,651 172,175 Interest expense Interest on deposits 7,705 10,596 13,200 15,116 24,198 7,705 24,198 Federal funds purchased - - - - 13 - 13 FHLB borrowed funds 1,875 1,917 2,235 2,656 2,698 1,875 2,698 Securities sold under agreements to repurchase 190 208 237 260 462 190 462 Subordinated debentures 4,793 4,810 4,823 4,899 5,079 4,793 5,079 Total interest expense 14,563 17,531 20,495 22,931 32,450 14,563 32,450 Net interest income 148,088 148,025 146,138 148,667 139,725 148,088 139,725 Provision for credit losses - - 14,000 20,655 94,598 - 94,598 Net interest income after provision for credit losses 148,088 148,025 132,138 128,012 45,127 148,088 45,127 Non-interest income Service charges on deposit accounts 5,002 5,544 4,910 4,296 6,631 5,002 6,631 Other service charges and fees 7,608 8,425 8,539 7,666 6,056 7,608 6,056 Trust fees 522 420 378 397 438 522 438 Mortgage lending income 8,167 10,071 10,177 6,196 2,621 8,167 2,621 Insurance commissions 492 366 271 533 678 492 678 Increase in cash value of life insurance 502 534 548 558 560 502 560 Dividends from FHLB, FRB, FNBB & other 8,609 967 3,433 230 7,842 8,609 7,842 Gain on SBA loans - 304 - - 341 - 341 (Loss) gain on branches, equipment and (29 ) 217 (27 ) 54 82 (29 ) 82 Gain on OREO, net 401 150 470 235 277 401 277 Gain on securities, net 219 - - - - 219 - Fair value adjustment for marketable securities 5,782 4,271 (1,350 ) 919 (5,818 ) 5,782 (5,818 ) Other income 8,001 2,616 2,602 3,939 3,219 8,001 3,219 Total non-interest income 45,276 33,885 29,951 25,023 22,927 45,276 22,927 Non-interest expense Salaries and employee benefits 42,059 43,022 41,511 40,088 39,329 42,059 39,329 Occupancy and equipment 9,237 9,801 9,566 10,172 8,873 9,237 8,873 Data processing expense 5,870 5,171 4,921 4,614 4,326 5,870 4,326 Other operating expenses 15,700 16,247 15,714 16,084 17,946 15,700 17,946 Total non-interest expense 72,866 74,241 71,712 70,958 70,474 72,866 70,474 Income (loss) before income taxes 120,498 107,669 90,377 82,077 (2,420 ) 120,498 (2,420 ) Income tax expense (benefit) 28,896 25,875 21,057 19,250 (2,927 ) 28,896 (2,927 ) Net income $ 91,602 $ 81,794 $ 69,320 $ 62,827 $ 507 $ 91,602 $ 507
Home BancShares, Inc. Selected Financial Information (Unaudited)
Quarter Ended Three Months Mar. 31, Dec. 31, Sep. 30, Jun. 30, Mar. 31, Mar. 31, Mar. 31, (Dollars and shares in thousands, except per share data) 2021 2020 2020 2020 2020 2021 2020 PER SHARE DATA Diluted earnings per common share $ 0.55 $ 0.50 $ 0.42 $ 0.38 $ - $ 0.55 $ - Diluted earnings per common share, as adjusted, excluding fair(1) 0.47 0.48 0.47 0.47 0.43 0.47 0.43 Basic earnings per common share 0.55 0.50 0.42 0.38 - 0.55 - Dividends per share - common 0.14 0.14 0.13 0.13 0.13 0.14 0.13 Book value per common share 16.02 15.78 15.38 15.09 14.72 16.02 14.72 Tangible book value per common share (non-GAAP)(1) 9.95 9.70 9.30 8.99 8.61 9.95 8.61 STOCK INFORMATION Average common shares outstanding 165,257 165,119 165,200 165,163 166,014 165,257 166,014 Average