Home BancShares Reports Record Profit in Q3

Home BancShares Reports Record Profit in Q3
John Allison, CEO and chair of Home BancShares (Karen E. Segrave)

Home BancShares Inc. of Conway (NYSE: HOMB) on Thursday reported third-quarter net income of $108.7 million, a record amount boosted by the bank's acquisition of Happy Bancshares of Texas.

Compared to the third quarter of 2021, profit was up nearly 45%. The bank also posted record net revenue of $256.3 million, up 47.5% from the same period a year ago.

The parent company of Centennial Bank said it had earnings of 53 cents per share. Earnings, adjusted for non-recurring costs, were 54 cents per share.

The results beat Wall Street expectations. The average estimate of three analysts surveyed by Zacks Investment Research was for earnings of 53 cents per share.

In response to economic uncertainty, the bank has implemented defensive measures, such as not making low-rate loans, not deploying cash in low-rate securities, paying off debt and managing its loan to deposit ratio.

John Allison, the company's CEO and chair, said in a news release that the bank's net interest margin is now "back where we like it" at 4.05%, up from 3.64% in the second quarter.

"We continue to keep the Company positioned to weather the storm, when and if it hits,” he said.

The bank has already seen some signs of a gathering storm. Year-over-year profit was down in the previous two quarters, affected by expenses from the $919 million Happy Bancshares deal, but also hit by what Allison described as "volatile" economic conditions. In the most recent quarter, total loans, deposits and assets declined. During the third quarter, loans decreased to $13.83 billion from $13.92 billion, deposits fell to $18.4 billion from $18.58 billion, and total assets shrank from $24.25 billion to $23.16 billion. 

The bank saw net interest income in the period rise to $215.5 million, a $14.3 million increase from the second quarter that it partially attributed to the rising interest rate environment.

Home BancShares currently has 76 branches in Arkansas, 78 branches in Florida, 62 branches in Texas, five branches in Alabama and one branch in New York City.

Shares of the company were down about 1% midday Thursday.

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