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Home BancShares, Inc. Announces a 13.8% Increase in First Quarter Earnings Per Share

CONWAY, Ark., April 20, 2017 (GLOBE NEWSWIRE) -- Home BancShares, Inc. (NASDAQ:HOMB), parent company of Centennial Bank, today announced a quarterly profit of $46.9 million for the first quarter of 2017 compared to $41.4 million, for the same quarter in 2016. Diluted earnings per share for the first quarter of 2017 was $0.33 per share compared to $0.29 per share (split adjusted) for 2016, representing an increase of $0.04 per share or 13.8% for the first quarter of 2017 when compared to the same quarter in the prior year. Excluding the $6.7 million of merger expenses associated with the recently completed acquisitions of Giant Holdings, Inc. (“GHI”) and The Bank of Commerce (“Commerce”) offset by $3.8 million of one-time non-taxable gain on acquisition associated with Commerce, diluted earnings per share for the first quarter of 2017 remained $0.33 per share.

“We were active on many fronts during the first quarter of 2017, and we delivered solid quarterly financial results in spite of the additional expenses associated with the recently closed acquisitions of GHI and Commerce,” said John Allison, Chairman. “We also look forward to the completion of the merger with Stonegate Bank in Pompano Beach, Florida later this year and the opportunity to welcome them to the Home BancShares family.”

Tracy French, Centennial Bank President and Chief Executive Officer, added, “We are pleased with the first quarter’s solid financial results. We are busy managing the growth momentum associated with our recently closed acquisitions of GHI on February 23, 2017 and Commerce on February 28, 2017. GHI completed its systems conversion on March 24, 2017; while Commerce is due to have its systems conversion on May 12, 2017.”

“We are pleased with reporting our twenty-fourth consecutive most profitable quarter in the Company’s history, when excluding the $4.5 million of reduced provision for loan losses as a result of a significant loan recovery offset by $433,000 of merger expenses associated with the GHI and Commerce acquisitions from the fourth quarter of 2016, record net interest income for the first quarter of 2017 and improvements in our non-performing assets,” said Randy Sims, Home BancShares, Inc. Chief Executive Officer. “Our team continues to do an excellent job of controlling expenses. We have been able to maintain a strong core efficiency ratio of 36.96%, even though we added nine branch locations with the GHI and Commerce transactions in the first quarter of 2017.”

Operating Highlights

Each quarter we perform credit impairment tests on the loans acquired in our acquisitions. During our first quarter 2017 impairment testing, several pools were determined to have a material projected credit improvement. This projected credit improvement offset by the expected decline in accretion income from the maturing and reduction of pay-offs in the acquired loan portfolios, resulted in a net decline of recognized accretion income when compared to the fourth quarter of 2016. Accretion yield decreased approximately $1.0 million from $8.6 million for the fourth quarter of 2016 to $7.6 million for first quarter of 2017.

Net interest margin, on a fully taxable equivalent basis, was 4.70% for the quarter just ended compared to 4.81% for the same quarter in 2016 and compared to 4.75% for the fourth quarter of 2016. The net interest margin, excluding accretion yield was slightly increased when comparing the fourth quarter of 2016 to the first quarter of 2017 at 4.31% and 4.32%, respectively.

During the first quarter of 2017, the Company recorded a provision for loan loss of $3.9 million compared to $5.7 million in the first quarter of 2016. For the first quarter of 2017, net charge-offs were $3.6 million compared to net charge-offs of $2.6 million for the first quarter of 2016.

The Company reported $26.5 million of non-interest income for the first quarter of 2017, compared to $19.4 million for the first quarter of 2016. The most important components of the first quarter non-interest income were $8.9 million from other service charges and fees, $6.0 million from service charges on deposits accounts, $3.8 million from gain on acquisitions, $2.8 million from mortgage lending income, $1.8 million from other income and $1.1 million from dividends from FHLB, FRB, Bankers’ Bank & other.

Non-interest expense for the first quarter of 2017 was $55.1 million compared to $45.6 million for the first quarter of 2016. Non-interest expense excluding merger expenses for the first quarter of 2017 was $48.4 million compared to $45.6 million for the first quarter of 2016, an increase of $2.8 million. This increase excluding merger expenses is primarily the result of $1.7 million growth in non-interest expense related to the Centennial Commercial Finance Group (“Centennial CFG”) combined with an increase in the costs associated with asset growth from the acquisitions in the first quarter of 2017. For the first quarter of 2017, our core efficiency ratio was 36.96% which is relatively unchanged from the 36.92% reported for first quarter of 2016.