diluted shares outstanding 165,446 165,119 165,200 165,163 166,014 165,446 166,014 End of period common shares outstanding 165,141 165,095 165,163 165,206 165,148 165,141 165,148 ANNUALIZED PERFORMANCE METRICS Return on average assets 2.22 % 1.97 % 1.66 % 1.55 % 0.01 % 2.22 % 0.01 % Return on average assets excluding fair value adjustment(1) 1.88 % 1.90 % 1.88 % 1.93 % 1.88 % 1.88 % 1.88 % Return on average assets excluding intangible amortization(1) 2.39 % 2.13 % 1.80 % 1.68 % 0.05 % 2.39 % 0.05 % Return on average common equity 14.15 % 12.72 % 10.97 % 10.27 % 0.08 % 14.15 % 0.08 % Return on average common equity excluding fair value(1) 11.96 % 12.23 % 12.39 % 12.77 % 11.48 % 11.96 % 11.48 % Return on average tangible common equity (non-GAAP)(1) 22.90 % 20.96 % 18.29 % 17.40 % 0.14 % 22.90 % 0.14 % Return on average tangible common equity excluding(1) 23.16 % 21.22 % 18.56 % 17.70 % 0.44 % 23.16 % 0.44 % Return on average tangible common equity excluding fair(1) 19.35 % 20.15 % 20.66 % 21.63 % 19.22 % 19.35 % 19.22 %
(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 Three Months Ended (Dollars and shares in thousands, Mar. 31, Dec. 31, Sep. 30, Jun. 30, Mar. 31, Mar. 31, Mar. 31, except per share data) 2021 2020 2020 2020 2020 2021 2020 Efficiency ratio 36.60 % 39.64 % 39.56 % 39.67 % 42.08 % 36.60 % 42.08 % Efficiency ratio, as adjusted (non-GAAP)(1) 40.67 % 40.67 % 40.08 % 39.38 % 41.37 % 40.67 % 41.37 % Net interest margin - FTE 4.02 % 4.00 % 3.92 % 4.11 % 4.22 % 4.02 % 4.22 % Net interest margin - FTE, excluding PPP loans(1) 3.87 % 3.97 % 3.98 % 4.16 % 4.22 % 3.87 % 4.22 % Fully taxable equivalent adjustment $ 1,857 $ 1,778 $ 1,576 $ 1,434 $ 1,227 $ 1,857 $ 1,227 Total revenue (net) 193,364 181,910 176,089 173,690 162,652 193,364 162,652 Pre-tax net income, excluding provision for credit(1) 120,498 107,669 104,377 102,732 92,178 120,498 92,178 Pre-tax net income to total revenue (net) 62.32 % 59.19 % 51.32 % 47.25 % -1.49 % 62.32 % -1.49 % P5NR (Pre-tax, pre-provision, profit percentage)(1) 62.32 % 59.19 % 59.28 % 59.15 % 56.67 % 62.32 % 56.67 % Net income, excluding provision for credit losses 91,602 81,794 79,661 78,084 70,382 91,602 70,382 Return on average assets (pre-tax net income,(1) 2.92 % 2.60 % 2.50 % 2.53 % 2.45 % 2.92 % 2.45 % Return on average assets, excluding provision(1) 2.22 % 1.97 % 1.91 % 1.92 % 1.87 % 2.22 % 1.87 % Total purchase accounting accretion 5,485 5,736 6,957 7,036 7,647 5,485 7,647 Average purchase accounting loan discounts 43,940 49,563 55,835 62,822 69,365 43,940 69,365 OTHER OPERATING EXPENSES Advertising $ 1,046 $ 1,076 $ 902 $ 795 $ 1,226 $ 1,046 $ 1,226 Merger and acquisition expenses - - - - 711 - 711 Amortization of intangibles 1,421 1,421 1,420 1,486 1,517 1,421 1,517 Electronic banking expense 2,238 2,282 2,426 2,054 1,715 2,238 1,715 Directors' fees 383 359 429 412 424 383 424 Due from bank service charges 249 254 259 239 223 249 223 FDIC and state assessment 1,363 1,493 1,607 1,846 1,548 1,363 1,548 Insurance 781 795 766 711 746 781 746 Legal and accounting 846 790 1,235 1,278 919 846 919 Other professional fees 1,613 1,528 1,661 1,735 3,226 1,613 3,226 Operating supplies 487 440 460 553 535 487 535 Postage 338 315 328 313 327 338 327 Telephone 346 347 321 310 324 346 324 Other expense 4,589 5,147 3,900 4,352 4,505 4,589 4,505 Total other operating expenses $ 15,700 $ 16,247 $ 15,714 $ 16,084 $ 17,946 $ 15,700 $ 17,946
