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Home BancShares, Inc. Announces Record Net Income of $50.1 Million

CONWAY, Ark., July 20, 2017 (GLOBE NEWSWIRE) -- Home BancShares, Inc. (NASDAQ:HOMB), parent company of Centennial Bank, today announced a record quarterly profit of $50.1 million for the second quarter of 2017 compared to $43.5 million, for the same quarter in 2016. Diluted earnings per share for the second quarter of 2017 was $0.35 per share compared to $0.31 per share for 2016, representing an increase of $0.04 per share or 12.9% for the second quarter of 2017 when compared to the same quarter in the prior year. Excluding merger expenses, diluted earnings per share for the second quarter of 2017 remained $0.35 per share.

“Our second quarter earnings excluding merger expenses are $50.7 million, which is $3.3 million or 7%, higher than the previous record quarterly earnings reported for Home BancShares,” said John Allison, Chairman. “We are proud of this earnings performance for the second quarter of 2017 reaching an impressive diluted earnings per share excluding merger expenses of $0.35 per share.”

“Now that we have completed the systems conversions for both of the first quarter of 2017 acquisitions, we can speed up the process of improving the financial metrics to maximize returns to our shareholders,” added Tracy French, Centennial Bank President and Chief Executive Officer. “We are also making preparations for the completion of our acquisition of Stonegate Bank, which is anticipated to close late in the third quarter or early in the fourth quarter of 2017, subject to both shareholder and regulatory approvals.”

“We have again, for the twenty-fifth consecutive quarter, reported the most profitable quarter in the Company’s history,” said Randy Sims, Home BancShares, Inc. Chief Executive Officer. “In addition to the excellent earnings previously mentioned, we are happy to report record net interest income for the second quarter of 2017 plus continued improvement to our non-performing asset portfolio.”

Operating Highlights

Accretion yield increased approximately $850,000 from $7.6 million for the first quarter of 2017 to $8.5 million for second quarter of 2017. Each quarter we perform credit impairment tests on the loans acquired in our acquisitions. During our second quarter 2017 impairment testing, several pools were determined to have a material projected credit improvement. The additional accretion income from the recently acquired loan portfolios combined with this projected credit improvement, resulted in a comparable level of scheduled accretion. The net increase of recognized accretion income when compared to the first quarter of 2017 is primarily due to pay-off accretion increasing from $1.9 million to $2.6 million.

Net interest margin, on a fully taxable equivalent basis, was 4.50% for the quarter just ended compared to 4.83% for the same quarter in 2016 and compared to 4.70% for the first quarter of 2017. The net interest margin, excluding accretion yield decreased when comparing the first quarter of 2017 to the second quarter of 2017 at 4.32% and 4.11%, respectively. The decrease in net interest margin is primarily the result of the addition of $300 million of 5.625% fixed-to-floating rate subordinated notes on April 3, 2017. The subordinated notes added approximately $4.2 million of interest expense when compared to the prior quarter. Consequently, the addition of the subordinated notes negatively impacted net interest margin by 15 basis points. Also, the Company made a strategic decision to keep excess cash liquidity on the books during the second quarter of 2017 resulting in a negative impact to the net interest margin of 7 basis points.

During the second quarter of 2017, the Company recorded a provision for loan loss of $387,000 compared to $5.7 million in the second quarter of 2016. Since the second quarter of 2016 the Company has seen both an improvement in asset quality and a decline in loan growth. Non-performing loans for the second quarter of 2016 and 2017 were, $59.7 million and $46.9 million, respectively, for an improvement of $12.8 million. Loan growth was $169.9 million for the second quarter of 2016 while there was a $15.2 million decline in loans for the second quarter of 2017. For the second quarter of 2017, net charge-offs were $560,000 compared to net charge-offs of $3.7 million for the second quarter of 2016.

The Company reported $24.4 million of non-interest income for the second quarter of 2017, compared to $21.8 million for the second quarter of 2016. The most important components of the second quarter non-interest income were $8.6 million from other service charges and fees, $6.0 million from service charges on deposits accounts, $3.8 million from mortgage lending income, and $2.8 million from other income.