Financial Condition

Total loans receivable were $7.85 billion at March 31, 2017 compared to $7.39 billion at December 31, 2016. Total deposits were $7.57 billion at March 31, 2017 compared to $6.94 billion at December 31, 2016. Total assets were $10.72 billion at March 31, 2017 compared to $9.81 billion at December 31, 2016.

During the first quarter of 2017, the Company acquired $446.3 million of loans, net of purchase accounting discounts. From December 31, 2016 to March 31, 2017, the Company produced organic loan growth of approximately $15.7 million in addition to the acquired loans. The legacy footprint produced $43.1 million of organic loan growth during the first quarter of 2017 while Centennial CFG experienced significant payoffs during the first quarter of 2017 resulting in a decline of $27.4 million. Centennial CFG had loans of $1.08 billion at March 31, 2017.

Non-performing loans at March 31, 2017 are $26.1 million, $33.0 million, $74,000 and zero in the Arkansas, Florida, Alabama and Centennial CFG markets, respectively, for a total of $59.2 million. Non-performing loans as a percent of total loans were 0.75% as of March 31, 2017 compared to 0.85% as of December 31, 2016. Non-performing assets at March 31, 2017 are $35.6 million, $39.8 million, $1.1 million and zero in the Arkansas, Florida and Alabama and Centennial CFG markets, respectively, for a total of $76.5 million. Non-performing assets as a percent of total assets were 0.71% as of March 31, 2017 compared to 0.81% as of December 31, 2016.

The Company’s allowance for loan losses was $80.3 million at March 31, 2017, or 1.02% of total loans, compared to $80.0 million, or 1.08% of total loans, at December 31, 2016. This decrease is primarily the result of acquiring $446.3 million of loans which do not have an associated allowance for loan losses as a result of purchase accounting. As of March 31, 2017 and December 31, 2016, the Company’s allowance for loan losses was 136% and 127% of its total non-performing loans, respectively.

Stockholders’ equity was $1.44 billion at March 31, 2017 compared to $1.33 billion at December 31, 2016, an increase of $114.1 million. Book value per common share was $10.05 at March 31, 2017 compared to $9.45 at December 31, 2016. Tangible book value per common share was $6.96 at March 31, 2017 compared to $6.63 at December 31, 2016 for an annualized increase of 20.2%.

Branches

In an effort to achieve efficiencies primarily from our acquisitions, during the first quarter, the Company closed one branch in Davie, Florida. During the second quarter the Company has plans to close one branch in Sarasota, Florida and two branches in Ft. Lauderdale, Florida. During the second quarter of 2017, the Company has plans to open a branch location in Clearwater, Florida and a loan production office in Los Angeles under the management of Centennial CFG. The Company currently has 76 branches in Arkansas, 68 branches in Florida, 6 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 20, 2017. We encourage all participants to pre-register for the conference call using the following link: http://dpregister.com/10103407. 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: 10103407, which will be available until April 27, 2017 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 earnings excluding non-fundamental items, return on average assets excluding intangible amortization, return on average assets excluding non-fundamental items, return on average common equity excluding intangible amortization, core efficiency ratio, non-GAAP net interest margin, tangible book value per common share, and the tangible common equity to tangible assets ratio, 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 non-fundamental items or non-recurring transactions. 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 core 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 contains 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, including, but not limited to, economic conditions, credit quality, interest rates, loan demand, the ability to successfully integrate new acquisitions and changes in the assumptions used in making the forward-looking statements, could cause actual results to differ materially from those contemplated by the forward-looking statements. Additional information on factors that might affect Home BancShares, Inc.'s financial results is included in its Annual Report on Form 10-K for the year ended December 31, 2016 filed with the Securities and Exchange Commission (the “SEC”) on February 28, 2017.

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.”


