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Florida Hurricane Drives Home BancShares 3Q Profit Down 66 Percent

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Home BancShares Inc. of Conway, the parent company of Centennial Bank, on Thursday reported third-quarter profit of $14.8 million, down 66 percent from the same quarter last year, as expenses related to Hurricane Irma weighed on results.

In a news release, the publicly traded company (Nasdaq: HOMB) said quarterly earnings “were significantly impacted” by the hurricane, which made initial landfall in the Florida Keys and a second landfall just south of Naples, Florida, as a Category 4 hurricane on Sept. 10.

The company said that the total effect of the hurricane on its financial condition remains unknown but that it had taken certain charges and establishes reserves because of it. It added that it had increased its provision for loan loss to $35 million, up from $5.5 million in the same quarter last year, with most of the hike attributable to the hurricane.

Home BancShares has 89 branches in Florida, 76 branches in Arkansas, 6 branches in Alabama and one branch in New York City. As a result of Hurricane Irma, its Naples, Florida branch is closed “until further notice,” the company said. Arkansas Business reported Sept. 25 that the branch, on Florida’s southwest mainland, sustained roof damage.

“Based on initial assessments of the potential credit impact and damage, the company has accrued $33.4 million of pre-tax hurricane expenses,” the company said. “The $33.4 million of hurricane expenses include the following items: $32.9 million to establish a storm-related provision for loan losses and a $556,000 charge related to direct expenses incurred through September 30, 2017.”

Tracy French, Centennial Bank’s president and CEO, said “a significant portion” of the company’s South Florida market and customer base had been affected by the hurricane.

“Home BancShares is working diligently to assist our customers and communities in the rebuilding process,” he said.

The company said third-quarter earnings per share fell to 10 cents compared to 31 cents in the same period in 2016. Third-quarter non-interest income was $21.5 million compared to $22 million in the same quarter last year. Non-interest expense was $70.8 million compared to $51 million last year. Its core efficiency ratio was 39.12 percent, up from the 36.51 percent in the same quarter last year.

As of Sept. 30, total deposits were $10.45 billion compared to $6.94 billion at Dec. 31. Total assets were $14.26 billion compared to $9.81 billion in December.

During the quarter, Home BancShares completed its acquisition of Stonegate Bank of Pompano Beach, Florida, in a transaction worth about $820 million. The deal expanded Centennial Bank’s presence in Florida.

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