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HOMB’s Disciplined Strategy Leads to a Beat of Management Expectations Despite Continued West Texas Headwinds
Источник: Nasdaq GlobeNewswire / 19 янв 2023 07:15:01 America/Chicago
CONWAY, Ark., Jan. 19, 2023 (GLOBE NEWSWIRE) -- Home BancShares, Inc. (NYSE: HOMB) (“Home” or the “Company”), parent company of Centennial Bank, released quarterly earnings today.
Highlights of the Fourth Quarter of 2022:
Metric Q4 2022 Q3 2022 Q2 2022 Q1 2022 Q4 2021 Net income $115.7 million $108.7 million $16.0 million $64.9 million $73.4 million Total revenue (net) $272.3 million $256.3 million $243.3 million $161.8 million $171.0 million Income before income taxes $148.4 million $142.0 million $19.3 million $84.9 million $93.9 million Pre-tax, pre-provision, net income (PPNR)
(non-GAAP)(1)$153.4 million $142.0 million $77.9 million $84.9 million $93.9 million Pre-tax net income to total revenue (net) 54.50% 55.39% 7.92% 52.48% 54.94% P5NR (Pre-tax, pre-provision, profit percentage) (PPNR to total revenue (net)) (non-GAAP)(1) 56.34% 55.39% 32.00% 52.48% 54.94% ROA 1.98% 1.81% 0.26% 1.43% 1.62% NIM 4.21% 4.05% 3.64% 3.21% 3.42% Purchase accounting accretion $3.5 million $4.6 million $5.2 million $3.1 million $4.0 million ROE 13.29% 12.25% 1.78% 9.58% 10.63% ROTCE (non-GAAP)(1) 22.96% 20.93% 2.96% 15.03% 16.73% Diluted earnings per share $0.57 $0.53 $0.08 $0.40 $0.45 Non-performing assets to total assets 0.27% 0.27% 0.25% 0.25% 0.29% Common equity tier 1 capital 12.9% 13.0% 12.8% 14.9% 15.4% Leverage 10.9% 10.4% 9.8% 10.8% 11.1% Tier 1 capital 12.9% 13.0% 12.9% 15.5% 16.0% Total risk-based capital 16.5% 16.7% 16.6% 21.6% 19.8% Allowance for credit losses to total loans 2.01% 2.09% 2.11% 2.34% 2.41% (1) Calculation of this metric and the reconciliation to GAAP are included in the schedules accompanying this release.
“It’s obvious all banks are not created equal. HOMB continues to try and separate ourselves from the pack. Financial strength is paramount, and I’m proud that Home BancShares is able to provide strength to our customers, especially during tough economic times. Despite the headwinds that arose out of West Texas, HOMB was able to rely on the patience and strength of the full franchise to deliver strong performance for the year,” said John Allison, Chairman.“As a result of the discipline, patience and liquidity maintained by HOMB, we were able to profitably grow loans by $580 million in the fourth quarter, increasing loan yield to 6.23% from 5.63%, which is impressive by any standard in a rising rate environment,” said Tracy French, Centennial Bank President and Chief Executive Officer.
Operating Highlights
Net income for the three-month period ended December 31, 2022 was $115.7 million, or $0.57 earnings per share. Net income for the year ended December 31, 2022 was $305.3 million, or $1.57 earnings per share. When adjusting for merger-related and other non-fundamental items, net income and earnings per share on an as-adjusted basis (non-GAAP), were $107.5 million(1), or $0.53 per share(1), and $375.9 million(1), or $1.93 per share(1), for the three months and year ended December 31, 2022, respectively.
Our net interest margin was 4.21% for the three-month period ended December 31, 2022, compared to 4.05% for the three-month period ended September 30, 2022. The yield on loans was 6.23% and 5.63% for the three months ended December 31, 2022 and September 30, 2022, respectively, as average loans increased from $13.82 billion to $14.11 billion. Additionally, the rate on interest bearing deposits increased to 1.45% as of December 31, 2022, from 0.70% as of September 30, 2022, while average balances decreased from $13.31 billion to $12.85 billion.
During the fourth quarter of 2022, there was $871,000 of event interest income compared to event interest income of $943,000 for the third quarter of 2022.
Purchase accounting accretion on acquired loans was $3.5 million and $4.6 million and average purchase accounting loan discounts were $38.6 million and $42.1 million for the three-month periods ended December 31, 2022 and September 30, 2022, respectively. The reduction in accretion income lowered the net interest margin by two basis points for the three-month period ended December 31, 2022.
Net interest income on a fully taxable equivalent basis was $217.7 million for the three-month period ended December 31, 2022, and $215.5 million for the three-month period ended September 30, 2022. This increase in net interest income for the three-month period ended December 31, 2022, was the result of a $29.5 million increase in interest income, partially offset by a $27.4 million increase in interest expense. The $29.5 million increase in interest income was primarily the result of a $25.5 million increase in loan interest income and a $4.6 million increase in investment income. The increase in interest income is a result of the rising interest rate environment as well as loan growth during the quarter. The $27.4 million increase in interest expense was due to a $23.7 million increase in interest expense on deposits and a $3.5 million increase in interest expense on FHLB borrowed funds. The increase in interest expense on deposits and FHLB borrowed funds is a result of the rising interest rate environment as well as an increase in FHLB borrowed funds during the quarter.
The Company reported $56.7 million of non-interest income for the fourth quarter of 2022. The most important components of fourth quarter non-interest income were $23.2 million from other income, $10.4 million from other service charges and fees, $10.1 million from service charges on deposit accounts, $4.0 million from trust fees, $3.6 million in mortgage lending income, $2.8 million from dividends from FHLB, FRB, FNBB and other, a $1.1 million increase in cash value of life insurance, a $1.0 million loss from the fair value adjustment for marketable securities, and $453,000 from insurance commissions. The $23.2 million in other income includes $15.0 million income from the settlement of a lawsuit brought by the Company.