Non-interest expense for the second quarter of 2017 was $51.0 million compared to $47.6 million for the second quarter of 2016. Non-interest expense excluding merger expenses for the second quarter of 2017 was $51.8 million compared to $47.6 million for the second quarter of 2016, an increase of $4.2 million. This increase excluding merger expenses is primarily the result of an increase in the costs associated with asset growth from the acquisitions in the first quarter of 2017 combined with approximately $664,000 of growth in non-interest expense related to the Centennial Commercial Finance Group (“Centennial CFG”). For the second quarter of 2017, our core efficiency ratio was 37.29% which has increased from the 36.84% reported for second quarter of 2016. This increase is primarily the result of our recently completed acquisitions not yet up to our Company’s legacy efficiency metrics.

Financial Condition

Total loans receivable were $7.83 billion at June 30, 2017 compared to $7.39 billion at December 31, 2016. Total deposits were $7.77 billion at June 30, 2017 compared to $6.94 billion at December 31, 2016. Total assets were $10.87 billion at June 30, 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 June 30, 2017, the Company produced approximately $525,000 of organic loan growth. Centennial CFG produced $40.3 million of net organic loan growth during the first six months of 2017 while the legacy footprint experienced significant net payoffs during the first six months of 2017, resulting in a decline of $39.8 million.

From March 31, 2017 to June 30, 2017, the Company experienced an organic decline in loans receivable of approximately $15.2 million. Centennial CFG produced $67.7 million of organic loan growth during the second quarter of 2017 while the legacy footprint experienced significant payoffs during the second quarter of 2017, resulting in a decline of $82.9 million. Centennial CFG had loans of $1.15 billion at June 30, 2017.

Non-performing loans at June 30, 2017 were $22.0 million, $24.6 million, $306,000 and zero in the Arkansas, Florida, Alabama and Centennial CFG markets, respectively, for a total of $46.9 million. Non-performing loans as a percent of total loans were 0.60% as of June 30, 2017 compared to 0.85% as of December 31, 2016. Non-performing assets at June 30, 2017 were $33.4 million, $31.3 million, $947,000 and zero in the Arkansas, Florida and Alabama and Centennial CFG markets, respectively, for a total of $65.7 million. Non-performing assets as a percent of total assets were 0.60% as of June 30, 2017 compared to 0.81% as of December 31, 2016.

The Company’s allowance for loan losses was $80.1 million at June 30, 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 during the first quarter of 2017 which do not have an associated allowance for loan losses as a result of purchase accounting. As of June 30, 2017 and December 31, 2016, the Company’s allowance for loan losses was 171% and 127% of its total non-performing loans, respectively.

Stockholders’ equity was $1.48 billion at June 30, 2017 compared to $1.33 billion at December 31, 2016, an increase of $148.5 million. Book value per common share was $10.32 at June 30, 2017 compared to $9.45 at December 31, 2016. Tangible book value per common share was $7.23 at June 30, 2017 compared to $6.63 at December 31, 2016 for an annualized increase of 18.2%.