(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)
Mar. 31, Dec. 31, Sep. 30, Jun. 30, Mar. 31, (Dollars in thousands) 2021 2020 2020 2020 2020 BALANCE SHEET RATIOS Total loans to total deposits 79.77 % 88.17 % 90.37 % 90.73 % 98.87 % Common equity to assets 15.34 % 15.89 % 15.35 % 14.75 % 15.65 % Tangible common equity to tangible assets (non-GAAP)(1) 10.12 % 10.41 % 9.88 % 9.35 % 9.79 % LOANS RECEIVABLE Real estate Commercial real estate loans Non-farm/non-residential $ 4,289,142 $ 4,429,060 $ 4,342,141 $ 4,325,795 $ 4,357,007 Construction/land development 1,612,973 1,562,298 1,748,928 1,818,151 1,892,394 Agricultural 113,382 114,431 89,476 105,554 89,630 Residential real estate loans Residential 1-4 family 1,437,546 1,536,257 1,665,628 1,730,716 1,775,610 Multifamily residential 377,661 536,538 491,380 482,635 411,960 Total real estate 7,830,704 8,178,584 8,337,553 8,462,851 8,526,601 Consumer 839,819 864,690 883,568 851,344 852,174 Commercial and industrial 1,794,787 1,896,442 2,161,818 2,228,816 1,759,752 Agricultural 65,017 66,869 85,365 80,023 64,582 Other 248,166 214,136 223,166 332,709 181,873 Loans receivable $ 10,778,493 $ 11,220,721 $ 11,691,470 $ 11,955,743 $ 11,384,982 Paycheck Protection Program (PPP) loans (included in total 667,316 691,747 848,745 848,628 - ALLOWANCE FOR CREDIT LOSSES Balance, beginning of period $ 245,473 $ 248,224 $ 238,340 $ 228,923 $ 102,122 Impact of adopting ASC 326 - - - - 43,988 Allowance for credit losses on acquired loans - - - - 357 Loans charged off 3,047 3,040 4,599 2,582 4,265 Recoveries of loans previously charged off 506 289 483 558 740 Net loans charged off 2,541 2,751 4,116 2,024 3,525 Provision for credit losses on loans - - 14,000 11,441 85,981 Balance, end of period $ 242,932 $ 245,473 $ 248,224 $ 238,340 $ 228,923 Net charge-offs to average total loans 0.09 % 0.10 % 0.14 % 0.07 % 0.13 % Allowance for credit losses to total loans 2.25 % 2.19 % 2.12 % 1.99 % 2.01 % Allowance for credit losses to total loans, excluding PPP loans 2.40 % 2.33 % 2.29 % 2.15 % 2.01 % NON-PERFORMING ASSETS Non-performing loans Non-accrual loans $ 59,142 $ 64,528 $ 65,148 $ 52,074 $ 52,131 Loans past due 90 days or more 4,209 9,610 8,635 7,824 7,760 Total non-performing loans 63,351 74,138 73,783 59,898 59,891 Other non-performing assets Foreclosed assets held for sale, net 3,004 4,420 4,322 6,292 8,204 Other non-performing assets - - 247 247 447 Total other non-performing assets 3,004 4,420 4,569 6,539 8,651 Total non-performing assets $ 66,355 $ 78,558 $ 78,352 $ 66,437 $ 68,542 Allowance for credit losses for loans to non-performing loans 383.47 % 331.10 % 336.42 % 397.91 % 382.23 % Non-performing loans to total loans 0.59 % 0.66 % 0.63 % 0.50 % 0.53 % Non-performing assets to total assets 0.38 % 0.48 % 0.47 % 0.39 % 0.44 %
