Home BancShares, Inc. Announces 2017 Earnings

CONWAY, Ark., Jan. 18, 2018 (GLOBE NEWSWIRE) -- Home BancShares, Inc. (NASDAQ:HOMB), parent company of Centennial Bank, today announced net income for the year ended December 31, 2017 of $135.1 million. Diluted earnings per share for the year ended 2017 was $0.89 per share. For the fourth quarter of 2017, the Company recorded a profit of $23.3 million. Diluted earnings per share for the fourth quarter of 2017 was $0.13 per share.

In addition to merger expenses and acquisition gain from the 2017 acquisitions, the Company’s annual earnings were significantly impacted by Hurricane Irma and the recently enacted “Tax Cuts and Jobs Act” (the “TCJA”). Excluding the $36.9 million one-time TCJA charge, $33.4 million of hurricane expense, and $25.7 million of merger expenses associated with the 2017 acquisitions offset by $3.8 million of one-time non-taxable gain on acquisition, 2017 annual after-tax earnings excluding non-fundamental items were $204.8 million, an increase of 15.7% from 2016 annual after-tax earnings excluding non-fundamental items of $177.0 million.

Excluding the $36.9 million one-time TCJA charge, after-tax earnings excluding non-fundamental items for the fourth quarter of 2017 were $60.2 million, an increase of 30.6% from the fourth quarter 2016 after-tax earnings excluding non-fundamental items of $46.1 million.

“Looking back on the last year, we were active in growing and navigating the Company as we crossed over the $10 billion threshold,” said John Allison, Home’s Chairman. “Home added $3.46 billion in total assets through the completion of three acquisitions and issued $300 million of subordinated debt in an underwritten public offering. While we experienced challenges through the year that largely impacted our earnings, including Hurricane Irma and the tax reform bill, we achieved milestone earnings excluding non-fundamental items of over $200 million for 2017 and over $60 million for the fourth quarter. In 2018, we are well-positioned to continue to execute on opportunities to grow our Company with the focus of improving overall shareholder value.”

Tracy French, Centennial Bank President and Chief Executive Officer added, “We have been hard at work in 2017 managing the growth associated with our 2017 acquisitions. Once we convert the Stonegate core operating systems on February 9, 2018, the Company will be well-positioned to realize the anticipated cost savings, thereby rewarding our shareholders. Our team is focused on this important task and is working to recognize these enhancements as quickly as possible.”

“Excluding the impact of the tax rate change, we are proud to report outstanding fourth quarter of 2017 earnings of $60.2 million, or $0.35 diluted earnings per share,” said Randy Sims, Home BancShares, Inc. President and Chief Executive Officer. “The Company was also able to maintain a sub-40 core efficiency ratio, reporting 37.35% for the fourth quarter of 2017, despite adding over $3 billion in assets through its 2017 acquisitions. With these excellent results, our shareholders can remain confident that our strong metrics will continue to provide them with solid returns.”

Operating Highlights

Accretion yield increased approximately $5.2 million from $7.2 million for the third quarter of 2017 to $12.4 million for fourth quarter of 2017. Each quarter we perform credit impairment tests on the credit impaired loans acquired in our acquisitions. During our fourth quarter 2017 impairment testing, several pools were determined to have a projected credit improvement. This projected credit improvement combined with the added accretion income from the acquisition of Stonegate Bank (“Stonegate”) offset by the expected decline in accretion income from the maturing and reduction of pay-offs in the previously acquired loan portfolios, resulted in a net increase of recognized accretion income when compared to the third quarter of 2017. The net increase of recognized accretion income when compared to the third quarter of 2017 is primarily due to $5.4 million of accretion income added during the fourth quarter of 2017 as a result of the Stonegate acquisition offset by a slight decline in legacy accretion income during the fourth quarter of 2017.

Net interest margin, on a fully taxable equivalent basis, was 4.47% for the quarter just ended compared to 4.75% for the same quarter in 2016 and compared to 4.40% for the third quarter of 2017. The net interest margin, excluding accretion yield, decreased when comparing the third quarter of 2017 to the fourth quarter of 2017 at 4.07% and 4.01%, respectively.

During the fourth quarter of 2017, the Company recorded a provision for loan loss of $4.9 million compared to $1.7 million in the fourth quarter of 2016. The Company was able to reduce fourth quarter 2016 provision for loan losses as a result of a significant loan recovery from a borrower which was charged-off in 2010. The Company estimates that the fourth quarter 2016 provision for loan losses was reduced by $4.5 million as a result of this loan recovery. For the fourth quarter of 2017, net charge-offs were $6.3 million compared to net recoveries of $1.9 million for the fourth quarter of 2016.

The Company reported $27.3 million of non-interest income for the fourth quarter of 2017, compared to $23.8 million for the fourth quarter of 2016. The most important components of the fourth quarter non-interest income were $10.1 million from other service charges and fees, $6.6 million from service charges on deposits accounts, $3.6 million from mortgage lending income, $2.9 million from other income and $1.2 million gain on securities, net.

