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Home BancShares Touts Liquidity as Profit Rises 59% in Q1

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Home BancShares Inc. of Conway (NYSE: HOMB) on Thursday said its “fortress balance sheet” helped it weather uncertainty in the banking industry in the first quarter, while profit increased 58% from $64.9 million to $103 million. 

CEO John Allison touted the company’s liquidity, saying the parent company of Centennial Bank would’ve been able to pay all uninsured and uncollateralized deposits in excess of FDIC limits and still had $1.7 billion on hand.

The bank finished the first quarter with $6.9 billion in net available liquidity, which consisted of $2.7 billion in internal liquidity and $4.2 billion in external liquidity.

“As the banking environment continues to be volatile, our ability to pay uninsured and uncollateralized deposits at Centennial Bank and deliver strong earnings for our shareholders is nothing less than remarkable,” Tracy French, president and CEO of Centennial Bank, said in a news release.

Earnings in the quarter, on a per-share basis, came to 51 cents. Earnings adjusted for non-recurring costs came to 54 cents per share.

The results topped Wall Street expectations. The average estimate of three analysts surveyed by Zacks Investment Research was for earnings of 51 cents per share.

The bank posted revenue of $248.8 million, up 54% from $161.8 million in the same period in 2022, the last quarter before it completed its acquisition of Happy Bancshares Inc. of Texas.

The revenue amount was short of Street forecasts. Three analysts surveyed by Zacks expected $251.4 million.

Signs of economic weakness showed up elsewhere in the bank’s earnings report. Total deposits were higher than a year ago, but have fallen each quarter since then from $19.5 billion to $17.5 billion.

Loans totaled $14.39 billion, higher than a year ago but down slightly from $14.41 billion in the fourth quarter of 2022. The bank said it has been actively monitoring its exposure to uninsured deposits in light of the current banking environment.

As of March 31, it held about $7.9 billion in uninsured deposits, of which $2.7 billion were collateralized deposits, for a net position of $5.2 billion. That represents approximately 29.9% the bank’s total deposits.

The bank’s allowance for credit losses was $287.2 million, or 2 % of total loans, compared to $234.8 million, or about 2.3% of loans, in the same quarter a year ago.

Total assets were $22.5 billion, up from $18.6 million a year ago but down from $22.9 billion in the fourth quarter of 2022.

Centennial 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.

Shares of the company were flat Thursday morning. For the year to date, shares have fallen 3%.

The Associated Press contributed information to this report.

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