Home BancShares, Inc.
Consolidated End of Period Balance Sheets
(Unaudited)
Mar. 31, Dec. 31, Sep. 30, Jun. 30, Mar. 31,
(In thousands) 2017 2016 2016 2016 2016
ASSETS
Cash and due from banks$ 163,662 $ 123,758 $ 123,126 $ 136,632 $ 115,206
Interest-bearing deposits with other banks 253,427 92,891 173,034 48,762 42,866
Cash and cash equivalents 417,089 216,649 296,160 185,394 158,072
Federal funds sold 1,700 1,550 1,850 525 7,050
Investment securities - available-for-sale 1,250,590 1,072,920 1,233,269 1,221,778 1,207,773
Investment securities - held-to-maturity 276,599 284,176 275,544 287,725 299,050
Loans receivable 7,849,645 7,387,699 7,112,291 7,022,156 6,852,212
Allowance for loan losses (80,311) (80,002) (76,370) (74,341) (72,306)
Loans receivable, net 7,769,334 7,307,697 7,035,921 6,947,815 6,779,906
Bank premises and equipment, net 212,813 205,301 208,137 207,932 210,764
Foreclosed assets held for sale 17,315 15,951 17,053 17,778 20,202
Cash value of life insurance 97,223 86,491 86,230 85,889 85,538
Accrued interest receivable 32,413 30,838 29,398 28,548 28,833
Deferred tax asset, net 67,063 61,298 56,435 61,613 69,564
Goodwill 420,941 377,983 377,983 377,983 377,983
Core deposit and other intangibles 21,885 18,311 19,073 19,835 20,597
Other assets 132,503 129,300 127,185 139,311 132,119
Total assets $ 10,717,468 $ 9,808,465 $ 9,764,238 $ 9,582,126 $ 9,397,451
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Deposits:
Demand and non-interest-bearing$ 1,862,996 $ 1,695,184 $ 1,717,467 $ 1,645,472 $ 1,562,565
Savings and interest-bearing transaction accounts 4,274,194 3,963,241 3,792,229 3,678,546 3,602,868
Time deposits 1,430,017 1,284,002 1,330,597 1,388,930 1,412,086
Total deposits 7,567,207 6,942,427 6,840,293 6,712,948 6,577,519
Federal funds purchased - - - - -
Securities sold under agreements to repurchase 123,793 121,290 109,350 111,072 121,906
FHLB and other borrowed funds 1,455,040 1,305,198 1,420,369 1,380,889 1,336,233
Accrued interest payable and other liabilities 69,125 51,234 37,382 51,476 73,185
Subordinated debentures 60,735 60,826 60,826 60,826 60,826
Total liabilities 9,275,900 8,480,975 8,468,220 8,317,211 8,169,669
Stockholders' equity
Common stock 1,434 1,405 1,405 1,404 702
Capital surplus 948,982 869,737 866,310 863,560 862,827
Retained earnings 490,142 455,948 419,999 389,014 357,788
Accumulated other comprehensive income 1,010 400 8,304 10,937 6,465
Total stockholders' equity 1,441,568 1,327,490 1,296,018 1,264,915 1,227,782
Total liabilities and stockholders' equity $ 10,717,468 $ 9,808,465 $ 9,764,238 $ 9,582,126 $ 9,397,451

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) 2017 2016 2016 2016 2016 2017 2016
Interest income
Loans$ 105,762 $ 103,113 $ 102,953 $ 100,415 $ 96,913 $ 105,762 $ 96,913
Investment securities
Taxable 5,478 5,068 5,583 5,145 5,450 5,478 5,450
Tax-exempt 2,944 3,059 2,720 2,823 2,815 2,944 2,815
Deposits - other banks 308 146 117 106 102 308 102
Federal funds sold 2 2 2 1 4 2 4
Total interest income 114,494 111,388 111,375 108,490 105,284 114,494 105,284
Interest expense
Interest on deposits 5,486 4,398 4,040 3,854 3,634 5,486 3,634
Federal funds purchased - - - 1 1 - 1
FHLB borrowed funds 3,589 3,201 3,139 3,074 3,070 3,589 3,070
Securities sold under agreements to repurchase 165 153 142 134 145 165 145
Subordinated debentures 439 429 401 386 377 439 377
Total interest expense 9,679 8,181 7,722 7,449 7,227 9,679 7,227
Net interest income 104,815 103,207 103,653 101,041 98,057 104,815 98,057
Provision for loan losses 3,914 1,703 5,536 5,692 5,677 3,914 5,677
Net interest income after provision for loan losses 100,901 101,504 98,117 95,349 92,380 100,901 92,380
Non-interest income
Service charges on deposit accounts 5,982 6,442 6,527 6,151 5,929 5,982 5,929
Other service charges and fees 8,917 7,611 7,504 7,968 7,117 8,917 7,117
Trust fees 456 329 365 359 404 456 404
Mortgage lending income 2,791 4,123 3,932 3,481 2,863 2,791 2,863
Insurance commissions 545 488 534 617 657 545 657
Increase in cash value of life insurance 310 320 344 353 395 310 395
Dividends from FHLB, FRB, Bankers' Bank & other 1,149 944 808 719 620 1,149 620
Gain on acquisitions 3,807 - - - - 3,807 -
Gain on sale of SBA loans 188 645 364 79 - 188 -
Gain (loss) on sale of branches, equipment and other assets, net (56) (1) (86) 840 (53) (56) (53)
Gain (loss) on OREO, net 121 159 132 (941) 96 121 96
Gain (loss) on securities, net 423 644 - 15 10 423 10
FDIC indemnification accretion/(amortization), net - - - (410) (362) - (362)
Other income 1,837 2,124 1,590 2,541 1,761 1,837 1,761
Total non-interest income 26,470 23,828 22,014 21,772 19,437 26,470 19,437
Non-interest expense
Salaries and employee benefits 27,421 26,944 25,623 25,437 23,958 27,421 23,958
Occupancy and equipment 6,681 6,281 6,668 6,509 6,671 6,681 6,671
Data processing expense 2,723 2,278 2,791 2,766 2,664 2,723 2,664
Other operating expenses 18,316 11,991 15,944 12,875 12,355 18,316 12,355
Total non-interest expense 55,141 47,494 51,026 47,587 45,648 55,141 45,648
Income before income taxes 72,230 77,838 69,105 69,534 66,169 72,230 66,169
Income tax expense 25,374 29,248 25,485 26,025 24,742 25,374 24,742
Net income $ 46,856 $ 48,590 $ 43,620 $ 43,509 $ 41,427 $ 46,856 $ 41,427