Non-interest expense for the fourth quarter of 2017 was $63.2 million compared to $47.5 million for the fourth quarter of 2016, an increase of $15.7 million. This increase is primarily the result of an increase in the costs associated with asset growth from the three acquisitions during 2017 combined with approximately $723,000 of growth in quarterly non-interest expense related to the Centennial Commercial Finance Group (“Centennial CFG”). For the fourth quarter of 2017, our core efficiency ratio was 37.35% which increased from the 35.97% reported for fourth quarter of 2016.

Financial Condition

Total loans receivable were $10.33 billion at December 31, 2017 compared to $7.39 billion at December 31, 2016. Total deposits were $10.39 billion at December 31, 2017 compared to $6.94 billion at December 31, 2016. Total assets were $14.45 billion at December 31, 2017 compared to $9.81 billion at December 31, 2016.

During 2017, the Company acquired $2.82 billion of loans, net of purchase accounting discounts. As of December 31, 2017, the Company produced approximately $125.2 million of organic loan growth since December 31, 2016. Centennial CFG produced $295.5 million of net organic loan growth during 2017 while the legacy and Stonegate footprints experienced significant net payoffs during 2017, resulting in a decline of $153.9 million and $16.5 million, respectively.

From September 30, 2017 to December 31, 2017, the Company experienced organic loan growth of approximately $45.0 million. During the fourth quarter of 2017, Centennial CFG produced $181.8 million of organic loan growth, while the legacy and Stonegate footprints experienced significant net payoffs resulting in a decline of $113.2 million and $23.6 million, respectively. Centennial CFG had loans of $1.40 billion at December 31, 2017.

Non-performing loans at December 31, 2017 were $15.5 million, $28.2 million, $929,000 and zero in the Arkansas, Florida, Alabama and Centennial CFG markets, respectively, for a total of $44.7 million. Non-performing loans as a percent of total loans were 0.43% as of December 31, 2017 compared to 0.85% as of December 31, 2016. Non-performing assets at December 31, 2017 were $25.6 million, $36.4 million, $1.6 million and zero in the Arkansas, Florida and Alabama and Centennial CFG markets, respectively, for a total of $63.6 million. Non-performing assets as a percent of total assets were 0.44% as of December 31, 2017 compared to 0.81% as of December 31, 2016.

The Company’s allowance for loan losses was $110.3 million at December 31, 2017, or 1.07% of total loans, compared to $80.0 million, or 1.08% of total loans, at December 31, 2016. These changes are primarily the result of the $32.9 million storm-related provision for loan loss recorded during the third quarter of 2017 offset by acquiring $2.82 billion of loans during 2017 which do not have an associated allowance for loan losses as a result of purchase accounting. As of December 31, 2017 and 2016, the Company’s allowance for loan losses was 247% and 127% of its total non-performing loans, respectively.

Stockholders’ equity was $2.20 billion at December 31, 2017 compared to $1.33 billion at December 31, 2016, an increase of $876.8 million. The increase in stockholders’ equity is primarily associated with the $77.5 million and $742.3 million of common stock issued to the Giant Holdings, Inc. (“GHI”) and Stonegate shareholders, respectively, plus the $74.7 million increase in retained earnings offset by $3.8 million of comprehensive loss and the repurchase of $20.8 million of our common stock during 2017. Book value per common share was $12.70 at December 31, 2017 compared to $9.45 at December 31, 2016 for an annualized increase of 34.4%.