(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 March 31, 2021 December 31, 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 $ 1,610,463 $ 410 0.10 % $ 1,029,047 $ 270 0.10 % Federal funds sold 119 - 0.00 % 5 - 0.00 % Investment securities - taxable 1,637,061 6,253 1.55 % 1,615,214 6,900 1.70 % Investment securities - non-taxable - FTE 848,158 6,732 3.22 % 798,402 6,550 3.26 % Loans receivable - FTE 11,023,139 151,113 5.56 % 11,457,713 153,614 5.33 % Total interest-earning assets 15,118,940 164,508 4.41 % 14,900,381 167,334 4.47 % Non-earning assets 1,599,950 1,592,685 Total assets $ 16,718,890 $ 16,493,066 LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities Interest-bearing liabilities Savings and interest-bearing transaction $ 8,338,791 $ 4,716 0.23 % $ 8,109,111 $ 5,813 0.29 % Time deposits 1,209,431 2,989 1.00 % 1,483,049 4,783 1.28 % Total interest-bearing deposits 9,548,222 7,705 0.33 % 9,592,160 10,596 0.44 % Federal funds purchased - - 0.00 % - - 0.00 % Securities sold under agreement to repurchase 159,697 190 0.48 % 156,198 208 0.53 % FHLB borrowed funds 400,000 1,875 1.90 % 400,001 1,917 1.91 % Subordinated debentures 370,421 4,793 5.25 % 370,232 4,810 5.17 % Total interest-bearing liabilities 10,478,340 14,563 0.56 % 10,518,591 17,531 0.66 % Non-interest bearing liabilities Non-interest bearing deposits 3,480,050 3,279,708 Other liabilities 134,882 137,516 Total liabilities 14,093,272 13,935,815 Shareholders' equity 2,625,618 2,557,251 Total liabilities and shareholders' equity $ 16,718,890 $ 16,493,066 Net interest spread 3.85 % 3.81 % Net interest income and margin - FTE $ 149,945 4.02 % $ 149,803 4.00 %
Home BancShares, Inc. Consolidated Net Interest Margin (Unaudited)
Three Months Ended March 31, 2021 March 31, 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 $ 1,610,463 $ 410 0.10 % $ 331,038 $ 1,116 1.36 % Federal funds sold 119 - 0.00 % 5,218 21 1.62 % Investment securities - taxable 1,637,061 6,253 1.55 % 1,710,288 9,776 2.30 % Investment securities - non-taxable - FTE 848,158 6,732 3.22 % 374,198 4,090 4.40 % Loans receivable - FTE 11,023,139 151,113 5.56 % 11,007,958 158,399 5.79 % Total interest-earning assets 15,118,940 164,508 4.41 % 13,428,700 173,402 5.19 % Non-earning assets 1,599,950 1,704,775 Total assets $ 16,718,890 $ 15,133,475 LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities Interest-bearing liabilities Savings and interest-bearing transaction $ 8,338,791 $ 4,716 0.23 % $ 7,041,303 $ 15,803 0.90 % Time deposits 1,209,431 2,989 1.00 % 1,943,721 8,395 1.74 % Total interest-bearing deposits 9,548,222 7,705 0.33 % 8,985,024 24,198 1.08 % Federal funds purchased - - 0.00 % 6,264 13 0.83 % Securities sold under agreement to repurchase 159,697 190 0.48 % 138,180 462 1.34 % FHLB borrowed