Home BancShares, Inc.
Selected Financial Information
(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) 2017 2016 2016 2016 2016 2017 2016
PER SHARE DATA
Diluted earnings per common share$ 0.33 $ 0.35 $ 0.31 $ 0.31 $ 0.29 $ 0.33 $ 0.29
Diluted earnings per common share excluding gain on acquisitions, merger expenses, reduced provision for loan losses as a result of a significant loan recovery & FDIC loss share buy-out expense (non-GAAP)(1) 0.33 0.33 0.33 0.31 0.29 0.33 0.29
Basic earnings per common share 0.33 0.35 0.31 0.31 0.30 0.33 0.30
Dividends per share - common 0.0900 0.0900 0.0900 0.0875 0.0750 0.0900 0.0750
Book value per common share 10.05 9.45 9.22 9.01 8.75 10.05 8.75
Tangible book value per common share (non-GAAP)(1) 6.96 6.63 6.40 6.18 5.91 6.96 5.91
STOCK INFORMATION
Average common shares outstanding 141,785 140,465 140,436 140,382 140,390 141,785 140,390
Average diluted shares outstanding 142,492 140,781 140,703 140,608 140,687 142,492 140,687
End of period common shares outstanding 143,442 140,472 140,490 140,382 140,380 143,442 140,380
ANNUALIZED PERFORMANCE METRICS
Return on average assets 1.86% 1.98% 1.81% 1.83% 1.79% 1.86% 1.79%
Return on average assets excluding intangible amortization (non-GAAP)(1) 1.96% 2.08% 1.91% 1.93% 1.89% 1.96% 1.89%
Return on average assets excluding intangible amortization, provision for loan losses, merger expenses, gain on acquisitions, reduced provision for loan losses as a result of a significant loan recovery, loss on FDIC loss share buyout and income taxes (Core ROA) (non-GAAP)(1) 3.31% 3.23% 3.43% 3.33% 3.27% 3.31% 3.27%
Return on average common equity 13.85% 14.79% 13.62% 14.11% 13.77% 13.85% 13.77%
Return on average tangible common equity excluding intangible amortization (non-GAAP)(1) 20.08% 21.45% 20.01% 21.01% 20.79% 20.08% 20.79%
Efficiency ratio 40.76% 36.19% 39.41% 37.52% 37.50% 40.76% 37.50%
Core efficiency ratio (non-GAAP)(1) 36.96% 35.97% 36.51% 36.84% 36.92% 36.96% 36.92%
Net interest margin - FTE 4.70% 4.75% 4.86% 4.83% 4.81% 4.70% 4.81%
Fully taxable equivalent adjustment$ 2,011 $ 2,108 $ 1,869 $ 1,974 $ 1,973 $ 2,011 $ 1,973
Total revenue 140,964 135,216 133,389 130,262 124,721 140,964 124,721
OTHER OPERATING EXPENSES
Advertising$ 698 $ 910 $ 866 $ 733 $ 823 $ 698 $ 823
Merger and acquisition expenses 6,727 433 - - - 6,727 -
FDIC loss share buy-out expense - - 3,849 - - - -
Amortization of intangibles 804 762 762 763 845 804 845
Electronic banking expense 1,519 1,621 1,428 1,237 1,456 1,519 1,456
Directors' fees 313 294 292 289 275 313 275
Due from bank service charges 420 393 319 337 305 420 305
FDIC and state assessment 1,288 1,097 1,502 1,446 1,446 1,288 1,446
Insurance 578 563 553 544 533 578 533
Legal and accounting 627 442 583 658 523 627 523
Other professional fees 1,153 943 1,137 1,044 925 1,153 925
Operating supplies 467 466 437 419 436 467 436
Postage 286 269 269 260 286 286 286
Telephone 324 360 449 455 487 324 487
Other expense 3,112 3,438 3,498 4,690 4,015 3,112 4,015
Total other operating expenses$18,316 $11,991 $15,944 $12,875 $12,355 $18,316 $12,355
(1) Calculation of this metric and the reconciliation to GAAP is 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) 2017 2016 2016 2016 2016
BALANCE SHEET RATIOS
Total loans to total deposits 103.73% 106.41% 103.98% 104.61% 104.18%
Common equity to assets 13.45% 13.53% 13.27% 13.20% 13.07%
Tangible common equity to tangible assets (non-GAAP)(1) 9.72% 9.89% 9.60% 9.44% 9.21%
LOANS RECEIVABLE
Real estate
Commercial real estate loans
Non-farm/non-residential$ 3,462,773 $ 3,153,121 $ 2,954,618 $ 2,884,162 $ 2,889,927
Construction/land development 1,217,519 1,135,843 1,065,204 1,068,544 977,800
Agricultural 79,940 77,736 77,556 78,535 75,763
Residential real estate loans
Residential 1-4 family 1,493,133 1,356,136 1,264,384 1,262,416 1,202,323
Multifamily residential 404,815 340,926 328,089 395,352 438,100
Total real estate 6,658,180 6,063,762 5,689,851 5,689,009 5,583,913
Consumer 41,893 41,745 42,487 48,933 50,090
Commercial and industrial 1,013,403 1,123,213 1,225,043 1,130,776 1,070,553
Agricultural 69,307 74,673 73,413 69,666 63,482
Other 66,862 84,306 81,497 83,772 84,174
Loans receivable$ 7,849,645 $ 7,387,699 $ 7,112,291 $ 7,022,156 $ 6,852,212
- - - - -
Discount for credit losses on purchased loans$ 104,464 $ 100,148 $ 108,017 $ 120,910 $ 142,223
Purchased loans, net of discount for credit losses on purchased loans 1,375,210 1,125,599 1,368,305 1,597,903 1,991,357
ALLOWANCE FOR LOAN LOSSES
Balance, beginning of period$ 80,002 $ 76,370 $ 74,341 $ 72,306 $ 69,224
Loans charged off 4,706 4,836 4,351 4,367 3,947
Recoveries of loans previously charged off 1,101 6,765 844 710 1,352
Net loans (recovered)/charged off 3,605 (1,929) 3,507 3,657 2,595
Provision for loan losses 3,914 1,703 5,536 5,692 5,677
Balance, end of period$ 80,311 $ 80,002 $ 76,370 $ 74,341 $ 72,306
- - - - -
Net (recoveries) charge-offs to average total loans 0.19% -0.11% 0.20% 0.21% 0.16%
Allowance for loan losses to total loans 1.02% 1.08% 1.07% 1.06% 1.06%
NON-PERFORMING ASSETS
Non-performing loans
Non-accrual loans$ 43,810 $ 47,182 $ 39,353 $ 36,660 $ 33,409
Loans past due 90 days or more 15,388 15,942 20,737 22,998 25,144
Total non-performing loans 59,198 63,124 60,090 59,658 58,553
Other non-performing assets
Foreclosed assets held for sale, net 17,315 15,951 17,053 17,778 20,202
Other non-performing assets 3 3 - - -
Total other non-performing assets 17,318 15,954 17,053 17,778 20,202
Total non-performing assets$ 76,516 $ 79,078 $ 77,143 $ 77,436 $ 78,755
Allowance for loan losses for loans to non-performing loans 135.67% 126.74% 127.09% 124.61% 123.49%
Non-performing loans to total loans 0.75% 0.85% 0.84% 0.85% 0.85%
Non-performing assets to total assets 0.71% 0.81% 0.79% 0.81% 0.84%
(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, 2017 December 31, 2016
Average Income/ Yield/ Average Income/ Yield/
(Dollars in thousands) Balance Expense Rate Balance Expense Rate
ASSETS
Earning assets
Interest-bearing balances due from banks$ 170,500$ 3080.73% $ 135,276$ 1460.43%
Federal funds sold 1,182 20.69% 1,374 20.58%
Investment securities - taxable 1,110,166 5,4782.00% 1,121,012 5,0681.80%
Investment securities - non-taxable - FTE 347,085 4,7865.59% 349,175 4,9825.68%
Loans receivable - FTE 7,585,565 105,9315.66% 7,217,631 103,2985.69%
Total interest-earning assets 9,214,498 116,5055.13% 8,824,468 113,4965.12%
Non-earning assets 984,346 952,680
Total assets$ 10,198,844 $ 9,777,148
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Interest-bearing liabilities
Savings and interest-bearing transaction accounts$ 4,138,813$ 3,3770.33% $ 3,877,152$ 2,5510.26%
Time deposits 1,357,300 2,1090.63% 1,303,182 1,8470.56%
Total interest-bearing deposits 5,496,113 5,4860.40% 5,180,334 4,3980.34%
Federal funds purchased - - 0.00% 86 - 0.00%
Securities sold under agreement to repurchase 124,094 1650.54% 119,413 1530.51%
FHLB borrowed funds 1,373,217 3,5891.06% 1,377,017 3,2010.92%
Subordinated debentures 60,819 4392.93% 60,826 4292.81%
Total interest-bearing liabilities 7,054,243 9,6790.56% 6,737,676 8,1810.48%
Non-interest bearing liabilities
Non-interest bearing deposits 1,716,452 1,686,214
Other liabilities 56,419 46,687
Total liabilities 8,827,114 8,470,577
Shareholders' equity 1,371,730 1,306,571
Total liabilities and shareholders' equity$ 10,198,844 $ 9,777,148
Net interest spread 4.57% 4.64%
Net interest income and margin - FTE $ 106,8264.70% $ 105,3154.75%