Branches

During the fourth quarter of 2017, the Company closed a branch location in Daphne, Alabama and a branch location in Naples, Florida. The Company currently has 76 branches in Arkansas, 89 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, January 18, 2018. We encourage all participants to pre-register for the conference call using the following link: http://dpregister.com/10115147. 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: 10115147, which will be available until January 28, 2018 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 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: the effects of future local, regional, national and international economic conditions, including inflation or a decrease in commercial real estate and residential housing values; changes in the level of nonperforming assets and charge-offs, and credit risk generally; the risks of changes in interest rates or the level and composition of deposits, loan demand and the values of loan collateral, securities and interest-sensitive assets and liabilities; the effect of any mergers, acquisitions or other transactions to which we or our bank subsidiary may from time to time be a party, including our ability to successfully integrate any businesses that we acquire; the risk that expected cost savings and other benefits from acquisitions may not be fully realized or may take longer to realize than expected; the possibility that an acquisition does not close when expected or at all because required regulatory, shareholder or other approvals and other conditions to closing are not received or satisfied on a timely basis or at all; the reaction to a proposed acquisition transaction of the respective companies’ customers, employees and counterparties; diversion of management time on acquisition-related issues; the ability to enter into and/or close additional acquisitions; the availability of and access to capital on terms acceptable to us; increased regulatory requirements and supervision that will apply as a result of our exceeding $10 billion in total assets; legislation and regulation affecting the financial services industry as a whole, and the Company and its subsidiaries in particular, including the effects resulting from the reforms enacted by the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) and the adoption of regulations by regulatory bodies under the Dodd-Frank Act; governmental monetary and fiscal policies, as well as legislative and regulatory changes, including as a result of initiatives of the newly elected administration of President Donald J. Trump; the effects of terrorism and efforts to combat it; political instability; the ability to keep pace with technological changes, including changes regarding cybersecurity; an increase in the incidence or severity of fraud, illegal payments, security breaches or other illegal acts impacting our bank subsidiary or our customers; the effects of competition from other commercial banks, thrifts, mortgage banking firms, consumer finance companies, credit unions, securities brokerage firms, insurance companies, money market and other mutual funds and other financial institutions operating in our market area and elsewhere, including institutions operating regionally, nationally and internationally, together with competitors offering banking products and services by mail, telephone and the Internet; the effect of changes in accounting policies and practices and auditing requirements, as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board, and other accounting standard setters; higher defaults on our loan portfolio than we expect; and the failure of assumptions underlying the establishment of our allowance for loan losses or changes in our estimate of the adequacy of the allowance for loan losses. 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)
Dec. 31,
Sep. 30,
Jun. 30,
Mar. 31,
Dec. 31,
(In thousands) 2017 2017 2017 2017 2016
ASSETS
Cash and due from banks $166,915 $197,953 $147,041 $163,662 $123,758
Interest-bearing deposits with other banks 469,018 354,367 313,447 253,427 92,891
Cash and cash equivalents 635,933 552,320 460,488 417,089 216,649
Federal funds sold 24,109 4,545 - 1,700 1,550
Investment securities - available-for-sale 1,663,517 1,575,685 1,400,431 1,250,590 1,072,920
Investment securities - held-to-maturity 224,756 234,945 254,161 276,599 284,176
Loans receivable 10,331,188 10,286,193 7,834,475 7,849,645 7,387,699
Allowance for loan losses (110,266) (111,620) (80,138) (80,311) (80,002)
Loans receivable, net 10,220,922 10,174,573 7,754,337 7,769,334 7,307,697
Bank premises and equipment, net 237,439 239,990 207,071 212,813 205,301
Foreclosed assets held for sale 18,867 21,701 18,789 17,315 15,951
Cash value of life insurance 146,866 146,158 97,684 97,223 86,491
Accrued interest receivable 45,708 41,071 32,445 32,413 30,838
Deferred tax asset, net 76,564 121,787 68,368 67,063 61,298
Goodwill 927,949 929,129 420,941 420,941 377,983
Core deposit and other intangibles 49,351 50,982 21,019 21,885 18,311
Other assets 177,779 163,081 136,494 132,503 129,300
Total assets $ 14,449,760 $ 14,255,967 $ 10,872,228 $ 10,717,468 $ 9,808,465
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Deposits:
Demand and non-interest-bearing $2,385,252 $2,555,465 $1,957,677 $1,862,996 $1,695,184
Savings and interest-bearing transaction accounts 6,476,819 6,341,883 4,335,456 4,274,194 3,963,241
Time deposits 1,526,431 1,551,422 1,474,255 1,430,017 1,284,002
Total deposits 10,388,502 10,448,770 7,767,388 7,567,207 6,942,427
Federal funds purchased - - - - -
Securities sold under agreements to repurchase 147,789 149,531 133,741 123,793 121,290
FHLB and other borrowed funds 1,299,188 1,044,333 1,099,478 1,455,040 1,305,198
Accrued interest payable and other liabilities 41,959 38,782 37,751 69,125 51,234
Subordinated debentures 368,031 367,835 357,838 60,735 60,826
Total liabilities 12,245,469 12,049,251 9,396,196 9,275,900 8,480,975
Stockholders' equity
Common stock 1,736 1,737 1,431 1,434 1,405
Capital surplus 1,675,318 1,674,642 940,821 948,982 869,737
Retained earnings 530,658 526,448 527,338 490,142 455,948
Accumulated other comprehensive (loss) income (3,421) 3,889 6,442 1,010 400
Total stockholders' equity 2,204,291 2,206,716 1,476,032 1,441,568 1,327,490
Total liabilities and stockholders' equity $ 14,449,760 $ 14,255,967 $ 10,872,228 $ 10,717,468 $ 9,808,465

