Quarterly profits for banks increase 9.5%

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Home BancShares Inc. reported on Thursday that profits rose just over 8% in the third quarter, as Conway Bank’s net profit climbed to $ 75 million from $ 69.3 million for the same period one year ago. Earnings per share jumped 9.5% to 46 cents in the quarter.

The bank broke analysts’ consensus of 44 cents per share, according to a report released Thursday by the banking team at Stephens Inc .. Non-interest income of $ 27 million was also above forecast by $ 26 million. dollars.

“We have had another very productive and strong quarter,” John Allison, chief executive officer of the bank, told financial analysts on a conference call Thursday. “We are ready to continue growing our business.

In Thursday’s press release, the bank said September “saw the first growth in quality loans that we have seen in some time” and added that “we are optimistic that quality loans will continue to grow. “.

Lending activity increased $ 55 million in September outside of Paycheck Protection Program loans and Home said it had a $ 250 million increase in unfunded liabilities for the quarter.

However, Stephens analysts reported that “loan growth remains sluggish” if PPP activity is excluded. Nonetheless, analysts noted that loans were higher than expected for the quarter.

Loan growth remains a challenge for Home and the banking industry as a whole, and declines were reflected in loans receivable and net interest margins at Home BancShares in the third quarter.

Loans decreased by $ 298.1 million in the third quarter. Home BancShares’ net interest margin fell to 3.6% in the third quarter from 3.92% in the same quarter a year ago.

Total interest income fell to $ 157 million in the third quarter from $ 166.6 million in the same period last year. Net interest income also declined, from $ 146.1 million to $ 144.6 million.

Total assets increased to $ 17.8 billion from $ 16.5 billion in the third quarter of last year. Deposits in the quarter jumped to $ 14 billion from $ 12.9 billion a year ago.

Just a month ago, Home announced its expansion into Texas with the $ 919 million acquisition of Happy Bancshares Inc. in an all-stock transaction. Home said the acquisition would “immediately triple accretion” to earnings from next year through 2023.

The acquisition, which is expected to close in the first quarter of 2022, will give Home BancShares assets of around $ 24 billion, an increase of almost 35% from total assets reported at the end of the third quarter. Home Bancshares will be the controlling entity and its management team will lead the combined banks upon closing of the transaction.

Home Bancshares said earnings per share would increase 5.5% next year and 9.2% by 2023 with the transaction. The book value per share will increase by 5.1% per share and the tangible book value per share is projected to be 1.5% as a result of the transaction.

The Texas border crossing puts Home in two of the country’s fastest growing states: Florida and Texas. “The Happy deal will continue to propel Home and create long-term shareholder value from our combined companies and we certainly have more value together than we are separately,” Allison told analysts.

Lending Director Kevin Hester said the bank remains on track to increase lending at the close of 2021. “Our plan for the fourth quarter is still strong and reflects what we expected to see when we have announced that loan growth could return in the last half of 2021, “Hester said during the analyst call.

Home BancShares stock closed at $ 24.55 on Thursday, down 0.73% or 18 cents as the Dow Jones Industrial Average was mostly flat for the day.


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