Home BancShares, Inc.
Consolidated Net Interest Margin
(Unaudited)
Three Months Ended
March 31, 2017 March 31, 2016
Average Income/ Yield/ Average Income/ Yield/
(Dollars in thousands) Balance Expense Rate Balance Expense Rate
ASSETS
Earning assets
Interest-bearing balances due from banks$ 170,500$ 3080.73% $ 113,831$ 1020.36%
Federal funds sold 1,182 20.69% 3,049 40.53%
Investment securities - taxable 1,110,166 5,4782.00% 1,177,595 5,4501.86%
Investment securities - non-taxable - FTE 347,085 4,7865.59% 338,988 4,5985.46%
Loans receivable - FTE 7,585,565 105,9315.66% 6,729,060 97,1035.80%
Total interest-earning assets 9,214,498 116,5055.13% 8,362,523 107,2575.16%
Non-earning assets 984,346 968,099
Total assets$ 10,198,844 $ 9,330,622
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Interest-bearing liabilities
Savings and interest-bearing transaction accounts$ 4,138,813$ 3,3770.33% $ 3,593,914$ 2,0180.23%
Time deposits 1,357,300 2,1090.63% 1,393,591 1,6160.47%
Total interest-bearing deposits 5,496,113 5,4860.40% 4,987,505 3,6340.29%
Federal funds purchased - - 0.00% 610 10.66%
Securities sold under agreement to repurchase 124,094 1650.54% 128,897 1450.45%
FHLB borrowed funds 1,373,217 3,5891.06% 1,368,457 3,0700.90%
Subordinated debentures 60,819 4392.93% 60,826 3772.49%
Total interest-bearing liabilities 7,054,243 9,6790.56% 6,546,295 7,2270.44%
Non-interest bearing liabilities
Non-interest bearing deposits 1,716,452 1,514,169
Other liabilities 56,419 59,891
Total liabilities 8,827,114 8,120,355
Shareholders' equity 1,371,730 1,210,267
Total liabilities and shareholders' equity$ 10,198,844 $ 9,330,622
Net interest spread 4.57% 4.72%
Net interest income and margin - FTE $ 106,8264.70% $ 100,0304.81%

