Home BancShares 3Q Earnings Down 5%


Home BancShares 3Q Earnings Down 5%

Home BancShares Inc. of Conway on Thursday reported third-quarter net income of $69.3 million, down about 5% from the same quarter last year.

The publicly traded company (Nasdaq: HOMB), the parent of Centennial Bank, said it had earnings of 42 cents per share. Earnings, adjusted for non-recurring costs, came to 47 cents per share.

The results beat Wall Street expectations. The average estimate of three analysts surveyed by Zacks Investment Research was for earnings of 40 cents per share.

The bank holding company posted revenue of $196.6 million in the period. Its revenue net of interest expense was $176.1 million, also exceeding Street forecasts of $172.5 million. That figure was also up 5% from the same quarter last year.

Chairman Johnny Allison said in a news release that the company's performance amid the COVID-19 pandemic, economic volatility and CECL — a new accounting standard that took effect this year that's changed how large banks reserve for possible loan losses — "is even beyond my expectations."

"While current economic times remain uncertain, one thing remains certain and that is the strong earnings power of Home BancShares," he said in an earnings news release.

The company said that during the quarter it recorded $14 million of total credit loss expense, primarily due to the company increasing reserves on deferred loans resulting from "ongoing uncertainties related to the COVID-19 pandemic." It said that as of Sept. 30, it had deferrals of $933.8 million on 330 loans.

The company also noted that the pandemic had created "a significant amount of excess liquidity in the market." As a result, Home BancShares had an increase of $173.7 million of average interest-bearing cash balances during the quarter compared to the same quarter last year, which diluted net interest margin by 5 basis points.

The company said its efficiency ratio was 39.56% compared to 44.93% for the second quarter of 2020. 

As of Sept. 30, total loans receivable were $11.69 billion, down from $11.96 billion at June 30. Total deposits were $12.94 billion, down from $13.18 billion, and total assets were $16.55 billion, down from $16.90 billion. 

(The Associated Press contributed to this report.)