Non-interest expense for the fourth quarter of 2022 was $118.9 million. The most important components of the fourth quarter non-interest expense were $64.2 million from salaries and employee benefits, $30.7 million in other operating expense, $14.9 million in occupancy and equipment expenses and $9.1 million in data processing expenses. Other operating expense includes $5.0 million in legal expense from a lawsuit brought by the Company. There were no merger and acquisition expenses during the fourth quarter of 2022. For the fourth quarter of 2022, our efficiency ratio was 42.44%; and, our efficiency ratio, as adjusted (non-GAAP), was 43.07%(1).
Financial Condition
Total loans receivable were $14.41 billion at December 31, 2022, compared to $13.83 billion at September 30, 2022. Total deposits were $17.94 billion at December 31, 2022, compared to $18.54 billion at September 30, 2022. Total assets were $22.88 billion at December 31, 2022, compared to $23.16 billion at September 30, 2022.
During the fourth quarter of 2022, the Company experienced approximately $580.2 million in loan growth. Centennial CFG experienced $196.0 million of organic loan growth and had loans of $2.27 billion at December 31, 2022. Our remaining footprint experienced $387.6 million in organic loan growth and $3.4 million in PPP loan decline during the quarter.
Non-performing loans to total loans was 0.42% and 0.45% at December 31, 2022 and September 30, 2022, respectively. Non-performing assets to total assets was 0.27% at both December 31, 2022 and September 30, 2022. Net charge-offs were $4.5 million and $5.1 million for the three months ended December 31, 2022 and September 30, 2022, respectively.
Non-performing loans at December 31, 2022, were $8.4 million, $20.5 million, $22.2 million, $404,000, $2.3 million and $7.1 million in the Arkansas, Florida, Texas, Alabama, Shore Premier Finance and Centennial CFG markets, respectively, for a total of $60.9 million. Non-performing assets at December 31, 2022, were $8.5 million, $20.8 million, $22.4 million, $404,000, $2.3 million and $7.1 million in the Arkansas, Florida, Texas, Alabama, Shore Premier Finance and Centennial CFG markets, respectively, for a total of $61.5 million.
The Company’s allowance for credit losses on loans was $289.7 million at December 31, 2022, or 2.01% of total loans, compared to the allowance for credit losses on loans of $289.2 million, or 2.09% of total loans, at September 30, 2022. As of December 31, 2022 and September 30, 2022, the Company’s allowance for credit losses on loans was 475.99% and 468.77% of its total non-performing loans, respectively.
Stockholders’ equity was $3.53 billion at December 31, 2022, compared to $3.46 billion at September 30, 2022, an increase of approximately $66.3 million. The increase in stockholders’ equity is primarily associated with the $82.0 million increase in retained earnings and the $2.0 million decrease in accumulated other comprehensive loss, which were partially offset by $20.0 million in stock repurchases. Book value per common share was $17.33 at December 31, 2022, compared to $16.94 at September 30, 2022. Tangible book value per common share (non-GAAP) was $10.17(1) at December 31, 2022, compared to $9.82(1) at September 30, 2022.
Branches
The Company currently has 76 branches in Arkansas, 78 branches in Florida, 63 branches in Texas, 5 branches in Alabama and one branch in New York City.
Conference Call
Management will conduct a conference call to review this information at 1:00 p.m. CT (2:00 p.m. ET) on Thursday, January 19, 2023. We strongly encourage all participants to pre-register for the conference call webcast or the live call using one of the following links. First, participants can pre-register for the conference call webcast using the following link: https://events.q4inc.com/attendee/223948707. Participants who pre-register will be given a unique webcast link to gain immediate access to the conference call webcast. Second, participants can pre-register for the live call using the following link: https://www.netroadshow.com/events/login?show=863c0014&confId=45606. Participants who pre-register will be given the phone number and unique access codes to gain immediate access to the live call. Participants may pre-register now, or at any time prior to the call, and will immediately receive simple instructions via email. The Home BancShares conference call will also be automatically scheduled as an event in your Outlook calendar.
Those without internet access or unable to pre-register may dial in and listen to the live call by calling 1-844-200-6205, Passcode: 794589. A replay of the call will be available by calling 1-866-813-9403, Passcode: 384771, which will be available until January 26, 2023, at 10:59 p.m. CT (11:59 p.m. ET). Internet access to the call will be available live or in recorded version on the Company's website at www.homebancshares.com.
About Home BancShares
Home BancShares, Inc. is a bank holding company, headquartered in Conway, Arkansas. Its wholly-owned subsidiary, Centennial Bank, provides a broad range of commercial and retail banking plus related financial services to businesses, real estate developers, investors, individuals and municipalities. Centennial Bank has branch locations in Arkansas, Florida, Texas, South Alabama and New York City. The Company’s common stock is traded through the New York Stock Exchange under the symbol “HOMB.” The Company was founded in 1998. Visit www.homebancshares.com or www.my100bank.com for more information.
(1) Calculation of this metric and the reconciliation to GAAP are included in the schedules accompanying this release.
Non-GAAP Financial Measures
This press release contains financial information determined by methods other than in accordance with generally accepted accounting principles (GAAP). The Company’s management uses these non-GAAP financial measures--including net income (earnings), as adjusted; pre-tax, pre-provision, net income (PPNR); PPNR, as adjusted; pre-tax net income, as adjusted, to total revenue (net); pre-tax, pre-provision, profit percentage; pre-tax, pre-provision, profit percentage, as adjusted; diluted earnings per common share, as adjusted; return on average assets, as adjusted; return on average assets excluding intangible amortization; return on average assets, as adjusted, excluding intangible amortization; return on average common equity, as adjusted; return on average tangible common equity; return on average tangible common equity, as adjusted; return on average tangible common equity excluding intangible amortization; return on average tangible common equity, as adjusted, excluding intangible amortization; efficiency ratio, as adjusted; tangible book value per common share and tangible common equity to tangible assets--to provide meaningful supplemental information regarding our performance. These measures typically adjust GAAP performance measures to include the tax benefit associated with revenue items that are tax-exempt, as well as adjust income available to common shareholders for certain significant items or transactions that management believes are not indicative of the Company’s primary business operating results. Since the presentation of these GAAP performance measures and their impact differ between companies, management believes presentations of these non-GAAP financial measures provide useful supplemental information that is essential to a proper understanding of the operating results of the Company’s business. These non-GAAP disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found in the tables of this release.