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) 2017 2016 2016 2016 2016 2017 2016
EARNINGS EXCLUDING NON-FUNDAMENTAL ITEMS
GAAP net income available to common shareholders (A)$ 46,856 $ 48,590 $ 43,620 $ 43,509 $ 41,427 $ 46,856 $ 41,427
Non-fundamental items
Gain on acquisitions (3,807) - - - - (3,807) -
Merger and acquisition expenses 6,727 433 - - - 6,727 -
FDIC loss share buy-out expense - - 3,849 - - - -
Reduced provision for loan losses as a result of a significant loan recovery - (4,457) - - - - -
Total non-fundamental items 2,920 (4,024) 3,849 - - 2,920 -
Tax-effect of non-fundamental items(2) 2,382 (1,578) 1,510 - - 2,382 -
Non-fundamental items after-tax (B) 538 (2,446) 2,339 - - 538 -
Earnings excluding non-fundamental items (C)$ 47,394 $ 46,144 $ 45,959 $ 43,509 $ 41,427 $ 47,394 $ 41,427
Average diluted shares outstanding (D) 142,492 140,781 140,703 140,608 140,687 142,492 140,687
GAAP diluted earnings per share: A/D$ 0.33 $ 0.35 $ 0.31 $ 0.31 $ 0.29 $ 0.33 $ 0.29
Non-fundamental items after-tax: B/D - (0.02) 0.02 - - - -
Diluted earnings per common share excluding gain on acquisitions, merger expenses, reduced provision for loan losses as a result of a significant loan recovery & FDIC loss share buy-out expense: C/D$ 0.33 $ 0.33 $ 0.33 $ 0.31 $ 0.29 $ 0.33 $ 0.29
- - - - - - -
ANNUALIZED RETURN ON AVERAGE ASSETS
Return on average assets: A/G 1.86% 1.98% 1.81% 1.83% 1.79% 1.86% 1.79%
Return on average assets excluding intangible amortization: (A+C)/(G-H) 1.96% 2.08% 1.91% 1.93% 1.89% 1.96% 1.89%
Return on average assets excluding intangible amortization, provision for loan losses, merger expenses, gain on acquisitions, reduced provision for loan losses as a result of a significant loan recovery, loss on FDIC loss share buyout and income taxes (Core ROA): (A+B+D+E+F)/(G-H) 3.31% 3.23% 3.43% 3.33% 3.27% 3.31% 3.27%
GAAP net income available to common shareholders (A) $ 46,856 $ 48,590 $ 43,620 $ 43,509 $ 41,427 $ 46,856 $ 41,427
Amortization of intangibles (B) 804 762 762 763 845 804 845
Amortization of intangibles after-tax (C) 489 463 463 464 514 489 514
Provision for loan losses (D) 3,914 1,703 5,536 5,692 5,677 3,914 5,677
Total non-fundamental items (E) 2,920 (4,024) 3,849 - - 2,920 -
Income tax expense (F) 25,374 29,248 25,485 26,025 24,742 25,374 24,742
Average assets (G) 10,198,844 9,777,148 9,602,363 9,562,624 9,330,622 10,198,844 9,330,622
Average goodwill, core deposits & other intangible assets (H) 415,699 396,662 397,429 398,184 398,978 415,699 398,978
ANNUALIZED RETURN ON AVERAGE COMMON EQUITY
Return on average common equity: A/C 13.85% 14.79% 13.62% 14.11% 13.77% 13.85% 13.77%
Return on average tangible common equity excluding intangible amortization: (A+B)/(C-D) 20.08% 21.45% 20.01% 21.01% 20.79% 20.08% 20.79%
GAAP net income available to common shareholders (A) $ 46,856 $ 48,590 $ 43,620 $ 43,509 $ 41,427 $ 46,856 $ 41,427
Amortization of intangibles after-tax (B) 489 463 463 464 514 489 514
Average common equity (C) 1,371,730 1,306,571 1,274,077 1,240,080 1,210,267 1,371,730 1,210,267
Average goodwill, core deposits & other intangible assets (D) 415,699 396,662 397,429 398,184 398,978 415,699 398,978
(2) Effective tax rate of 39.225%, adjusted for non-taxable gain on acquisition and non-deductible merger-related costs.

