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Home BancShares Deposits Continue Sliding in Q2

2 min read

Home Bancshares Inc. (NYSE: HOMB) of Conway on Thursday reported mixed results in the second quarter as total deposits fell for the fourth consecutive period.

Since the parent company of Centennial Bank acquired Happy Bancshares Inc. of Texas in the second quarter of 2022, deposits have fallen more than 13% from $19.6 billion to just under $17 billion.

The bank said it has been limiting its exposure to uninsured deposits in light of industry volatility. At the end of the period, uninsured deposits accounted for 29% of its total deposits, down about 1% from the first quarter.

The bank posted second-quarter profit of $105.3 million. That’s higher than the $16 million in net income the company reported a year ago, but would be lower if $107.3 million in acquisition costs from the second quarter of 2022 were excluded.

Still, the results met Wall Street expectations. On a per share basis, earnings came to 52 cents per share. When adjusted for non-recurring gains, earnings were 51 cents per share, matching the average estimate of three analysts surveyed by Zacks Investment Research.

Home BancShares posted net revenue of $257.2 million, up 5.7% from $243.3 million a year ago and better than Wall Street projections. Three analysts surveyed by Zacks expected $252.1 million.

In a statement, CEO John Allison said the first six months of the year were a “challenging time” for the banking industry. But as he did in the first quarter, Allison touted Home BancShares’ ability to pay all uninsured and uncollateralized deposits and have leftover funds. The bank finished the quarter with $6.61 billion net available liquidity, compared to $4.93 billion in uninsured deposits.

“Our performance metrics, in the second quarter, were impressive, and I am the most proud of the fact that we can more than cover our uninsured and uncollateralized deposits,” Allison said. “We have worked hard to protect all deposits (insured and uninsured), our shareholders, our customers and our employees. It is our committed goal to keep Home BancShares, Centennial Bank and Happy State Bank in this position.”

Loans totaled $14.2 billion in the quarter, down from $14.4 billion a year ago.

Assets totaled $22.1 billion, down from $24.3 billion a year ago. It’s the fourth straight quarter total assets has declined, though Centennial Bank CEO Tracy French said the quality of the assets remains strong. He pointed to quarterly improvement in the bank’s ratio of non-performing assets to total assets.

“Our disciplined underwriting is a core focus for Centennial Bank, and the proof is certainly in the pudding,” French said in a statement.

Shares of the company were down about 3% Thursday morning. Year to date, shares were up 8%.

The bank has 76 branches in Arkansas, 78 branches in Florida, 63 branches in Texas, five branches in Alabama and one branch in New York City.

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