funds 400,000 1,875 1.90 % 623,525 2,698 1.74 % Subordinated debentures 370,421 4,793 5.25 % 369,652 5,079 5.53 % Total interest-bearing liabilities 10,478,340 14,563 0.56 % 10,122,645 32,450 1.29 % Non-interest bearing liabilities Non-interest bearing deposits 3,480,050 2,410,583 Other liabilities 134,882 119,143 Total liabilities 14,093,272 12,652,371 Shareholders' equity 2,625,618 2,481,104 Total liabilities and shareholders' equity $ 16,718,890 $ 15,133,475 Net interest spread 3.85 % 3.90 % Net interest income and margin - FTE $ 149,945 4.02 % $ 140,952 4.22 %
Home BancShares, Inc. Non-GAAP Reconciliations (Unaudited)
Quarter Ended Three Months Ended (Dollars and shares in thousands, Mar. 31, Dec. 31, Sep. 30, Jun. 30, Mar. 31, Mar. 31, Mar. 31, except per share data) 2021 2020 2020 2020 2020 2021 2020 EARNINGS, AS ADJUSTED GAAP net income available to common shareholders (A) $ 91,602 $ 81,794 $ 69,320 $ 62,827 $ 507 $ 91,602 $ 507 Pre-tax adjustments Fair value adjustment for marketable securities (5,782 ) (4,271 ) 1,350 (919 ) 5,818 (5,782 ) 5,818 Special dividend from equity investment (8,073 ) - (3,181 ) - (7,004 ) (8,073 ) (7,004 ) Gain on securities (219 ) - - - - (219 ) - Recoveries on historic losses (5,107 ) - - - - (5,107 ) - Provision for credit losses - - 14,000 20,655 94,598 - 94,598 Branch write-off expense - - - 981 - - - Outsourced special project expense - - - - 1,092 - 1,092 Merger and acquisition expenses - - - - 711 - 711 Total pre-tax adjustments (19,181 ) (4,271 ) 12,169 20,717 95,215 (19,181 ) 95,215 Tax-effect of adjustments (5,013 ) (1,116 ) 3,181 5,414 24,884 (5,013 ) 24,884 Total adjustments after-tax (B) (14,168 ) (3,155 ) 8,988 15,303 70,331 (14,168 ) 70,331 Earnings, as adjusted (C) $ 77,434 $ 78,639 $ 78,308 $ 78,130 $ 70,838 $ 77,434 $ 70,838 Average diluted shares outstanding (D) 165,446 165,119 165,200 165,163 166,014 165,446 166,014 GAAP diluted earnings per share: (A/D) $ 0.55 $ 0.50 $ 0.42 $ 0.38 $ - $ 0.55 $ - Adjustments after-tax: (B/D) (0.08 ) (0.02 ) 0.05 0.09 0.43 (0.08 ) 0.43 Diluted earnings per common share, as adjusted, excluding $ 0.47 $ 0.48 $ 0.47 $ 0.47 $ 0.43 $ 0.47 $ 0.43 ANNUALIZED RETURN ON AVERAGE ASSETS Return on average assets: (A/G) 2.22 % 1.97 % 1.66 % 1.55 % 0.01 % 2.22 % 0.01 % Return on average assets excluding fair value adjustment for 1.88 % 1.90 % 1.88 % 1.93 % 1.88 % 1.88 % 1.88 % Return on average assets (pre-tax net income, excluding 2.92 % 2.60 % 2.50 % 2.53 % 2.45 % 2.92 % 2.45 % Return on average assets, excluding provision for credit 2.22 % 1.97 % 1.91 % 1.92 % 1.87 % 2.22 % 1.87 % Return on average assets excluding intangible 2.39 % 2.13 % 1.80 % 1.68 % 0.05 % 2.39 % 0.05 % GAAP net income available to common shareholders (A) $ 91,602 $ 81,794 $ 69,320 $ 62,827 $ 507 $ 91,602 $ 507 Pre-tax net income, excluding provision for credit losses (B) 120,498 107,669 104,377 102,732 92,178 120,498 92,178 Net income, excluding provision for credit losses (C) 91,602 81,794 79,661 78,084 70,382 