Home BancShares 3Q Profit Another Record


Home BancShares 3Q Profit Another Record

Greater regulatory costs and expenses associated with a company performance goal weren't enough to keep Home BancShares Inc. of Conway from reporting on Thursday another quarter of record profit.

The publicly traded firm (Nasdaq: HOMB), the parent company of Centennial Bank, said third-quarter net income was $80.3 million, or 46 cents per share, up more than 400 percent from the same quarter last year.

This year's results were a marked improvement from last year's third quarter, which was depressed by a series of one-time items, including $33.4 million in pre-tax hurricane expenses related to Hurricane Irma. The storm made landfall in the Florida Keys as a Category 4 hurricane on Sept. 10, 2017, causing widespread damage in a market populated by Centennial Bank branches.

The company was also hit last year by Stonegate Bank merger expenses and other tax effects. Excluding the one-time items, adjusted third-quarter 2017 earnings were $46.4 million, with third-quarter 2018 results up nearly 73 percent.

"I am very proud to report that in our first quarter of swimming upstream with Durbin and HOMB $2.00 expenses, HOMB was still able to report record quarterly net income of $80.3 million and record quarterly loan originations of $987 million," Chairman Johnny Allison said in a news release.

"Durbin" refers to the Durbin Amendment to the Dodd-Frank Wall Street Reform & Consumer Protection Act — a federal regulation that limits transaction fees imposed upon merchants by debit card issuers. 

Companies fall under the amendment six months after the year-end when they cross the $10 billion-asset threshold. Home BancShares was over $10 billion in assets on Dec. 31, 2017; it fell under the amendment in July.

"HOMB $2.00" refers to an incentive plan Allison created to push the company toward annual earnings of $2 per share.

The third quarter of 2018 marked the first full quarter of the company's ownership of Shore Premier Finance, which it purchased earlier this year. The company provides direct consumer financing to U.S. Coast Guard-registered high-end sail and power boats, as well as inventory floor plan lines of credit to marine dealers.

"Our first full quarter with Shore Premier Finance did not create the drag on margin as much as we anticipated, with 4.46% compared to 4.47% in the second quarter, mostly due to the strong contribution by Centennial CFG this quarter," Tracy French, Centennial Bank president and CEO, said in a news release.

Centennial Commercial Finance Group is the company's commercial real estate loans arm, formed when Centennial bought $289 million in national commercial real estate loans from J.C. Flowers & Co. LLC. in 2015.

As of Sept. 30, total deposits were $10.6 billion, up from $10.4 billion at Dec. 31, 2017. Total assets were $14.9 billion, up from $14.4 billion.