Home BancShares, Inc.
Consolidated Statements of Income
(Unaudited)
Quarter Ended Year Ended
Dec. 31, Sep. 30, Jun. 30, Mar. 31, Dec. 31, Dec. 31, Dec. 31,
(In thousands) 2017 2017 2017 2017 2016 2017 2016
Interest income
Loans $147,426 $113,269 $112,732 $105,762 $103,113 $479,189 $403,394
Investment securities
Taxable 7,793 7,071 6,434 5,478 5,068 26,776 21,246
Tax-exempt 3,025 3,032 2,966 2,944 3,059 11,967 11,417
Deposits - other banks 736 538 727 308 146 2,309 471
Federal funds sold 1 3 4 2 2 10 9
Total interest income 158,981 123,913 122,863 114,494 111,388 520,251 436,537
Interest expense
Interest on deposits 12,946 8,535 6,810 5,486 4,398 33,777 15,926
Federal funds purchased 1 - - - - 1 2
FHLB borrowed funds 3,806 3,408 3,710 3,589 3,201 14,513 12,484
Securities sold under agreements to repurchase 325 232 196 165 153 918 574
Subordinated debentures 4,934 4,969 4,795 439 429 15,137 1,593
Total interest expense 22,012 17,144 15,511 9,679 8,181 64,346 30,579
Net interest income 136,969 106,769 107,352 104,815 103,207 455,905 405,958
Provision for loan losses 4,926 35,023 387 3,914 1,703 44,250 18,608
Net interest income after
provision for loan losses 132,043 71,746 106,965 100,901 101,504 411,655 387,350
Non-interest income
Service charges on deposit accounts 6,566 6,408 5,966 5,982 6,442 24,922 25,049
Other service charges and fees 10,144 8,490 8,576 8,917 7,611 36,127 30,200
Trust fees 548 365 309 456 329 1,678 1,457
Mortgage lending income 3,573 3,172 3,750 2,791 4,123 13,286 14,399
Insurance commissions 466 472 465 545 488 1,948 2,296
Increase in cash value of life insurance 738 478 463 310 320 1,989 1,412
Dividends from FHLB, FRB, Bankers' Bank & other 1,030 834 472 1,149 944 3,485 3,091
Gain on acquisitions - - - 3,807 - 3,807 -
Gain (loss) on SBA loans - 163 387 188 645 738 1,088
Gain (loss) on branches, equipment and
other assets, net
2 (1,337) 431 (56) (1) (960) 700
Gain (loss) on OREO, net 176 335 393 121 159 1,025 (554)
Gain (loss) on securities, net 1,193 136 380 423 644 2,132 669
FDIC indemnification accretion/(amortization), net - - - - - - (772)
Other income 2,856 1,941 2,825 1,837 2,124 9,459 8,016
Total non-interest income 27,292 21,457 24,417 26,470 23,828 99,636 87,051
Non-interest expense
Salaries and employee benefits 35,404 28,510 28,034 27,421 26,944 119,369 101,962
Occupancy and equipment 9,009 7,887 7,034 6,681 6,281 30,611 26,129
Data processing expense 3,559 2,853 2,863 2,723 2,278 11,998 10,499
Other operating expenses 15,246 31,596 13,072 18,316 11,991 78,230 53,165
Total non-interest expense 63,218 70,846 51,003 55,141 47,494 240,208 191,755
Income before income taxes 96,117 22,357 80,379 72,230 77,838 271,083 282,646
Income tax expense 72,808 7,536 30,282 25,374 29,248 136,000 105,500
Net income $23,309 $14,821 $50,097 $46,856 $48,590 $135,083 $177,146