91,602 70,382 Amortization of intangibles (D) 1,421 1,421 1,420 1,486 1,517 1,421 1,517 Amortization of intangibles after-tax (E) 1,049 1,049 1,049 1,098 1,121 1,049 1,121 Adjustments after-tax (F) (14,168 ) (3,155 ) 8,988 15,303 70,331 (14,168 ) 70,331 Average assets (G) 16,718,890 16,493,066 16,594,495 16,319,206 15,133,475 16,718,890 15,133,475 Average goodwill, core deposits & other intangible 1,003,011 1,004,432 1,005,864 1,007,307 999,004 1,003,011 999,004
Home BancShares, Inc. Non-GAAP Reconciliations (Unaudited)
Quarter Ended Three Months Ended Mar. 31, Dec. 31, Sep. 30, Jun. 30, Mar. 31, Mar. 31, Mar. 31, (Dollars and shares in thousands, except per share data) 2021 2020 2020 2020 2020 2021 2020 ANNUALIZED RETURN ON AVERAGE COMMON EQUITY Return on average common equity: (A/D) 14.15 % 12.72 % 10.97 % 10.27 % 0.08 % 14.15 % 0.08 % Return on average common equity excluding fair value adjustment for 11.96 % 12.23 % 12.39 % 12.77 % 11.48 % 11.96 % 11.48 % Return on average tangible common equity: (A/(D-E)) 22.90 % 20.96 % 18.29 % 17.40 % 0.14 % 22.90 % 0.14 % Return on average tangible common equity excluding intangible 23.16 % 21.22 % 18.56 % 17.70 % 0.44 % 23.16 % 0.44 % Return on average tangible common equity excluding fair value 19.35 % 20.15 % 20.66 % 21.63 % 19.22 % 19.35 % 19.22 % GAAP net income available to common shareholders (A) $ 91,602 $ 81,794 $ 69,320 $ 62,827 $ 507 $ 91,602 $ 507 Earnings excluding intangible amortization (B) 92,651 82,843 70,369 63,925 1,628 92,651 1,628 Adjustments after-tax (C) (14,168 ) (3,155 ) 8,988 15,303 70,331 (14,168 ) 70,331 Average common equity (D) 2,625,618 2,557,251 2,513,792 2,459,941 2,481,104 2,625,618 2,481,104 Average goodwill, core deposits & other intangible assets (E) 1,003,011 1,004,432 1,005,864 1,007,307 999,004 1,003,011 999,004 EFFICIENCY RATIO Efficiency ratio: ((C-E)/(A+B+D)) 36.60 % 39.64 % 39.56 % 39.67 % 42.08 % 36.60 % 42.08 % Efficiency ratio, as adjusted: ((C-E-G)/(A+B+D-F)) 40.67 % 40.67 % 40.08 % 39.38 % 41.37 % 40.67 % 41.37 % Net interest income (A) $ 148,088 $ 148,025 $ 146,138 $ 148,667 $ 139,725 $ 148,088 $ 139,725 Non-interest income (B) 45,276 33,885 29,951 25,023 22,927 45,276 22,927 Non-interest expense (C) 72,866 74,241 71,712 70,958 70,474 72,866 70,474 Fully taxable equivalent adjustment (D) 1,857 1,778 1,576 1,434 1,227 1,857 1,227 Amortization of intangibles (E) 1,421 1,421 1,420 1,486 1,517 1,421 1,517 Adjustments: Non-interest income: Fair value adjustment for marketable securities $ 5,782 $ 4,271 $ (1,350 ) $ 919 $ (5,818 ) $ 5,782 $ (5,818 ) Gain (loss) on OREO 401 150 470 235 277 401 277 Gain (loss) on branches, equipment and other assets, net (29 ) 217 (27 ) 54 82 (29 ) 82 Special dividend from equity investment 8,073 - 3,181 - 7,004 8,073 7,004 Gain (loss) on securities 219 - - - - 219 - Recoveries on historic losses 5,107 - - - - 5,107 - Total non-interest income adjustments (F) $ 19,553 $ 4,638 $ 2,274 $ 1,208 $ 1,545 $ 19,553 $ 1,545 Non-interest expense: Branch