General
This release may contain forward-looking statements regarding the Company’s plans, expectations, goals and outlook for the future. Statements in this press release that are not historical facts should be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not guarantees of future events, performance or results. When we use words like “may,” “plan,” “propose,” “contemplate,” “anticipate,” “believe,” “intend,” “continue,” “expect,” “project,” “predict,” “estimate,” “could,” “should,” “would,” and similar expressions, you should consider them as identifying forward-looking statements, although we may use other phrasing. Forward-looking statements of this type speak only as of the date of this news release. By nature, forward-looking statements involve inherent risks and uncertainties. Various factors could cause actual results to differ materially from those contemplated by the forward-looking statements. These factors include, but are not limited to, the following: economic conditions, credit quality, interest rates, loan demand, real estate values and unemployment, including the ongoing impacts of inflation; disruptions, uncertainties and related effects on our business and operations as a result of the ongoing coronavirus (COVID-19) pandemic and measures that have been or may be implemented or imposed in response to the pandemic, including the impact on, among other things, credit quality and liquidity; the risk that the benefits from the acquisition of Happy Bancshares, Inc. (“Happy”) may not be fully realized or may take longer to realize than expected, including as a result of changes in general economic and market conditions, ongoing or future effects of the COVID-19 pandemic, interest and exchange rates, monetary policy, laws and regulations and their enforcement, and the degree of competition in the geographic and business areas in which Home and Happy operate; the ability to effectively integrate the businesses of Home and Happy; the reaction to the transaction of the companies’ customers, employees and counterparties; diversion of management time on acquisition-related issues; the effect of any future mergers, acquisitions or other transactions to which we or our bank subsidiary may from time to time be a party, including as a result of one or more of the factors described above as they would relate to such transaction; the ability to identify, enter into and/or close additional acquisitions; legislative and regulatory changes and risks and expenses associated with current and future legislation and regulations; technological changes and cybersecurity risks; the effects of changes in accounting policies and practices; changes in governmental monetary and fiscal policies; political instability, military conflicts and other major domestic or international events; adverse weather events, including hurricanes, and other natural disasters; competition from other financial institutions; potential claims, expenses and other adverse effects related to current or future litigation, regulatory examinations or other government actions; changes in the assumptions used in making the forward-looking statements; and other factors described in reports we file with the Securities and Exchange Commission (the “SEC”), including those factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on February 24, 2022.
FOR MORE INFORMATION CONTACT:
Donna Townsell
Director of Investor Relations
Home BancShares, Inc.
(501) 328-4625Home BancShares, Inc. Consolidated End of Period Balance Sheets (Unaudited) (In thousands) Dec. 31, 2022 Sep. 30, 2022 Jun. 30, 2022 Mar. 31, 2022 Dec. 31, 2021 ASSETS Cash and due from banks $ 263,893 $ 268,929 $ 287,451 $ 173,134 $ 119,908 Interest-bearing deposits with other banks 460,897 1,311,492 2,528,925 3,446,324 3,530,407 Cash and cash equivalents 724,790 1,580,421 2,816,376 3,619,458 3,650,315 Federal funds sold — 2,700 — — — Investment securities - available-for sale, net of allowance for credit losses 4,041,590 4,085,102 3,791,509 2,957,322 3,119,807 Investment securities - held-to-maturity, net of allowance for credit losses 1,287,705 1,251,007 1,366,781 499,265 — Total investment securities 5,329,295 5,336,109 5,158,290 3,456,587 3,119,807 Loans receivable 14,409,480 13,829,311 13,923,873 10,052,714 9,836,089 Allowance for credit losses (289,669 ) (289,203 ) (294,267 ) (234,768 ) (236,714 ) Loans receivable, net 14,119,811 13,540,108 13,629,606 9,817,946 9,599,375 Bank premises and equipment, net 405,073 411,479 415,056 274,503 275,760 Foreclosed assets held for sale 546 365 373 1,144 1,630 Cash value of life insurance 213,693 212,619 211,811 105,623 105,135 Accrued interest receivable 103,199 88,671 80,274 46,934 46,736 Deferred tax asset, net 209,321 228,979 208,585 116,605 78,290 