Home BancShares, Inc.
Selected Financial Information
(Unaudited)
Quarter Ended Year Ended
Dec. 31, Sep. 30,
Jun. 30,
Mar. 31,
Dec. 31,
Dec. 31,
Dec. 31,
(Dollars and shares in thousands, except per share data) 2017 2017 2017 2017 2016 2017 2016
PER SHARE DATA
Diluted earnings per common share$0.13 $0.10 $0.35 $0.33 $0.35 $0.89 $1.26
Diluted earnings per common share excluding gain on
acquisitions, merger expenses, FDIC loss share buy-out
expense, reduced provision for loan losses as a result of a
significant loan recovery, hurricane expenses & effect of tax
rate change (non-GAAP)(1)
0.35 0.32 0.35 0.33 0.33 1.35 1.26
Basic earnings per common share 0.13 0.10 0.35 0.33 0.35 0.90 1.26
Dividends per share - common 0.1100 0.1100 0.0900 0.0900 0.0900 0.4000 0.3425
Book value per common share 12.70 12.71 10.32 10.05 9.45 12.70 9.45
Tangible book value per common share (non-GAAP)(1) 7.07 7.06 7.23 6.96 6.63 7.07 6.63
STOCK INFORMATION
Average common shares outstanding 173,641 144,238 143,282 141,785 140,465 150,806 140,418
Average diluted shares outstanding 174,349 144,987 144,116 142,492 140,781 151,528 140,713
End of period common shares outstanding 173,633 173,666 143,071 143,442 140,472 173,633 140,472
ANNUALIZED PERFORMANCE METRICS
Return on average assets 0.66% 0.54% 1.86% 1.86% 1.98% 1.17% 1.85%
Return on average assets excluding gain on acquisitions,
merger expenses, FDIC loss share buy-out expense,
reduced provision for loan losses as a result of a significant
loan recovery, hurricane expenses & effect of tax rate
change (non-GAAP)(1)
1.69% 1.70% 1.88% 1.88% 1.88% 1.78% 1.85%
Return on average assets excluding intangible
amortization (non-GAAP)(1)
0.73% 0.59% 1.96% 1.96% 2.08% 1.26% 1.95%
Return on average assets excluding intangible
amortization, provision for loan losses, gain on acquisitions,
merger expenses, FDIC loss share buy-out expense,
hurricane expenses and income taxes (Core ROA)
(non-GAAP)(1)
3.10% 2.94% 3.19% 3.31% 3.23% 3.13% 3.32%
Return on average common equity 4.17% 3.88% 13.83% 13.85% 14.79% 8.23% 14.08%
Return on average tangible common equity excluding
intangible amortization (non-GAAP)(1)
7.78% 5.80% 20.09% 20.08% 21.45% 12.92% 20.82%
Efficiency ratio 37.05% 53.77% 37.48% 40.76% 36.19% 41.89% 37.65%
Core efficiency ratio (non-GAAP)(1) 37.35% 39.12% 37.29% 36.96% 35.97% 37.66% 36.55%
Net interest margin - FTE 4.47% 4.40% 4.50% 4.70% 4.75% 4.51% 4.81%
Fully taxable equivalent adjustment$1,983 $1,846 $2,016 $2,011 $2,108 $7,856 $7,924
Total revenue 186,273 145,370 147,280 140,964 135,216 619,887 523,588
OTHER OPERATING EXPENSES
Advertising$898 $795 $812 $698 $910 $3,203 $3,332
Merger and acquisition expenses - 18,227 789 6,727 433 25,743 433
FDIC loss share buy-out expense - - - - - - 3,849
Amortization of intangibles 1,631 906 866 804 762 4,207 3,132
Electronic banking expense 1,777 1,712 1,654 1,519 1,621 6,662 5,742
Directors' fees 313 309 324 313 294 1,259 1,150
Due from bank service charges 254 472 456 420 393 1,602 1,354
FDIC and state assessment 1,476 1,293 1,182 1,288 1,097 5,239 5,491
Insurance 814 577 543 578 563 2,512 2,193
Legal and accounting 1,194 698 474 627 442 2,993 2,206
Other professional fees 1,537 1,436 1,233 1,153 943 5,359 4,049
Operating supplies 602 432 477 467 466 1,978 1,758
Postage 323 280 295 286 269 1,184 1,084
Telephone 347 305 398 324 360 1,374 1,751
Other expense 4,080 4,154 3,569 3,112 3,438 14,915 15,641
Total other operating expenses$15,246 $31,596 $13,072 $18,316 $11,991 $78,230 $53,165
(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)
Dec. 31, Sep. 30, Jun. 30, Mar. 31, Dec. 31,
(Dollars in thousands) 2017 2017 2017 2017 2016
BALANCE SHEET RATIOS
Total loans to total deposits 99.45% 98.44% 100.86% 103.73% 106.41%
Common equity to assets 15.25% 15.48% 13.58% 13.45% 13.53%
Tangible common equity to tangible assets (non-GAAP)(1) 9.11% 9.24% 9.91% 9.72% 9.89%
LOANS RECEIVABLE
Real estate
Commercial real estate loans
Non-farm/non-residential $4,600,117 $4,532,402 $3,368,663 $3,462,773 $3,153,121
Construction/land development 1,700,491 1,648,923 1,315,309 1,217,519 1,135,843
Agricultural 82,229 88,295 78,260 79,940 77,736
Residential real estate loans
Residential 1-4 family 1,970,311 1,968,688 1,513,888 1,493,133 1,356,136
Multifamily residential 441,303 497,910 398,781 404,815 340,926
Total real estate 8,794,451 8,736,218 6,674,901 6,658,180 6,063,762
Consumer 46,148 51,515 38,424 41,893 41,745
Commercial and industrial 1,297,397 1,296,485 994,827 1,013,403 1,123,213
Agricultural 49,815 57,489 69,697 69,307 74,673
Other 143,377 144,486 56,626 66,862 84,306
Loans receivable $ 10,331,188 $ 10,286,193 $ 7,834,475 $ 7,849,645 $ 7,387,699
Discount for credit losses on purchased loans $146,557 $158,001 $95,627 $104,464 $100,148
Purchased loans, net of discount for credit losses
on purchased loans
3,464,990 3,653,079 1,355,922 1,375,210 1,125,599
ALLOWANCE FOR LOAN LOSSES
Balance, beginning of period $111,620 $80,138 $80,311 $80,002 $76,370
Loans charged off 6,936 4,424 1,405 4,706 4,836
Recoveries of loans previously charged off 656 883 845 1,101 6,765
Net loans (recovered)/charged off 6,280 3,541 560 3,605 (1,929)
Provision for loan losses 4,926 35,023 387 3,914 1,703
Balance, end of period $ 110,266 $ 111,620 $ 80,138 $ 80,311 $ 80,002
- - - - -
Net (recoveries) charge-offs to average total loans 0.24% 0.18% 0.03% 0.19% -0.11%
Allowance for loan losses to total loans 1.07% 1.09% 1.02% 1.02% 1.08%
NON-PERFORMING ASSETS
Non-performing loans
Non-accrual loans $34,032 $34,794 $32,426 $43,810 $47,182
Loans past due 90 days or more 10,665 29,183 14,442 15,388 15,942
Total non-performing loans 44,697 63,977 46,868 59,198 63,124
Other non-performing assets
Foreclosed assets held for sale, net 18,867 21,701 18,789 17,315 15,951
Other non-performing assets 3 3 3 3 3
Total other non-performing assets 18,870 21,704 18,792 17,318 15,954
Total non-performing assets $ 63,567 $ 85,681 $ 65,660 $ 76,516 $ 79,078
Allowance for loan losses for loans to non-performing loans 246.70% 174.47% 170.99% 135.67% 126.74%
Non-performing loans to total loans 0.43% 0.62% 0.60% 0.75% 0.85%
Non-performing assets to total assets 0.44% 0.60% 0.60% 0.71% 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
December 31, 2017 September 30, 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 $ 225,889 $ 736 1.29% $ 180,368 $ 538 1.18%
Federal funds sold 21,580 1 0.02% 878 3 1.36%
Investment securities - taxable 1,504,433 7,793 2.06% 1,326,117 7,071 2.12%
Investment securities - non-taxable - FTE 352,690 4,905 5.52% 348,920 4,908 5.58%
Loans receivable - FTE 10,234,713 147,529 5.72% 7,938,716 113,239 5.66%
Total interest-earning assets 12,339,305 160,964 5.18% 9,794,999 125,759 5.09%
Non-earning assets 1,774,631 1,058,560
Total assets $ 14,113,936 $ 10,853,559
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Interest-bearing liabilities
Savings and interest-bearing transaction accounts $ 6,329,858 $ 9,732 0.61% $ 4,512,785 $ 5,755 0.51%
Time deposits 1,532,201 3,214 0.83% 1,444,662 2,780 0.76%
Total interest-bearing deposits 7,862,059 12,946 0.65% 5,957,447 8,535 0.57%
Federal funds purchased 304 1 1.31% - - 0.00%
Securities sold under agreement to repurchase 149,849 325 0.86% 135,855 232 0.68%
FHLB borrowed funds 1,005,989 3,806 1.50% 920,754 3,408 1.47%
Subordinated debentures 367,935 4,934 5.32% 358,347 4,969 5.50%
Total interest-bearing liabilities 9,386,136 22,012 0.93% 7,372,403 17,144 0.92%
Non-interest bearing liabilities
Non-interest bearing deposits 2,473,853 1,924,933
Other liabilities 35,398 42,394
Total liabilities 11,895,387 9,339,730
Shareholders' equity 2,218,549 1,513,829
Total liabilities and shareholders' equity $ 14,113,936 $ 10,853,559
Net interest spread 4.25% 4.17%
Net interest income and margin - FTE $ 138,952 4.47% $ 108,615 4.40%

