Con­way bank’s 2Q a record

Home BancShares beats fore­cast, posts 25th straight gain

Northwest Arkansas Democrat-Gazette - - BUSINESS & FARM - DAVID SMITH ARKANSAS DEMO­CRAT-GAZETTE

Home BancShares had record net in­come of $50.1 mil­lion in the sec­ond quar­ter, a 15 per­cent im­prove­ment over $43.5 mil­lion in profit in the same pe­riod last year, the Con­way bank said Thurs­day.

It was the 25th straight quar­ter of record net in­come for the bank, dat­ing back to 2011.

Home BancShares earned 35 cents a share, up from 31 cents a year ear­lier, beat­ing the av­er­age es­ti­mate of 33 cents a share pre­dicted by eight an­a­lysts sur­veyed by Thom­son Reuters.

The bank’s shares fell 40 cents Thurs­day to close at $24.50 on the Nas­daq ex­change.

Home BancShares had $7.8 bil­lion in loans at the close of the sec­ond quar­ter. De­posits also were at $7.8 bil­lion.

Home BancShares had $10.9 bil­lion in as­sets on June 30, com­pared with $9.6 bil­lion in as­sets a year ear­lier.

The bank’s ef­fi­ciency ra­tio was 37.48 per­cent in the quar­ter. That means that it cost the bank $37.48 to earn $100.

Loans have been flat or slightly down this year, John Al­li­son, Home BancShares chair­man, said dur­ing a con­fer­ence call Thurs­day. He stressed, how­ever, that there was no rea­son for con­cern.

The bank orig­i­nated $370 mil­lion in loans in the sec­ond quar­ter and $400 mil­lion in the first quar­ter, Al­li­son said.

“Many busi­ness­men are sit­ting on the side­lines with lots of money to de­ploy, wait­ing on an un­pro­duc­tive Con-

gress to take some ac­tion on health care and taxes,” Al­li­son said. “It’s dif­fi­cult for busi­ness­men to op­er­ate some­times.”

The Con­way bank an­nounced in March that it would buy Stonegate Bank of Pom­pano Beach, Fla., for $778 mil­lion. Stonegate has $3.5 bil­lion in as­sets, the big­gest pur­chase Home BancShares has made.

The deal is ex­pected to close in the fourth quar­ter.

The bank is on track to close Stonegate on Oct. 1, Brian Davis, Home BancShares’ chief fi­nan­cial of­fi­cer, said on

the con­fer­ence call.

“It al­ways fits nicely if we can do it on the first day of the quar­ter, es­pe­cially be­cause of [Stonegate’s] size,” Davis said.

But Matt Ol­ney, a bank­ing an­a­lyst with Stephens Inc. in Lit­tle Rock, said he an­tic­i­pates Home BancShares will re­turn to mak­ing ac­qui­si­tions pos­si­bly next year.

“At some point, I think [Home BancShares] will come back to the mar­ket and ac­quire,” Ol­ney said. “Given how big Stonegate is, I wouldn’t be sur­prised if they take their time and fo­cus more on in­te­grat­ing this deal.”

Al­li­son made it clear on the call that Home BancShares has been and will

con­tinue to look for ac­qui­si­tions in Florida, Arkansas and pos­si­bly Texas, said Gar­land Binns, a Lit­tle Rock bank­ing at­tor­ney.

“We think Texas is a good state [for pos­si­ble ac­qui­si­tions],” Al­li­son said.

In 2010 and 2012, Home BancShares ac­quired sev­eral failed banks from the fed­eral govern­ment, what Al­li­son re­ferred to as “dent-and­scratch” deals.

“Some of those dent-and­scratch deals can add 3, 4 or 5 cents to your [earn­ings per share],” Al­li­son said. “Over the years we’ve been kind of suc­cess­ful at that. We’re look­ing at what­ever that comes up that makes sense. But we prob­a­bly wouldn’t do a den­tand-scratch that didn’t fit into

our [ex­ist­ing mar­kets].”

The bank likes to make pur­chases in the $1 bil­lion to $2 bil­lion range of as­sets, Al­li­son said.

Home BancShares has 147 branches — 76 in Arkansas, 64 in Florida, six in Alabama and one in New York City.

Home BancShares opened its loan of­fice in Los An­ge­les re­cently and al­ready has about $200 mil­lion in po­ten­tial loans, Al­li­son said.

Af­ter the Stonegate deal was an­nounced, Home BancShares de­cided to limit the New York of­fice’s loan growth to about 15 per­cent, Al­li­son said.

That means New York could grow its loans to about $2.1 bil­lion, Al­li­son said.

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