write-off expense $ - $ - $ - $ 981 $ - $ - $ - FDIC Small Bank Assessment Credit - - - - - - - Merger Expenses - - - - 711 - 711 Hurricane damage expense - - - - - - - Outsourced special project expense - - - - 1,092 - 1,092 Total non-interest expense adjustments (G) $ - $ - $ - $ 981 $ 1,803 $ - $ 1,803 ANNUALIZED NET INTEREST MARGIN Net interest margin: A/C 4.02 % 4.00 % 3.92 % 4.11 % 4.22 % 4.02 % 4.22 % Net interest margin, excluding PPP loans: B/D 3.87 % 3.97 % 3.98 % 4.16 % 4.22 % 3.87 % 4.22 % Net interest income - FTE (A) $ 149,945 $ 149,803 $ 147,714 $ 150,101 $ 140,952 $ 149,945 $ 140,952 PPP loan interest & discount accretion income 11,878 8,841 5,943 4,450 - 11,878 - Net interest income - FTE, excluding PPP loans (B) $ 138,067 $ 140,962 $ 141,771 $ 145,651 $ 140,952 $ 138,067 $ 140,952 Average interest-earning assets (C) $ 15,118,940 $ 14,900,381 $ 14,975,146 $ 14,678,465 $ 13,428,700 $ 15,118,940 $ 13,428,700 Average PPP loans 633,790 775,861 821,977 585,946 - 633,790 - Average interest-earning assets, excluding PPP loans (D) $ 14,485,150 $ 14,124,520 $ 14,153,169 $ 14,092,519 $ 13,428,700 $ 14,485,150 $ 13,428,700
Home BancShares, Inc. Non-GAAP Reconciliations (Unaudited)
Quarter Ended Three Months (Dollars and shares in thousands, Mar. 31, Dec. 31, Sep. 30, Jun. 30, Mar. 31, Mar. 31, Mar. 31, except per share data) 2021 2020 2020 2020 2020 2021 2020 Pre-tax net income $ 120,498 $ 107,669 $ 90,377 $ 82,077 $ (2,420 ) $ 120,498 $ (2,420 ) Provision for credit losses - - 14,000 20,655 94,598 - 94,598 Pre-tax net income, excluding provision for credit $ 120,498 $ 107,669 $ 104,377 $ 102,732 $ 92,178 $ 120,498 $ 92,178 Total revenue (net) (B) 193,364 181,910 176,089 173,690 162,652 193,364 162,652 Pre-tax net income to total revenue (net) 62.32 % 59.19 % 51.32 % 47.25 % -1.49 % 62.32 % -1.49 % P5NR (Pre-tax, pre-provision, profit percentage) 62.32 % 59.19 % 59.28 % 59.15 % 56.67 % 62.32 % 56.67 % Quarter Ended Mar. 31, Dec. 31, Sep. 30, Jun. 30, Mar. 31, (Dollars in thousands) 2021 2020 2020 2020 2020 TANGIBLE BOOK VALUE PER COMMON SHARE Book value per common share: (A/B) $ 16.02 $ 15.78 $ 15.38 $ 15.09 $ 14.72 Tangible book value per common share: 9.95 9.70 9.30 8.99 8.61 Total stockholders' equity (A) $ 2,645,204 $ 2,605,758 $ 2,540,799 $ 2,492,146 $ 2,430,271 End of period common shares outstanding (B) 165,141 165,095 165,163 165,206 165,148 Goodwill (C) 973,025 973,025 973,025 973,025 973,025 Core deposit and other intangibles (D) 29,307 30,728 32,149 33,569 35,055 TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS Equity to assets: (B/A) 15.34 % 15.89 % 15.35 % 14.75 % 15.65 % Tangible common equity to tangible assets: 10.12 % 10.41 % 9.88 % 9.35 % 9.79 % Total assets (A) $ 17,240,241 $ 16,398,804 $ 16,549,758 $ 16,895,406 $ 15,531,732 Total stockholders' equity (B) 2,645,204 2,605,758 2,540,799 2,492,146 2,430,271 Goodwill (C) 973,025 973,025 973,025 973,025 973,025 Core deposit and other intangibles (D) 29,307 30,728 32,149 33,569 35,055