Home BancShares, Inc.
Consolidated Net Interest Margin
(Unaudited)
Year Ended
December 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 $220,231 $2,309 1.05% $117,022 $471 0.40%
Federal funds sold 6,308 10 0.16% 1,764 9 0.51%
Investment securities - taxable 1,300,384 26,776 2.06% 1,161,428 21,246 1.83%
Investment securities - non-taxable - FTE 348,865 19,411 5.56% 337,318 18,598 5.51%
Loans receivable - FTE 8,403,154 479,601 5.71% 6,986,759 404,137 5.78%
Total interest-earning assets 10,278,942 528,107 5.14% 8,604,291 444,461 5.17%
Non-earning assets 1,220,163 964,562
Total assets $11,499,105 $9,568,853
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Interest-bearing liabilities
Savings and interest-bearing transaction accounts $4,823,626 $23,176 0.48% $3,717,880 $8,978 0.24%
Time deposits 1,444,828 10,601 0.73% 1,362,680 6,948 0.51%
Total interest-bearing deposits 6,268,454 33,777 0.54% 5,080,560 15,926 0.31%
Federal funds purchased 77 1 1.30% 255 2 0.78%
Securities sold under agreement to repurchase 134,689 918 0.68% 120,576 574 0.48%
FHLB borrowed funds 1,117,817 14,513 1.30% 1,376,364 12,484 0.91%
Subordinated debentures 285,733 15,137 5.30% 60,826 1,593 2.62%
Total interest-bearing liabilities 7,806,770 64,346 0.82% 6,638,581 30,579 0.46%
Non-interest bearing liabilities
Non-interest bearing deposits 2,005,632 1,619,128
Other liabilities 45,425 53,218
Total liabilities 9,857,827 8,310,927
Shareholders' equity 1,641,278 1,257,926
Total liabilities and shareholders' equity $11,499,105 $9,568,853
Net interest spread 4.32% 4.71%
Net interest income and margin - FTE $463,761 4.51% $413,882 4.81%

