Home BancShares Calls 2Q ‘Best’ in 20 Years

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Home BancShares Inc. of Conway on Thursday reported what it called its best quarter in its 20-year history, recording record revenue and net interest income while net income fell 13%.

The publicly traded parent company of Centennial Bank (Nasdaq: HOMB) reported second-quarter net income of $62.8 million, down 13% from the same quarter last year. Total revenue was $173.7 million, up about 6% from the same quarter last year.

Diluted earnings per share came in at 38 cents, beating expectations.

“To say that during a full quarter of a pandemic that HOMB was able to meet EPS targets, set a record for revenue and maintain a solid net interest margin brings about an enormous sense of pride that I have in this team of bankers,” Chairman John Allison said in a news release. “Our outlook for future dividends remains strong, which is also an important component to our solid performance.”

Net interest margin was 4.11%, down from 4.28% in the same quarter last year. Excluding Paycheck Protection Program loans, net interest margin was 4.16%. The company said that as of June 30, it had PPP loans of $846.6 million. 

Allowance for credit losses to total loans, excluding PPP loans, was 2.15%, up from 0.96% in the same quarter last year and 2.01% in the first quarter, when a new accounting standard for loan loss reserves took effect.

“While we realize this is a marathon and not a sprint, to have best in class asset quality and loan reserves, excluding PPP loans, of 2.15% brings about a strong sense of comfort,” Centennial Bank President and CEO Tracy French said.

The company noted that, during the quarter, it recorded $11.4 million of total credit loss expense, primarily due to the COVID-19 pandemic. The pandemic also created “a significant amount of excess liquidity in the market,” which resulted in an increase of $416.8 million of average interest-bearing cash balances in the quarter compared to the first quarter of 2020.

Net interest income was a record. On a fully taxable equivalent basis it increased $9.1 million, or 6.5%, to $150.1 million for the three-month period ended June 30 from $141.0 million for the three-month period ended March 31. The company attributed the increase to a $9.5 million decrease in interest expense, which was partially offset by a $370,000 decrease in interest income. 

Total deposits were $13.18 billion at June 30, compared to $11.51 billion at March 31. Total assets were $16.90 billion, compared to $15.53 billion at March 31.