Goodwill 1,398,253 1,394,353 1,398,400 973,025 973,025 Core deposit intangible 58,455 60,932 63,410 23,624 25,045 Other assets 321,152 300,634 270,987 182,546 177,020 Total assets $ 22,883,588 $ 23,157,370 $ 24,253,168 $ 18,617,995 $ 18,052,138 LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities Deposits: Demand and non-interest-bearing $ 5,164,997 $ 5,540,539 $ 6,036,583 $ 4,311,400 $ 4,127,878 Savings and interest-bearing transaction accounts 11,730,552 11,968,519 12,424,192 9,461,393 9,251,805 Time deposits 1,043,234 1,033,266 1,119,297 808,141 880,887 Total deposits 17,938,783 18,542,324 19,580,072 14,580,934 14,260,570 Securities sold under agreements to repurchase 131,146 121,555 118,573 151,151 140,886 FHLB and other borrowed funds 650,000 400,000 400,000 400,000 400,000 Accrued interest payable and other liabilities 196,877 192,908 197,503 131,339 113,868 Subordinated debentures 440,420 440,568 458,455 667,868 371,093 Total liabilities 19,357,226 19,697,355 20,754,603 15,931,292 15,286,417 Stockholders' equity Common stock 2,034 2,042 2,053 1,638 1,637 Capital surplus 2,386,699 2,404,388 2,426,271 1,485,524 1,487,373 Retained earnings 1,443,087 1,361,040 1,286,146 1,304,098 1,266,249 Accumulated other comprehensive (loss) income (305,458 ) (307,455 ) (215,905 ) (104,557 ) 10,462 Total stockholders' equity 3,526,362 3,460,015 3,498,565 2,686,703 2,765,721 Total liabilities and stockholders' equity $ 22,883,588 $ 23,157,370 $ 24,253,168 $ 18,617,995 $ 18,052,138 Home BancShares, Inc. Consolidated Statements of Income (Unaudited) Quarter Ended Year Ended (In thousands) Dec. 31, 2022 Sep. 30, 2022 Jun. 30, 2022 Mar. 31, 2022 Dec. 31, 2021 Dec. 31, 2022 Dec. 31, 2021 Interest income: Loans $ 221,280 $ 195,841 $ 181,779 $ 129,442 $ 136,750 $ 728,342 $ 571,960 Investment securities Taxable 33,639 28,273 20,941 9,080 8,121 91,933 30,054 Tax-exempt 7,855 8,069 7,725 4,707 4,827 28,356 19,642 Deposits - other banks 10,109 10,763 6,565 1,673 1,281 29,110 3,515 Federal funds sold 12 9 3 1 — 25 — Total interest income 272,895 242,955 217,013 144,903 150,979 877,766 625,171 Interest expense: Interest on deposits 47,019 23,347 10,729 4,894 5,155 85,989 24,936 Federal funds purchased — — 2 — — 2 — FHLB borrowed funds 5,388 1,917 1,896 1,875 1,916 11,076 7,604 Securities sold under agreements to repurchase 701 434 187 108 98 1,430 497 Subordinated debentures 4,121 4,153 5,441 6,878 4,790 20,593 19,163 Total interest expense 57,229 29,851 18,255 13,755 11,959 119,090 52,200 Net interest income 215,666 213,104 198,758 131,148 139,020 758,676 572,971 Provision for credit losses on loans 5,000 — — — — 5,000 — Provision for credit losses on acquired loans — — 45,170 — — 45,170 — Provision for credit losses on acquired unfunded commitments — — 11,410 — — 11,410 — Provision for credit losses on unfunded commitments — — — — — — (4,752 ) Provision for credit losses on acquired investment securities — — 2,005 — — 2,005 — Total credit loss expense (benefit) 5,000 — 58,585 — — 63,585 (4,752 ) Net interest income after credit loss expense (benefit) 210,666 213,104 140,173 131,148 139,020 695,091 577,723 Non-interest income: Service charges on deposit accounts 10,134 10,756 10,084 6,140 6,217 37,114 22,276 Other service charges and fees 10,363 13,951 12,541 7,733 11,133 44,588 36,451 Trust fees 3,981 3,980 4,320 574 515 12,855 1,960 Mortgage lending income 3,566 4,179 5,996 3,916 5,359 17,657 25,676 Insurance commissions 453 601 658 480 387 2,192 1,943 Increase in cash value of life insurance 1,079 1,089 1,140 492 501 3,800 2,049 Dividends from FHLB, FRB, FNBB & other 2,814 1,741 3,945 698 919 9,198 14,835 Gain on SBA loans 30 58 — 95 792 183 2,380 Gain (loss) on branches, equipment and other assets, net 10 (13 ) 2 16 (19 ) 15 (105 ) Gain on OREO, net 13 — 9 478 737 500 2,003 Gain on securities, net — — — — — — 219 Fair value adjustment for marketable securities 1,032 (2,628 ) (1,801 ) 2,125 85 (1,272 ) 7,178 Other income 23,185 9,487 7,687 7,922 5,338 48,281 20,704 Total non-interest income 56,660 43,201 44,581 30,669 31,964 175,111 137,569 Non-interest expense: Salaries and employee benefits 64,249 65,290 65,795 43,551 43,765 238,885 170,755 Occupancy and equipment 14,884 15,133 14,256 9,144 9,047 53,417 36,631 Data processing expense 9,062 8,747 10,094 7,039 6,493 34,942 24,280 Merger and acquisition expenses — — 48,731 863 880 49,594 1,886 Other operating expenses 30,708 25,176 26,606 16,299 16,865 98,789 64,965 Total non-interest expense 118,903 114,346 165,482 76,896 77,050 475,627 298,517 Income before income taxes 148,423 141,959 19,272 84,921 93,934 394,575 416,775 Income tax expense 32,736 33,254 3,294 20,029 20,577 89,313 97,754 Net income $ 115,687 $ 108,705 $ 15,978 $ 64,892 $ 73,357 $ 305,262 $ 319,021 Home