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) 2017 2016 2016 2016 2016 2017 2016
EFFICIENCY RATIO
Efficiency ratio: ((C-E)/(A+B+D)) 40.76% 36.19% 39.41% 37.52% 37.50% 40.76% 37.50%
Core efficiency ratio: ((C-E-G)/(A+B+D-F)) 36.96% 35.97% 36.51% 36.84% 36.92% 36.96% 36.92%
- - - - - - -
Net interest income (A)$ 104,815 $ 103,207 $ 103,653 $ 101,041 $ 98,057 $ 104,815 $ 98,057
Non-interest income (B) 26,470 23,828 22,014 21,772 19,437 26,470 19,437
Non-interest expense (C) 55,141 47,494 51,026 47,587 45,648 55,141 45,648
Fully taxable equivalent adjustment (D) 2,011 2,108 1,869 1,974 1,973 2,011 1,973
Amortization of intangibles (E) 804 762 762 763 845 804 845
Non-fundamental items:
Non-interest income:
Gain on acquisition $ 3,807 $ - $ - $ - $ - $ 3,807 $ -
Gain (loss) on OREO 121 159 132 (941) 96 121 96
Gain (loss) on SBA 188 645 364 79 - 188 -
Gain on sale of branches, equipment & other assets, net (56) (1) (86) 840 (53) (56) (53)
Gain (loss) on securities 423 644 - 15 10 423 10
Recoveries on historic losses - - - 925 - - -
Total non-fundamental non-interest income (F)$ 4,483 $ 1,447 $ 410 $ 918 $ 53 $ 4,483 $ 53
Non-interest expense:
Merger Expenses $ 6,727 $ 433 $ - $ - $ - $ 6,727 $ -
FDIC loss share buy-out - - 3,849 - - - -
Vacant properties write-downs - 369 - 1,194 720 - 720
Total non-fundamental non-interest expense (G)$ 6,727 $ 802 $ 3,849 $ 1,194 $ 720 $ 6,727 $ 720
ANNUALIZED NET INTEREST MARGIN
Net interest margin: A/C 4.70% 4.75% 4.86% 4.83% 4.81% 4.70% 4.81%
Net interest margin (non-GAAP): B/D 4.32% 4.31% 4.25% 4.24% 4.22% 4.32% 4.22%
Net interest income - FTE (A)$ 106,826 $ 105,315 $ 105,522 $ 103,015 $ 100,030 $ 106,826 $ 100,030
Total purchase accounting accretion 7,652 8,659 11,937 11,017 10,730 7,652 10,730
Net interest income - FTE (non-GAAP) (B)$ 99,174 $ 96,656 $ 93,585 $ 91,998 $ 89,300 $ 99,174 $ 89,300
Average interest-earning assets (C)$ 9,214,498 $ 8,824,468 $ 8,646,026 $ 8,585,955 $ 8,362,523 $ 9,214,498 $ 8,362,523
Average purchase accounting loan discounts 102,906 104,783 115,766 135,172 149,763 102,906 149,763
Average interest-earning assets (non-GAAP) (D)$ 9,317,404 $ 8,929,251 $ 8,761,792 $ 8,721,127 $ 8,512,286 $ 9,317,404 $ 8,512,286