Branches

In an effort to achieve efficiencies primarily from our acquisitions, during the second quarter, the Company closed one branch in Sarasota, Florida and two branches in Ft. Lauderdale, Florida. During the second quarter of 2017, the Company opened 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, 64 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, July 20, 2017. We encourage all participants to pre-register for the conference call using the following link: http://dpregister.com/10109971. 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: 10109971, which will be available until July 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)
Jun. 30, Mar. 31, Dec. 31, Sep. 30, Jun. 30,
(In thousands) 2017 2017 2016 2016 2016
ASSETS
Cash and due from banks $ 147,041 $ 163,662 $ 123,758 $ 123,126 $ 136,632
Interest-bearing deposits with other banks 313,447 253,427 92,891 173,034 48,762
Cash and cash equivalents 460,488 417,089 216,649 296,160 185,394
Federal funds sold - 1,700 1,550 1,850 525
Investment securities - available-for-sale 1,400,431 1,250,590 1,072,920 1,233,269 1,221,778
Investment securities - held-to-maturity 254,161 276,599 284,176 275,544 287,725
Loans receivable 7,834,475 7,849,645 7,387,699 7,112,291 7,022,156
Allowance for loan losses (80,138) (80,311) (80,002) (76,370) (74,341)
Loans receivable, net 7,754,337 7,769,334 7,307,697 7,035,921 6,947,815
Bank premises and equipment, net 207,071 212,813 205,301 208,137 207,932
Foreclosed assets held for sale 18,789 17,315 15,951 17,053 17,778
Cash value of life insurance 97,684 97,223 86,491 86,230 85,889
Accrued interest receivable 32,445 32,413 30,838 29,398 28,548
Deferred tax asset, net 68,368 67,063 61,298 56,435 61,613
Goodwill 420,941 420,941 377,983 377,983 377,983
Core deposit and other intangibles 21,019 21,885 18,311 19,073 19,835
Other assets 136,494 132,503 129,300 127,185 139,311
Total assets $ 10,872,228 $ 10,717,468 $ 9,808,465 $ 9,764,238 $ 9,582,126
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Deposits:
Demand and non-interest-bearing $ 1,957,677 $ 1,862,996 $ 1,695,184 $ 1,717,467 $ 1,645,472
Savings and interest-bearing transaction accounts 4,335,456 4,274,194 3,963,241 3,792,229 3,678,546
Time deposits 1,474,255 1,430,017 1,284,002 1,330,597 1,388,930
Total deposits 7,767,388 7,567,207 6,942,427 6,840,293 6,712,948
Federal funds purchased - - - - -
Securities sold under agreements to repurchase 133,741 123,793 121,290 109,350 111,072
FHLB and other borrowed funds 1,099,478 1,455,040 1,305,198 1,420,369 1,380,889
Accrued interest payable and other liabilities 37,751 69,125 51,234 37,382 51,476
Subordinated debentures 357,838 60,735 60,826 60,826 60,826
Total liabilities 9,396,196 9,275,900 8,480,975 8,468,220 8,317,211
Stockholders' equity
Common stock 1,431 1,434 1,405 1,405 1,404
Capital surplus 940,821 948,982 869,737 866,310 863,560
Retained earnings 527,338 490,142 455,948 419,999 389,014
Accumulated other comprehensive income 6,442 1,010 400 8,304 10,937
Total stockholders' equity 1,476,032 1,441,568 1,327,490 1,296,018 1,264,915
Total liabilities and stockholders' equity $ 10,872,228 $ 10,717,468 $ 9,808,465 $ 9,764,238 $ 9,582,126

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) 2017 2017 2016 2016 2016 2017 2016
Interest income
Loans $ 112,732 $ 105,762 $ 103,113 $ 102,953 $ 100,415 $ 218,494 $ 197,328
Investment securities
Taxable 6,434 5,478 5,068 5,583 5,145 11,912 10,595
Tax-exempt 2,966 2,944 3,059 2,720 2,823 5,910 5,638
Deposits - other banks 727 308 146 117 106 1,035 208
Federal funds sold 4 2 2 2 1 6 5
Total interest income 122,863 114,494 111,388 111,375 108,490 237,357 213,774
Interest expense
Interest on deposits 6,810 5,486 4,398 4,040 3,854 12,296 7,488
Federal funds purchased - - - - 1 - 2
FHLB borrowed funds 3,710 3,589 3,201 3,139 3,074 7,299 6,144
Securities sold under agreements to repurchase 196 165 153 142 134 361 279
Subordinated debentures 4,795 439 429 401 386 5,234 763
Total interest expense 15,511 9,679 8,181 7,722 7,449 25,190 14,676
Net interest income 107,352 104,815 103,207 103,653 101,041 212,167 199,098
Provision for loan losses 387 3,914 1,703 5,536 5,692 4,301 11,369
Net interest income after
provision for loan losses 106,965 100,901 101,504 98,117 95,349 207,866 187,729
Non-interest income
Service charges on deposit accounts 5,966 5,982 6,442 6,527 6,151 11,948 12,080
Other service charges and fees 8,576 8,917 7,611 7,504 7,968 17,493 15,085
Trust fees 309 456 329 365 359 765 763
Mortgage lending income 3,750 2,791 4,123 3,932 3,481 6,541 6,344
Insurance commissions 465 545 488 534 617 1,010 1,274
Increase in cash value of life insurance 463 310 320 344 353 773 748
Dividends from FHLB, FRB, Bankers' Bank & other 472 1,149 944 808 719 1,621 1,339
Gain on acquisitions - 3,807 - - - 3,807 -
Gain on sale of SBA loans 387 188 645 364 79 575 79
Gain (loss) on sale of branches, equipment and
other assets, net
431 (56) (1) (86) 840 375 787
Gain (loss) on OREO, net 393 121 159 132 (941) 514 (845)
Gain (loss) on securities, net 380 423 644 - 15 803 25
FDIC indemnification accretion/(amortization), net - - - - (410) - (772)
Other income 2,825 1,837 2,124 1,590 2,541 4,662 4,302
Total non-interest income 24,417 26,470 23,828 22,014 21,772 50,887 41,209
Non-interest expense
Salaries and employee benefits 28,034 27,421 26,944 25,623 25,437 55,455 49,395
Occupancy and equipment 7,034 6,681 6,281 6,668 6,509 13,715 13,180
Data processing expense 2,863 2,723 2,278 2,791 2,766 5,586 5,430
Other operating expenses 13,072 18,316 11,991 15,944 12,875 31,388 25,230
Total non-interest expense 51,003 55,141 47,494 51,026 47,587 106,144 93,235
Income before income taxes 80,379 72,230 77,838 69,105 69,534 152,609 135,703
Income tax expense 30,282 25,374 29,248 25,485 26,025 55,656 50,767
Net income $ 50,097 $ 46,856 $ 48,590 $ 43,620 $ 43,509 $ 96,953 $ 84,936