BancShares, Inc. Selected Financial Information (Unaudited) Quarter Ended Year Ended (Dollars and shares in thousands, except per share data) Dec. 31, 2022 Sep. 30, 2022 Jun. 30, 2022 Mar. 31, 2022 Dec. 31, 2021 Dec. 31, 2022 Dec. 31, 2021 PER SHARE DATA Diluted earnings per common share $ 0.57 $ 0.53 $ 0.08 $ 0.40 $ 0.45 $ 1.57 $ 1.94 Diluted earnings per common share, as adjusted (non-GAAP)(1) 0.53 0.54 0.47 0.37 0.45 1.93 1.83 Basic earnings per common share 0.57 0.53 0.08 0.40 0.45 1.57 1.94 Dividends per share - common 0.165 0.165 0.165 0.165 0.14 0.66 0.56 Book value per common share 17.33 16.94 17.04 16.41 16.90 17.33 16.90 Tangible book value per common share (non-GAAP)(1) 10.17 9.82 9.92 10.32 10.80 10.17 10.80 STOCK INFORMATION Average common shares outstanding 203,924 204,829 205,683 163,787 163,859 194,694 164,501 Average diluted shares outstanding 204,179 205,135 206,015 164,196 164,306 195,019 164,858 End of period common shares outstanding 203,434 204,219 205,291 163,758 163,699 203,434 163,699 ANNUALIZED PERFORMANCE METRICS Return on average assets (ROA) 1.98 % 1.81 % 0.26 % 1.43 % 1.62 % 1.35 % 1.83 % Return on average assets, as adjusted: (ROA, as adjusted) (non-GAAP)(1) 1.84 % 1.83 % 1.57 % 1.36 % 1.64 % 1.67 % 1.73 % Return on average assets excluding intangible amortization (non-GAAP)(1) 2.15 % 1.97 % 0.31 % 1.54 % 1.75 % 1.47 % 1.96 % Return on average assets, as adjusted, excluding intangible amortization (non-GAAP)(1) 2.00 % 1.99 % 1.70 % 1.46 % 1.76 % 1.80 % 1.86 % Return on average common equity (ROE) 13.29 % 12.25 % 1.78 % 9.58 % 10.63 % 9.17 % 11.89 % Return on average common equity, as adjusted: (ROE, as adjusted) (non-GAAP)(1) 12.35 % 12.39 % 10.83 % 9.09 % 10.72 % 11.29 % 11.26 % Return on average tangible common equity (ROTCE) (non-GAAP)(1) 22.96 % 20.93 % 2.96 % 15.03 % 16.73 % 15.30 % 18.95 % Return on average tangible common equity, as adjusted: (ROTCE, as adjusted) (non-GAAP)(1) 21.33 % 21.16 % 17.94 % 14.26 % 16.87 % 18.84 % 17.95 % Return on average tangible common equity excluding intangible amortization (non-GAAP)(1) 23.33 % 21.29 % 3.30 % 15.28 % 16.97 % 15.63 % 19.20 % Return on average tangible common equity, as adjusted, excluding intangible amortization (non-GAAP)(1) 21.70 % 21.52 % 18.29 % 14.50 % 17.11 % 19.17 % 18.20 % (1) Calculation of this metric and the reconciliation to GAAP are included in the schedules accompanying this release. Home BancShares, Inc. Selected Financial Information (Unaudited) Quarter Ended Year Ended (Dollars in thousands) Dec. 31, 2022 Sep. 30, 2022 Jun. 30, 2022 Mar. 31, 2022 Dec. 31, 2021 Dec. 31, 2022 Dec. 31, 2021 Efficiency ratio 42.44 % 43.24 % 66.31 % 46.15 % 43.79 % 49.53 % 40.81 % Efficiency ratio, as adjusted (non-GAAP)(1) 43.07 % 42.97 % 46.02 % 47.33 % 43.48 % 44.55 % 42.12 % Net interest margin - FTE (NIM) 4.21 % 4.05 % 3.64 % 3.21 % 3.42 % 3.81 % 3.66 % Fully taxable equivalent adjustment $ 2,017 $ 2,437 $ 2,471 $ 1,738 $ 1,736 $ 8,663 $ 7,079 Total revenue (net) 272,326 256,305 243,339 161,817 170,984 933,787 710,540 Pre-tax, pre-provision, net income (PPNR) (non-GAAP)(1) 153,423 141,959 77,857 84,921 93,934 458,160 412,023 PPNR, as adjusted (non-GAAP)(1) 142,567 143,522 126,683 80,371 94,729 493,143 388,905 Pre-tax net income to total revenue (net) 54.50 % 55.39 % 7.92 % 52.48 % 54.94 % 42.26 % 58.66 % Pre-tax net income, as adjusted, to total revenue (net) (non-GAAP)(1) 50.52 % 56.00 % 52.06 % 49.67 % 55.40 % 52.28 % 55.40 % P5NR (Pre-tax, pre-provision, profit percentage) (PPNR to total revenue (net)) (non-GAAP)(1) 56.34 % 55.39 % 32.00 % 52.48 % 54.94 % 49.06 % 57.99 % P5NR, as adjusted (non-GAAP)(1) 52.35 % 56.00 % 52.06 % 49.67 % 55.40 % 52.81 % 54.73 % Total purchase accounting accretion $ 3,497 $ 4,578 $ 5,177 $ 3,089 $ 4,001 $ 16,341 $ 20,151 Average purchase accounting loan discounts 38,552 42,050 46,258 25,359 28,882 38,055 36,178 OTHER OPERATING EXPENSES Hurricane expense $ 176 $ — $ — $ — $ — $ 176 $ — Advertising 2,567 2,024 2,117 1,266 1,411 7,974 4,855 Amortization of intangibles 2,478 2,477 2,477 1,421 1,420 8,853 5,683 Electronic banking expense 3,914 3,828 3,352 2,538 2,442 13,632 9,817 Directors' fees 358 354 375 404 422 1,491 1,614 Due from bank service charges 273 316 396 270 257 1,255 1,044 FDIC and state assessment 2,224 2,146 2,390 1,668 1,353 8,428 5,472 Insurance 1,003 959 973 770 801 3,705 3,118 Legal and accounting 5,962 1,581 1,061 797 749 9,401 3,703 Other professional fees 2,552 2,466 2,254 1,609 1,754 8,881 6,950 Operating supplies 690 681 995 754 489 3,120 1,915 Postage 602 614 556 306 352 2,078 1,283 Telephone 576 593 384 337 343 1,890 1,425 Other expense 7,333 7,137 9,276 4,159 5,072 27,905 18,086 Total other operating expenses $ 30,708 $ 25,176 $ 26,606 $ 16,299 $ 16,865 $ 98,789 $ 64,965 (1) Calculation