Home BancShares, Inc.
Non-GAAP Reconciliations
(Unaudited)
Mar. 31, Dec. 31, Sep. 30, Jun. 30, Mar. 31,
(Dollars in thousands) 2017 2016 2016 2016 2016
TANGIBLE BOOK VALUE PER COMMON SHARE
Book value per common share: A/B$ 10.05 $ 9.45 $ 9.22 $ 9.01 $ 8.75
Tangible book value per common share: (A-C-D)/B 6.96 6.63 6.40 6.18 5.91
Total stockholders' equity (A)$ 1,441,568 $ 1,327,490 $ 1,296,018 $ 1,264,915 $ 1,227,782
End of period common shares outstanding (B) 143,442 140,472 140,490 140,382 140,380
Goodwill (C) 420,941 377,983 377,983 377,983 377,983
Core deposit and other intangibles (D) 21,885 18,311 19,073 19,835 20,597
TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS
Equity to assets: B/A 13.45% 13.53% 13.27% 13.20% 13.07%
Tangible common equity to tangible assets: (B-C-D)/(A-C-D) 9.72% 9.89% 9.60% 9.44% 9.21%
- - - - -
Total assets (A)$ 10,717,468 $ 9,808,465 $ 9,764,238 $ 9,582,126 $ 9,397,451
Total stockholders' equity (B) 1,441,568 1,327,490 1,296,018 1,264,915 1,227,782
Goodwill (C) 420,941 377,983 377,983 377,983 377,983
Core deposit and other intangibles (D) 21,885 18,311 19,073 19,835 20,597

FOR MORE INFORMATION CONTACT: Jennifer C. Floyd Chief Accounting Officer & Investor Relations Officer Home BancShares, Inc. (501) 339-2929

Source:Home BancShares, Inc.