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 and shares in thousands, except per share data) 2017 2017 2016 2016 2016 2017 2016
PER SHARE DATA
Diluted earnings per common share $ 0.35 $ 0.33 $ 0.35 $ 0.31 $ 0.31 $ 0.68 $ 0.60
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)
0.35 0.33 0.33 0.33 0.31 0.68 0.60
Basic earnings per common share 0.35 0.33 0.35 0.31 0.31 0.68 0.61
Dividends per share - common 0.0900 0.0900 0.0900 0.0900 0.0875 0.1800 0.1625
Book value per common share 10.32 10.05 9.45 9.22 9.01 10.32 9.01
Tangible book value per common share (non-GAAP)(1) 7.23 6.96 6.63 6.40 6.18 7.23 6.18
STOCK INFORMATION
Average common shares outstanding 143,282 141,785 140,465 140,436 140,382 142,538 140,386
Average diluted shares outstanding 144,116 142,492 140,781 140,703 140,608 143,270 140,667
End of period common shares outstanding 143,071 143,442 140,472 140,490 140,382 143,071 140,382
ANNUALIZED PERFORMANCE METRICS
Return on average assets 1.86% 1.86% 1.98% 1.81% 1.83% 1.86% 1.81%
Return on average assets excluding intangible
amortization (non-GAAP)(1)
1.96% 1.96% 2.08% 1.91% 1.93% 1.96% 1.91%
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)
3.19% 3.31% 3.23% 3.43% 3.33% 3.25% 3.30%
Return on average common equity 13.83% 13.85% 14.79% 13.62% 14.11% 13.84% 13.94%
Return on average tangible common equity excluding
intangible amortization (non-GAAP)(1)
20.09% 20.08% 21.45% 20.01% 21.01% 20.09% 20.90%
Efficiency ratio 37.48% 40.76% 36.19% 39.41% 37.52% 39.12% 37.51%
Core efficiency ratio (non-GAAP)(1) 37.29% 36.96% 35.97% 36.51% 36.84% 37.13% 36.88%
Net interest margin - FTE 4.50% 4.70% 4.75% 4.86% 4.83% 4.60% 4.82%
Fully taxable equivalent adjustment $ 2,016 $ 2,011 $ 2,108 $ 1,869 $ 1,974 $ 4,027 $ 3,947
Total revenue 147,280 140,964 135,216 133,389 130,262 288,244 254,983
OTHER OPERATING EXPENSES
Advertising $ 812 $ 698 $ 910 $ 866 $ 733 $ 1,510 $ 1,556
Merger and acquisition expenses 789 6,727 433 - - 7,516 -
FDIC loss share buy-out expense - - - 3,849 - - -
Amortization of intangibles 866 804 762 762 763 1,670 1,608
Electronic banking expense 1,654 1,519 1,621 1,428 1,237 3,173 2,693
Directors' fees 324 313 294 292 289 637 564
Due from bank service charges 456 420 393 319 337 876 642
FDIC and state assessment 1,182 1,288 1,097 1,502 1,446 2,470 2,892
Insurance 543 578 563 553 544 1,121 1,077
Legal and accounting 474 627 442 583 658 1,101 1,181
Other professional fees 1,233 1,153 943 1,137 1,044 2,386 1,969
Operating supplies 477 467 466 437 419 944 855
Postage 295 286 269 269 260 581 546
Telephone 398 324 360 449 455 722 942
Other expense 3,569 3,112 3,438 3,498 4,690 6,681 8,705
Total other operating expenses $ 13,072 $ 18,316 $ 11,991 $ 15,944 $ 12,875 $ 31,388 $ 25,230
(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)
Jun. 30, Mar. 31, Dec. 31, Sep. 30, Jun. 30,
(Dollars in thousands) 2017 2017 2016 2016 2016
BALANCE SHEET RATIOS
Total loans to total deposits 100.86% 103.73% 106.41% 103.98% 104.61%
Common equity to assets 13.58% 13.45% 13.53% 13.27% 13.20%
Tangible common equity to tangible assets (non-GAAP)(1) 9.91% 9.72% 9.89% 9.60% 9.44%
LOANS RECEIVABLE
Real estate
Commercial real estate loans
Non-farm/non-residential $ 3,368,663 $ 3,462,773 $ 3,153,121 $ 2,954,618 $ 2,884,162
Construction/land development 1,315,309 1,217,519 1,135,843 1,065,204 1,068,544
Agricultural 78,260 79,940 77,736 77,556 78,535
Residential real estate loans
Residential 1-4 family 1,513,888 1,493,133 1,356,136 1,264,384 1,262,416
Multifamily residential 398,781 404,815 340,926 328,089 395,352