of this metric and the reconciliation to GAAP are included in the schedules accompanying this release. Home BancShares, Inc. Selected Financial Information (Unaudited) (Dollars in thousands) Dec. 31, 2022 Sep. 30, 2022 Jun. 30, 2022 Mar. 31, 2022 Dec. 31, 2021 BALANCE SHEET RATIOS Total loans to total deposits 80.33 % 74.58 % 71.11 % 68.94 % 68.97 % Common equity to assets 15.41 % 14.94 % 14.43 % 14.43 % 15.32 % Tangible common equity to tangible assets (non-GAAP)(1) 9.66 % 9.24 % 8.94 % 9.59 % 10.36 % LOANS RECEIVABLE Real estate Commercial real estate loans Non-farm/non-residential $ 5,632,063 $ 5,156,438 $ 5,092,539 $ 3,810,383 $ 3,889,284 Construction/land development 2,135,266 2,232,906 2,595,384 1,856,096 1,850,050 Agricultural 346,811 330,748 329,106 142,920 130,674 Residential real estate loans Residential 1-4 family 1,748,551 1,704,850 1,708,221 1,223,890 1,274,953 Multifamily residential 578,052 525,110 389,633 248,650 280,837 Total real estate 10,440,743 9,950,052 10,114,883 7,281,939 7,425,798 Consumer 1,149,896 1,120,250 1,106,343 1,059,342 825,519 Commercial and industrial 2,349,263 2,268,750 2,187,771 1,510,205 1,386,747 Agricultural 285,235 313,693 324,630 48,095 43,920 Other 184,343 176,566 190,246 153,133 154,105 Loans receivable $ 14,409,480 $ 13,829,311 $ 13,923,873 $ 10,052,714 $ 9,836,089 Paycheck Protection Program (PPP) loans (net of discounts) (included in total loans receivable) 7,332 10,771 37,204 59,609 112,814 ALLOWANCE FOR CREDIT LOSSES Balance, beginning of period $ 289,203 $ 294,267 $ 234,768 $ 236,714 $ 238,673 Allowance for credit losses on PCD loans - Happy acquisition — — 16,816 — — Loans charged off 5,379 6,313 3,265 2,310 3,125 Recoveries of loans previously charged off 845 1,249 778 364 1,166 Net loans charged off 4,534 5,064 2,487 1,946 1,959 Provision for credit losses - Happy acquisition — — 45,170 — — Provision for credit losses - loans 5,000 — — — — Balance, end of period $ 289,669 $ 289,203 $ 294,267 $ 234,768 $ 236,714 Net charge-offs to average total loans 0.13 % 0.15 % 0.07 % 0.08 % 0.08 % Allowance for credit losses to total loans 2.01 % 2.09 % 2.11 % 2.34 % 2.41 % NON-PERFORMING ASSETS Non-performing loans Non-accrual loans $ 51,011 $ 56,796 $ 44,170 $ 44,629 $ 47,158 Loans past due 90 days or more 9,845 4,898 16,432 46 3,035 Total non-performing loans 60,856 61,694 60,602 44,675 50,193 Other non-performing assets Foreclosed assets held for sale, net 546 365 373 1,144 1,630 Other non-performing assets 74 104 104 — — Total other non-performing assets 620 469 477 1,144 1,630 Total non-performing assets $ 61,476 $ 62,163 $ 61,079 $ 45,819 $ 51,823 Allowance for credit losses for loans to non-performing loans 475.99 % 468.77 % 485.57 % 525.50 % 471.61 % Non-performing loans to total loans 0.42 % 0.45 % 0.44 % 0.44 % 0.51 % Non-performing assets to total assets 0.27 % 0.27 % 0.25 % 0.25 % 0.29 % (1) Calculation of this metric and the reconciliation to GAAP are included in the schedules accompanying this release. Home BancShares, Inc. Consolidated Net Interest Margin (Unaudited) Three Months Ended December 31, 2022 September 30, 2022 (Dollars in thousands) Average
BalanceIncome/
ExpenseYield/
RateAverage
BalanceIncome/
ExpenseYield/
RateASSETS Earning assets Interest-bearing balances due from banks $ 1,094,144 $ 10,109 3.67 % $ 1,965,136 $ 10,763 2.17 % Federal funds sold 1,300 12 3.66 % 1,176 9 3.04 % Investment securities - taxable 4,002,678 33,639 3.33 % 4,008,230 28,273 2.80 % Investment securities - non-taxable - FTE 1,294,096 9,653 2.96 % 1,292,702 10,370 3.18 % Loans receivable - FTE 14,109,329 221,499 6.23 % 13,822,459 195,977 5.63 % Total interest-earning assets 20,501,547 274,912 5.32 % 21,089,703 245,392 4.62 % Non-earning assets 2,685,458 2,689,066 Total assets $ 23,187,005 $ 23,778,769 LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities Interest-bearing liabilities Savings and interest-bearing transaction accounts $ 11,818,158 $ 45,029 1.51 % $ 12,233,755 $ 22,388 0.73 % Time deposits 1,027,765 1,990 0.77 % 1,078,112 959 0.35 % Total interest-bearing deposits 12,845,923 47,019 1.45 % 13,311,867 23,347 0.70 % Federal funds purchased — — — % 14 — — % Securities sold under agreement to repurchase 128,798 701 2.16 % 126,770 434 1.36 % FHLB borrowed funds 692,935 5,388 3.08 % 400,012 1,917 1.90 % Subordinated debentures 440,492 4,121 3.71 % 442,312 4,153 3.73 % Total interest-bearing liabilities 14,108,148 57,229 1.61 % 14,280,975 29,851 0.83 % Non-interest bearing liabilities Non-interest bearing deposits 5,423,821 5,779,082 Other liabilities 201,031 199,416 Total liabilities 19,733,000 20,259,473 Shareholders' equity 3,454,005 3,519,296 Total liabilities and shareholders' equity $ 23,187,005 $ 23,778,769 Net interest spread 3.71 % 3.79 % Net interest income and margin - FTE $ 217,683 4.21 % $ 215,541 4.05 % Home BancShares, Inc. Consolidated Net Interest Margin (Unaudited) Year Ended December 31, 2022 December 31, 2021 (Dollars in thousands) Average