Home BancShares, Inc.
Non-GAAP Reconciliations
(Unaudited)
Quarter Ended
Year Ended
(Dollars and shares in thousands, Dec. 31,
Sep. 30,
Jun. 30,
Mar. 31,
Dec. 31,
Dec. 31,
Dec. 31,
except per share data) 2017 2017 2017 2017 2016 2017 2016
EARNINGS EXCLUDING NON-FUNDAMENTAL ITEMS
GAAP net income available to common shareholders (A) $23,309 $14,821 $50,097 $46,856 $48,590 $135,083 $177,146
Non-fundamental items
Gain on acquisitions - - - (3,807) - (3,807) -
Merger and acquisition expenses - 18,227 789 6,727 433 25,743 433
FDIC loss share buy-out expense - - - - - - 3,849
Reduced provision for loan losses as a result of a
significant loan recovery
- - - - (4,457) - (4,457)
Hurricane expenses(2) - 33,445 - - - 33,445 -
Effect of tax rate change 36,935 - - - - 36,935 -
Total non-fundamental items 36,935 51,672 789 2,920 (4,024) 92,316 (175)
Tax-effect of non-fundamental items(3) - 20,045 199 2,382 (1,578) 22,626 (69)
Non-fundamental items after-tax (B) 36,935 31,627 590 538 (2,446) 69,690 (106)
Earnings excluding non-fundamental items (C) $ 60,244 $ 46,448 $ 50,687 $ 47,394 $ 46,144 $ 204,773 $ 177,040
Average diluted shares outstanding (D) 174,349 144,987 144,116 142,492 140,781 151,528 140,713
GAAP diluted earnings per share: A/D $0.13 $0.10 $0.35 $0.33 $0.35 $0.89 $1.26
Non-fundamental items after-tax: B/D 0.22 0.22 - - (0.02) 0.46 -
Diluted earnings per common share excluding gain on
acquisitions, merger expenses, FDIC loss share buy-out
expense, reduced provision for loan losses as a result of a
significant loan recovery, hurricane expenses & effect of tax
rate change: C/D
$ 0.35 $ 0.32 $ 0.35 $ 0.33 $ 0.33 $ 1.35 $ 1.26
ANNUALIZED RETURN ON AVERAGE ASSETS
Return on average assets: A/H 0.66% 0.54% 1.86% 1.86% 1.98% 1.17% 1.85%
Return on average assets excluding gain on acquisitions,
merger expenses, FDIC loss share buy-out expense,
reduced provision for loan losses as a result of a significant
loan recovery, hurricane expenses & effect of tax rate
change: (A+F)/H
1.69% 1.70% 1.88% 1.88% 1.88% 1.78% 1.85%
Return on average assets excluding intangible
amortization: (A+C)/(H-I)
0.73% 0.59% 1.96% 1.96% 2.08% 1.26% 1.95%
Return on average assets excluding intangible amortization,
provision for loan losses, gain on acquisitions, merger
expenses, FDIC loss share buy-out expense, hurricane
expenses and income taxes (Core ROA): (A+B+D+E+G)/(H-I)
3.10% 2.94% 3.19% 3.31% 3.23% 3.13% 3.32%
GAAP net income available to common shareholders (A) $ 23,309 $ 14,821 $ 50,097 $ 46,856 $ 48,590 $ 135,083 $ 177,146
Amortization of intangibles (B) 1,631 906 866 804 762 4,207 3,132
Amortization of intangibles after-tax (C) 991 551 526 489 463 2,557 1,903
Provision for loan losses excluding hurricane provision (D) 4,926 2,134 387 3,914 1,703 11,361 18,608
Total non-fundamental items (E) 36,935 51,672 789 2,920 (4,024) 92,316 (175)
Non-fundamental items after-tax (F) 36,935 31,627 590 538 (2,446) 69,690 (106)
Income tax expense excluding effect of tax rate change (G) 35,873 7,536 30,282 25,374 29,248 99,065 105,500
Average assets (H) 14,113,936 10,853,559 10,793,770 10,198,844 9,777,148 11,499,105 9,568,853
Average goodwill, core deposits & other intangible assets (I) 979,209 462,799 442,380 415,699 396,662 576,258 397,809
ANNUALIZED RETURN ON AVERAGE COMMON EQUITY
Return on average common equity: A/C 4.17% 3.88% 13.83% 13.85% 14.79% 8.23% 14.08%
Return on average tangible common equity
excluding intangible amortization: (A+B)/(C-D)
7.78% 5.80% 20.09% 20.08% 21.45% 12.92% 20.82%
GAAP net income available to common shareholders (A) $23,309 $14,821 $50,097 $46,856 $48,590 $135,083 $177,146
Amortization of intangibles after-tax (B) 991 551 526 489 463 2,557 1,903
Average common equity (C) 2,218,549 1,513,829 1,453,099 1,371,730 1,306,571 1,641,278 1,257,926
Average goodwill, core deposits & other intangible assets (D) 979,209 462,799 442,380 415,699 396,662 576,258 397,809
(2) Hurricane expenses includes $32,889 of provision for loan losses and $556 of damage expense related to Hurricane Irma.
(3) 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
Year Ended
(Dollars and shares in thousands, Dec. 31,
Sep. 30,
Jun. 30,
Mar. 31,
Dec. 31,
Dec. 31,
Dec. 31,
except per share data) 2017 2017 2017 2017 2016 2017 2016
EFFICIENCY RATIO
Efficiency ratio: ((C-E)/(A+B+D)) 37.05% 53.77% 37.48% 40.76% 36.19% 41.89% 37.65%
Core efficiency ratio: ((C-E-G)/(A+B+D-F)) 37.35% 39.12% 37.29% 36.96% 35.97% 37.66% 36.55%
Net interest income (A) $136,969 $106,769 $107,352 $104,815 $103,207 $455,905 $405,958
Non-interest income (B) 27,292 21,457 24,417 26,470 23,828 99,636 87,051
Non-interest expense (C) 63,218 70,846 51,003 55,141 47,494 240,208 191,755
Fully taxable equivalent adjustment (D) 1,983 1,846 2,016 2,011 2,108 7,856 7,924
Amortization of intangibles (E) 1,631 906 866 804 762 4,207 3,132
Non-core items:
Non-interest income:
Gain on acquisition $- $- $- $3,807 $- $3,807 $-
Gain (loss) on OREO 176 335 393 121 159 1,025 (554)
Gain (loss) on SBA loans - 163 387 188 645 738 1,088
Gain (loss) on branches, equipment and other assets, net 2 (1,337) 431 (56) (1) (960) 700
Gain (loss) on securities 1,193 136 380 423 644 2,132 669
Recoveries on historic losses - - - - - - 925
Total non-core non-interest income (F) $ 1,371 $ (703)$ 1,591 $ 4,483 $ 1,447 $ 6,742 $ 2,828
Non-interest expense:
Merger Expenses $ - $ 18,227 $ 789 $ 6,727 $ 433 $ 25,743 $ 433
FDIC loss share buy-out - - - - - - 3,849
Hurricane damage expense - 556 - - - 556 -
Vacant properties write-downs - - 47 - 369 47 2,283
Total non-core non-interest expense (G) $ - $ 18,783 $ 836 $ 6,727 $ 802 $ 26,346 $ 6,565
ANNUALIZED NET INTEREST MARGIN
Net interest margin: A/C 4.47% 4.40% 4.50% 4.70% 4.75% 4.51% 4.81%
Net interest margin (non-GAAP): B/D 4.01% 4.07% 4.11% 4.32% 4.31% 4.12% 4.26%
Net interest income - FTE (A) $ 138,952 $ 108,615 $ 109,368 $ 106,826 $ 105,315 $ 463,761 $ 413,882
Total purchase accounting accretion 12,397 7,174 8,497 7,652 8,659 35,720 42,343
Net interest income - FTE (non-GAAP) (B) $ 126,555 $ 101,441 $ 100,871 $ 99,174 $ 96,656 $ 428,041 $ 371,539
Average interest-earning assets (C) $ 12,339,305 $ 9,794,999 $ 9,737,949 $ 9,214,498 $ 8,824,468 $ 10,278,942 $ 8,604,291
Average purchase accounting loan discounts 178,027 97,978 104,384 102,906 104,783 120,160 127,210
Average interest-earning assets (non-GAAP) (D) $ 12,517,332 $ 9,892,977 $ 9,842,333 $ 9,317,404 $ 8,929,251 $ 10,399,102 $ 8,731,501