Total real estate 6,674,901 6,658,180 6,063,762 5,689,851 5,689,009
Consumer 38,424 41,893 41,745 42,487 48,933
Commercial and industrial 994,827 1,013,403 1,123,213 1,225,043 1,130,776
Agricultural 69,697 69,307 74,673 73,413 69,666
Other 56,626 66,862 84,306 81,497 83,772
Loans receivable $ 7,834,475 $ 7,849,645 $ 7,387,699 $ 7,112,291 $ 7,022,156
Discount for credit losses on purchased loans $ 95,627 $ 104,464 $ 100,148 $ 108,017 $ 120,910
Purchased loans, net of discount for credit losses
on purchased loans
1,355,922 1,375,210 1,125,599 1,368,305 1,597,903
ALLOWANCE FOR LOAN LOSSES
Balance, beginning of period $ 80,311 $ 80,002 $ 76,370 $ 74,341 $ 72,306
Loans charged off 1,405 4,706 4,836 4,351 4,367
Recoveries of loans previously charged off 845 1,101 6,765 844 710
Net loans (recovered)/charged off 560 3,605 (1,929) 3,507 3,657
Provision for loan losses 387 3,914 1,703 5,536 5,692
Balance, end of period $ 80,138 $ 80,311 $ 80,002 $ 76,370 $ 74,341
Net (recoveries) charge-offs to average total loans 0.03% 0.19% -0.11% 0.20% 0.21%
Allowance for loan losses to total loans 1.02% 1.02% 1.08% 1.07% 1.06%
NON-PERFORMING ASSETS
Non-performing loans
Non-accrual loans $ 32,426 $ 43,810 $ 47,182 $ 39,353 $ 36,660
Loans past due 90 days or more 14,442 15,388 15,942 20,737 22,998
Total non-performing loans 46,868 59,198 63,124 60,090 59,658
Other non-performing assets
Foreclosed assets held for sale, net 18,789 17,315 15,951 17,053 17,778
Other non-performing assets 3 3 3 - -
Total other non-performing assets 18,792 17,318 15,954 17,053 17,778
Total non-performing assets $ 65,660 $ 76,516 $ 79,078 $ 77,143 $ 77,436
Allowance for loan losses for loans to non-performing loans 170.99% 135.67% 126.74% 127.09% 124.61%
Non-performing loans to total loans 0.60% 0.75% 0.85% 0.84% 0.85%
Non-performing assets to total assets 0.60% 0.71% 0.81% 0.79% 0.81%
(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, 2017 March 31, 2017
Average Income/ Yield/ Average Income/ Yield/
(Dollars in thousands) Balance Expense Rate Balance Expense Rate
ASSETS
Earning assets
Interest-bearing balances due from banks $ 303,997 $ 727 0.96% $ 170,500 $ 308 0.73%
Federal funds sold 1,427 4 1.12% 1,182 2 0.69%
Investment securities - taxable 1,256,202 6,434 2.05% 1,110,166 5,478 2.00%
Investment securities - non-taxable - FTE 346,708 4,812 5.57% 347,085 4,786 5.59%
Loans receivable - FTE 7,829,615 112,902 5.78% 7,585,565 105,931 5.66%
Total interest-earning assets 9,737,949 124,879 5.14% 9,214,498 116,505 5.13%
Non-earning assets 1,055,821 984,346
Total assets $ 10,793,770 $ 10,198,844
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Interest-bearing liabilities
Savings and interest-bearing transaction accounts $ 4,292,389 $ 4,313 0.40% $ 4,138,813 $ 3,377 0.33%
Time deposits 1,443,228 2,497 0.69% 1,357,300 2,109 0.63%
Total interest-bearing deposits 5,735,617 6,810 0.48% 5,496,113 5,486 0.40%
Federal funds purchased - - 0.00% - - 0.00%
Securities sold under agreement to repurchase 128,661 196 0.61% 124,094 165 0.54%
FHLB borrowed funds 1,177,510 3,710 1.26% 1,373,217 3,589 1.06%
Subordinated debentures 351,659 4,795 5.47% 60,819 439 2.93%
Total interest-bearing liabilities 7,393,447 15,511 0.84% 7,054,243 9,679 0.56%
Non-interest bearing liabilities
Non-interest bearing deposits 1,899,865 1,716,452
Other liabilities 47,359 56,419
Total liabilities 9,340,671 8,827,114
Shareholders' equity 1,453,099 1,371,730
Total liabilities and shareholders' equity $ 10,793,770 $ 10,198,844
Net interest spread 4.30% 4.57%
Net interest income and margin - FTE $ 109,368 4.50% $ 106,826 4.70%