BalanceIncome/
ExpenseYield/
RateAverage
BalanceIncome/
ExpenseYield/
RateASSETS Earning assets Interest-bearing balances due from banks $ 2,444,541 $ 29,110 1.19 % $ 2,596,460 $ 3,515 0.14 % Federal funds sold 1,519 25 1.65 % 71 — — % Investment securities - taxable 3,582,664 91,933 2.57 % 2,031,139 30,054 1.48 % Investment securities - non-taxable - FTE 1,178,561 36,363 3.09 % 858,503 26,017 3.03 % Loans receivable - FTE 12,940,998 728,998 5.63 % 10,375,457 572,664 5.52 % Total interest-earning assets 20,148,283 886,429 4.40 % 15,861,630 632,250 3.99 % Non-earning assets 2,405,057 1,597,355 Total assets $ 22,553,340 $ 17,458,985 LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities Interest-bearing liabilities Savings and interest-bearing transaction accounts $ 11,520,781 $ 81,061 0.70 % $ 8,716,004 $ 15,956 0.18 % Time deposits 1,033,431 4,928 0.48 % 1,087,875 8,980 0.83 % Total interest-bearing deposits 12,554,212 85,989 0.68 % 9,803,879 24,936 0.25 % Federal funds purchased 220 2 0.91 % — — — % Securities sold under agreement to repurchase 129,006 1,430 1.11 % 151,190 497 0.33 % FHLB borrowed funds 473,839 11,076 2.34 % 400,000 7,604 1.90 % Subordinated debentures 515,049 20,593 4.00 % 370,712 19,163 5.17 % Total interest-bearing liabilities 13,672,326 119,090 0.87 % 10,725,781 52,200 0.49 % Non-interest bearing liabilities Non-interest bearing deposits 5,378,906 3,924,341 Other liabilities 171,390 124,724 Total liabilities 19,222,622 14,774,846 Shareholders' equity 3,330,718 2,684,139 Total liabilities and shareholders' equity $ 22,553,340 $ 17,458,985 Net interest spread 3.53 % 3.50 % Net interest income and margin - FTE $ 767,339 3.81 % $ 580,050 3.66 % Non-GAAP Reconciliations (Unaudited) Quarter Ended Year Ended (Dollars and shares in thousands, except per share data) Dec. 31, 2022 Sep. 30, 2022 Jun. 30, 2022 Mar. 31, 2022 Dec. 31, 2021 Dec. 31, 2022 Dec. 31, 2021 EARNINGS, AS ADJUSTED GAAP net income available to common shareholders (A) $ 115,687 $ 108,705 $ 15,978 $ 64,892 $ 73,357 $ 305,262 $ 319,021 Pre-tax adjustments Merger and acquisition expenses — — 48,731 863 880 49,594 1,886 Initial provision for credit losses - acquisition — — 58,585 — — 58,585 — Fair value adjustment for marketable securities (1,032 ) 2,628 1,801 (2,125 ) (85 ) 1,272 (7,178 ) Special dividend from equity investment — — (1,434 ) — — (1,434 ) (12,500 ) TRUPS redemption fees — — 2,081 — — 2,081 — Special lawsuit settlement, net of expense (10,000 ) — — — — (10,000 ) — Recoveries on historic losses — (1,065 ) (2,353 ) (3,288 ) — (6,706 ) (5,107 ) Hurricane expense 176 — — — — 176 — Gain on securities — — — — — — (219 ) Total pre-tax adjustments (10,856 ) 1,563 107,411 (4,550 ) 795 93,568 (23,118 ) Tax-effect of adjustments (2,679 ) 393 26,396 (1,220 ) 188 22,890 (6,225 ) Total adjustments after-tax (B) (8,177 ) 1,170 81,015 (3,330 ) 607 70,678 (16,893 ) Earnings, as adjusted (C) $ 107,510 $ 109,875 $ 96,993 $ 61,562 $ 73,964 $ 375,940 $ 302,128 Average diluted shares outstanding (D) 204,179 205,135 206,015 164,196 164,306 195,019 164,858 GAAP diluted earnings per share: (A/D) $ 0.57 $ 0.53 $ 0.08 $ 0.40 $ 0.45 $ 1.57 $ 1.94 Adjustments after-tax: (B/D) (0.04 ) 0.01 0.39 (0.03 ) 0.00 0.36 (0.11 ) Diluted earnings per common share, as adjusted: (C/D) $ 0.53 $ 0.54 $ 0.47 $ 0.37 $ 0.45 $ 1.93 $ 1.83 ANNUALIZED RETURN ON AVERAGE ASSETS Return on average assets: (A/E) 1.98 % 1.81 % 0.26 % 1.43 % 1.62 % 1.35 % 1.83 % Return on average assets, as adjusted: (ROA, as adjusted) ((A+D)/E) 1.84 % 1.83 % 1.57 % 1.36 % 1.64 % 1.67 % 1.73 % Return on average assets excluding intangible amortization: ((A+C)/(E-F)) 2.15 % 1.97 % 0.31 % 1.54 % 1.75 % 1.47 % 1.96 % Return on average assets, as adjusted, excluding intangible amortization: ((A+C+D)/(E-F)) 2.00 % 1.99 % 1.70 % 1.46 % 1.76 % 1.80 % 1.86 % GAAP net income available to common shareholders (A) $ 115,687 $ 108,705 $ 15,978 $ 64,892 $ 73,357 $ 305,262 $ 319,021 Amortization of intangibles (B) 2,478 2,477 2,477 1,421 1,420 8,853 5,683 Amortization of intangibles after-tax (C) 1,867 1,854 1,854 1,049 1,054 6,624 4,220 Adjustments after-tax (D) (8,177 ) 1,170 81,015 (3,330 ) 607 70,678 (16,893 ) Average assets (E) 23,187,005 23,778,769 24,788,365 18,393,075 17,914,727 22,553,340 17,458,985 Average goodwill, core deposits & other intangible assets (F) 1,454,639 1,459,034 1,423,466 997,338 998,760 1,335,216 1,000,872 Home BancShares, Inc. Non-GAAP Reconciliations (Unaudited) Quarter Ended Year Ended (Dollars in thousands) Dec. 31, 2022 Sep. 30, 2022 Jun. 30, 2022 Mar. 31, 2022 Dec. 