Conway bank’s 2Q a record
Home BancShares beats forecast, posts 25th straight gain
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.