Home BancShares, Inc.
Consolidated Net Interest Margin
(Unaudited)
Six Months Ended
June 30, 2017 June 30, 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 $ 237,617 $ 1,035 0.88% $ 110,842 $ 208 0.38%
Federal funds sold 1,305 6 0.93% 2,279 5 0.44%
Investment securities - taxable 1,183,588 11,912 2.03% 1,173,843 10,595 1.82%
Investment securities - non-taxable - FTE 346,895 9,598 5.58% 335,539 9,209 5.52%
Loans receivable - FTE 7,708,264 218,833 5.72% 6,849,394 197,704 5.80%
Total interest-earning assets 9,477,669 241,384 5.14% 8,471,897 217,721 5.17%
Non-earning assets 1,020,474 974,726
Total assets $ 10,498,143 $ 9,446,623
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Interest-bearing liabilities
Savings and interest-bearing transaction accounts $ 4,216,025 $ 7,690 0.37% $ 3,635,782 $ 4,159 0.23%
Time deposits 1,400,501 4,606 0.66% 1,393,307 3,329 0.48%
Total interest-bearing deposits 5,616,526 12,296 0.44% 5,029,089 7,488 0.30%
Federal funds purchased - - 0.00% 470 2 0.86%
Securities sold under agreement to repurchase 126,390 361 0.58% 122,373 279 0.46%
FHLB borrowed funds 1,274,823 7,299 1.15% 1,385,461 6,144 0.89%
Subordinated debentures 207,043 5,234 5.10% 60,826 763 2.52%
Total interest-bearing liabilities 7,224,782 25,190 0.70% 6,598,219 14,676 0.45%
Non-interest bearing liabilities
Non-interest bearing deposits 1,808,660 1,562,725
Other liabilities 52,062 60,505
Total liabilities 9,085,504 8,221,449
Shareholders' equity 1,412,639 1,225,174
Total liabilities and shareholders' equity $ 10,498,143 $ 9,446,623
Net interest spread 4.44% 4.72%
Net interest income and margin - FTE $ 216,194 4.60% $ 203,045 4.82%