Home BancShares, Inc.
Non-GAAP Reconciliations
(Unaudited)
Dec. 31, Sep. 30, Jun. 30, Mar. 31, Dec. 31,
(Dollars in thousands) 2017 2017 2017 2017 2016
TANGIBLE BOOK VALUE PER COMMON SHARE
Book value per common share: A/B $ 12.70 $ 12.71 $ 10.32 $ 10.05 $ 9.45
Tangible book value per common share: (A-C-D)/B 7.07 7.06 7.23 6.96 6.63
Total stockholders' equity (A) $ 2,204,291 $ 2,206,716 $ 1,476,032 $ 1,441,568 $ 1,327,490
End of period common shares outstanding (B) 173,633 173,666 143,071 143,442 140,472
Goodwill (C) $ 927,949 $ 929,129 $ 420,941 $ 420,941 $ 377,983
Core deposit and other intangibles (D) 49,351 50,982 21,019 21,885 18,311
TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS
Equity to assets: B/A 15.25% 15.48% 13.58% 13.45% 13.53%
Tangible common equity to tangible assets: (B-C-D)/(A-C-D) 9.11% 9.24% 9.91% 9.72% 9.89%
- - - - -
Total assets (A) $ 14,449,760 $ 14,255,967 $ 10,872,228 $ 10,717,468 $ 9,808,465
Total stockholders' equity (B) 2,204,291 2,206,716 1,476,032 1,441,568 1,327,490
Goodwill (C) 927,949 929,129 420,941 420,941 377,983
Core deposit and other intangibles (D) 49,351 50,982 21,019 21,885 18,311

FOR MORE INFORMATION CONTACT:

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


Source:Home BancShares, Inc.