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) 2017 2017 2016 2016 2016 2017 2016
EARNINGS EXCLUDING NON-FUNDAMENTAL ITEMS
GAAP net income available to common shareholders (A) $ 50,097 $ 46,856 $ 48,590 $ 43,620 $ 43,509 $ 96,953 $ 84,936
Non-fundamental items
Gain on acquisitions - (3,807) - - - (3,807) -
Merger and acquisition expenses 789 6,727 433 - - 7,516 -
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 789 2,920 (4,024) 3,849 - 3,709 -
Tax-effect of non-fundamental items(2) 199 2,382 (1,578) 1,510 - 2,581 -
Non-fundamental items after-tax (B) 590 538 (2,446) 2,339 - 1,128 -
Earnings excluding non-fundamental items (C) $ 50,687 $ 47,394 $ 46,144 $ 45,959 $ 43,509 $ 98,081 $ 84,936
Average diluted shares outstanding (D) 144,116 142,492 140,781 140,703 140,608 143,270 140,667
GAAP diluted earnings per share: A/D $ 0.35 $ 0.33 $ 0.35 $ 0.31 $ 0.31 $ 0.68 $ 0.60
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
$ 0.35 $ 0.33 $ 0.33 $ 0.33 $ 0.31 $ 0.68 $ 0.60
ANNUALIZED RETURN ON AVERAGE ASSETS
Return on average assets: A/G 1.86% 1.86% 1.98% 1.81% 1.83% 1.86% 1.81%
Return on average assets excluding intangible
amortization: (A+C)/(G-H)
1.96% 1.96% 2.08% 1.91% 1.93% 1.96% 1.91%
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)
3.19% 3.31% 3.23% 3.43% 3.33% 3.25% 3.30%
GAAP net income available to common shareholders (A) $ 50,097 $ 46,856 $ 48,590 $ 43,620 $ 43,509 $ 96,953 $ 84,936
Amortization of intangibles (B) 866 804 762 762 763 1,670 1,608
Amortization of intangibles after-tax (C) 526 489 463 463 464 1,015 977
Provision for loan losses (D) 387 3,914 1,703 5,536 5,692 4,301 11,369
Total non-fundamental items (E) 789 2,920 (4,024) 3,849 - 3,709 -
Income tax expense (F) 30,282 25,374 29,248 25,485 26,025 55,656 50,767
Average assets (G) 10,793,770 10,198,844 9,777,148 9,602,363 9,562,624 10,498,143 9,446,623
Average goodwill, core deposits & other intangible assets (H) 442,380 415,699 396,662 397,429 398,184 429,113 398,581
ANNUALIZED RETURN ON AVERAGE COMMON EQUITY
Return on average common equity: A/C 13.83% 13.85% 14.79% 13.62% 14.11% 13.84% 13.94%
Return on average tangible common equity
excluding intangible amortization: (A+B)/(C-D)
20.09% 20.08% 21.45% 20.01% 21.01% 20.09% 20.90%
GAAP net income available to common shareholders (A) $ 50,097 $ 46,856 $ 48,590 $ 43,620 $ 43,509 $ 96,953 $ 84,936
Amortization of intangibles after-tax (B) 526 489 463 463 464 1,015 977
Average common equity (C) 1,453,099 1,371,730 1,306,571 1,274,077 1,240,080 1,412,639 1,225,174
Average goodwill, core deposits & other intangible assets (D) 442,380 415,699 396,662 397,429 398,184 429,113 398,581
(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 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) 2017 2017 2016 2016 2016 2017 2016
EFFICIENCY RATIO
Efficiency ratio: ((C-E)/(A+B+D)) 37.48% 40.76% 36.19% 39.41% 37.52% 39.12% 37.51%
Core efficiency ratio: ((C-E-G)/(A+B+D-F)) 37.29% 36.96% 35.97% 36.51% 36.84% 37.13% 36.88%
Net interest income (A) $ 107,352 $ 104,815 $ 103,207 $ 103,653 $ 101,041 $ 212,167 $ 199,098
Non-interest income (B) 24,417 26,470 23,828 22,014 21,772 50,887 41,209
Non-interest expense (C) 51,003 55,141 47,494 51,026 47,587 106,144 93,235
Fully taxable equivalent adjustment (D) 2,016 2,011 2,108 1,869 1,974 4,027 3,947
Amortization of intangibles (E) 866 804 762 762 763 1,670 1,608
Non-fundamental items:
Non-interest income:
Gain on acquisition $ - $ 3,807 $ - $ - $ - $ 3,807 $ -
Gain (loss) on OREO 393 121 159 132 (941) 514 (845)
Gain (loss) on SBA 387 188 645 364 79 575 79
Gain on sale of branches, equipment & other assets, net 431 (56) (1) (86) 840 375 787
Gain (loss) on securities 380 423 644 - 15 803 25
Recoveries on historic losses - - - - 925 - 925
Total non-fundamental non-interest income (F) $ 1,591 $ 4,483 $ 1,447 $ 410 $ 918 $ 6,074 $ 971
Non-interest expense:
Merger Expenses $ 789 $ 6,727 $ 433 $ - $ - $ 7,516 $ -
FDIC loss share buy-out - - - 3,849 - - -
Vacant properties write-downs 47 - 369 - 1,194 47 1,914
Total non-fundamental non-interest expense (G) $ 836 $ 6,727 $ 802 $ 3,849 $ 1,194 $ 7,563 $ 1,914
ANNUALIZED NET INTEREST MARGIN
Net interest margin: A/C 4.50% 4.70% 4.75% 4.86% 4.83% 4.60% 4.82%
Net interest margin (non-GAAP): B/D 4.11% 4.32% 4.31% 4.25% 4.24% 4.21% 4.23%
Net interest income - FTE (A) $ 109,368 $ 106,826 $ 105,315 $ 105,522 $ 103,015 $ 216,194 $ 203,045
Total purchase accounting accretion 8,497 7,652 8,659 11,937 11,017 16,145 21,747
Net interest income - FTE (non-GAAP) (B) $ 100,871 $ 99,174 $ 96,656 $ 93,585 $ 91,998 $ 200,049 $ 181,298
Average interest-earning assets (C) $ 9,737,949 $ 9,214,498 $ 8,824,468 $ 8,646,026 $ 8,585,955 $ 9,477,669 $ 8,471,897
Average purchase accounting loan discounts 104,384 102,906 104,783 115,766 135,172 101,403 138,932
Average interest-earning assets (non-GAAP) (D) $ 9,842,333 $ 9,317,404 $ 8,929,251 $ 8,761,792 $ 8,721,127 $ 9,579,072 $ 8,610,829

Home BancShares, Inc.
Non-GAAP Reconciliations
(Unaudited)
Jun. 30, Mar. 31, Dec. 31, Sep. 30, Jun. 30,
(Dollars in thousands) 2017 2017 2016 2016 2016
TANGIBLE BOOK VALUE PER COMMON SHARE
Book value per common share: A/B $ 10.32 $ 10.05 $ 9.45 $ 9.22 $ 9.01
Tangible book value per common share: (A-C-D)/B 7.23 6.96 6.63 6.40 6.18
Total stockholders' equity (A) $ 1,476,032 $ 1,441,568 $ 1,327,490 $ 1,296,018 $ 1,264,915
End of period common shares outstanding (B) 143,071 143,442 140,472 140,490 140,382
Goodwill (C) $ 420,941 $ 420,941 $ 377,983 $ 377,983 $ 377,983
Core deposit and other intangibles (D) 21,019 21,885 18,311 19,073 19,835
TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS
Equity to assets: B/A 13.58% 13.45% 13.53% 13.27% 13.20%
Tangible common equity to tangible assets: (B-C-D)/(A-C-D) 9.91% 9.72% 9.89% 9.60% 9.44%
Total assets (A) $ 10,872,228 $ 10,717,468 $ 9,808,465 $ 9,764,238 $ 9,582,126
Total stockholders' equity (B) 1,476,032 1,441,568 1,327,490 1,296,018 1,264,915
Goodwill (C) 420,941 420,941 377,983 377,983 377,983
Core deposit and other intangibles (D) 21,019 21,885 18,311 19,073 19,835


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

Source:Home BancShares, Inc.