31, 2021 Dec. 31, 2022 Dec. 31, 2021 ANNUALIZED RETURN ON AVERAGE COMMON EQUITY Return on average common equity: (A/D) 13.29 % 12.25 % 1.78 % 9.58 % 10.63 % 9.17 % 11.89 % Return on average common equity, as adjusted: (ROE, as adjusted) ((A+C)/D) 12.35 % 12.39 % 10.83 % 9.09 % 10.72 % 11.29 % 11.26 % Return on average tangible common equity: (A/(D-E)) 22.96 % 20.93 % 2.96 % 15.03 % 16.73 % 15.30 % 18.95 % Return on average tangible common equity, as adjusted: (ROTCE, as adjusted) ((A+C)/(D-E)) 21.33 % 21.16 % 17.94 % 14.26 % 16.87 % 18.84 % 17.95 % Return on average tangible common equity excluding intangible amortization: (B/(D-E)) 23.33 % 21.29 % 3.30 % 15.28 % 16.97 % 15.63 % 19.20 % Return on average tangible common equity, as adjusted, excluding intangible amortization: ((B+C)/(D-E)) 21.70 % 21.52 % 18.29 % 14.50 % 17.11 % 19.17 % 18.20 % GAAP net income available to common shareholders (A) $ 115,687 $ 108,705 $ 15,978 $ 64,892 $ 73,357 $ 305,262 $ 319,021 Earnings excluding intangible amortization (B) 117,554 110,559 17,832 65,941 74,411 311,886 323,241 Adjustments after-tax (C) (8,177 ) 1,170 81,015 (3,330 ) 607 70,678 (16,893 ) Average common equity (D) 3,454,005 3,519,296 3,591,758 2,747,980 2,738,305 3,330,718 2,684,139 Average goodwill, core deposits & other intangible assets (E) 1,454,639 1,459,034 1,423,466 997,338 998,760 1,335,216 1,000,872 EFFICIENCY RATIO & P5NR Efficiency ratio: ((D-H)/(B+C+E)) 42.44 % 43.24 % 66.31 % 46.15 % 43.79 % 49.53 % 40.81 % Efficiency ratio, as adjusted: ((D-H-J)/(B+C+E-I)) 43.07 % 42.97 % 46.02 % 47.33 % 43.48 % 44.55 % 42.12 % Pre-tax net income to total revenue (net) (A/(B+C)) 54.50 % 55.39 % 7.92 % 52.48 % 54.94 % 42.26 % 58.66 % Pre-tax net income, as adjusted, to total revenue (net) ((A+F)/(B+C)) 50.52 % 56.00 % 52.06 % 49.67 % 55.40 % 52.28 % 55.40 % Pre-tax, pre-provision, net income (PPNR) (B+C-D) $ 153,423 $ 141,959 $ 77,857 $ 84,921 $ 93,934 $ 458,160 $ 412,023 Pre-tax, pre-provision, net income, as adjusted (B+C-D+F-G) $ 142,567 $ 143,522 $ 126,683 $ 80,371 $ 94,729 $ 493,143 $ 388,905 P5NR (Pre-tax, pre-provision, profit percentage) PPNR to total revenue (net)) (B+C-D)/(B+C) 56.34 % 55.39 % 32.00 % 52.48 % 54.94 % 49.06 % 57.99 % P5NR, as adjusted (B+C-D+F-G)/(B+C) 52.35 % 56.00 % 52.06 % 49.67 % 55.40 % 52.81 % 54.73 % Pre-tax net income (A) $ 148,423 $ 141,959 $ 19,272 $ 84,921 $ 93,934 $ 394,575 $ 416,775 Net interest income (B) 215,666 213,104 198,758 131,148 139,020 758,676 572,971 Non-interest income (C) 56,660 43,201 44,581 30,669 31,964 175,111 137,569 Non-interest expense (D) 118,903 114,346 165,482 76,896 77,050 475,627 298,517 Fully taxable equivalent adjustment (E) 2,017 2,437 2,471 1,738 1,736 8,663 7,079 Total pre-tax adjustments (F) (10,856 ) 1,563 107,411 (4,550 ) 795 93,568 (23,118 ) Initial provision for credit losses - acquisition (G) — — 58,585 — — 58,585 — Amortization of intangibles (H) 2,478 2,477 2,477 1,421 1,420 8,853 5,683 Adjustments: Non-interest income: Fair value adjustment for marketable securities $ 1,032 $ (2,628 ) $ (1,801 ) $ 2,125 $ 85 $ (1,272 ) $ 7,178 Gain on OREO 13 — 9 478 737 500 2,003 Gain (loss) on branches, equipment and other assets, net 10 (13 ) 2 16 (19 ) 15 (105 ) Special dividend from equity investment — — 1,434 — — 1,434 12,500 Gain on securities — — — — — — 219 Lawsuit settlement - special lawsuit 15,000 — — — — 15,000 — Recoveries on historic losses — 1,065 2,353 3,288 — 6,706 5,107 Total non-interest income adjustments (I) $ 16,055 $ (1,576 ) $ 1,997 $ 5,907 $ 803 $ 22,383 $ 26,902 Non-interest expense: Merger and acquisition expenses — — 48,731 863 880 49,594 1,886 Hurricane expense 176 — — — — 176 — Legal expense - special lawsuit 5,000 — — — — 5,000 — TRUPS redemption fees — — 2,081 — — 2,081 — Total non-interest expense adjustments (J) $ 5,176 $ — $ 50,812 $ 863 $ 880 $ 56,851 $ 1,886 Home BancShares, Inc. Non-GAAP Reconciliations (Unaudited) Quarter Ended Dec. 31, 2022 Sep. 30, 2022 Jun. 30, 2022 Mar. 31, 2022 Dec. 31, 2021 TANGIBLE BOOK VALUE PER COMMON SHARE Book value per common share: (A/B) $ 17.33 $ 16.94 $ 17.04 $ 16.41 $ 16.90 Tangible book value per common share: ((A-C-D)/B) 10.17 9.82 9.92 10.32 10.80 Total stockholders' equity (A) $ 3,526,362 $ 3,460,015 $ 3,498,565 $ 2,686,703 $ 2,765,721 End of period common shares outstanding (B) 203,434 204,219 205,291 163,758 163,699 Goodwill (C) 1,398,253 1,394,353 1,398,400 973,025 973,025 Core deposit and other intangibles (D) 58,455 60,932 63,410 23,624 25,045 TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS Equity to assets: (B/A) 15.41 % 14.94 % 14.43 % 14.43 % 15.32 % Tangible common equity to tangible assets: ((B-C-D)/(A-C-D)) 9.66 % 9.24 % 8.94 % 9.59 % 10.36 % Total assets (A) $ 22,883,588 $ 23,157,370 $ 24,253,168 $ 18,617,995 $ 18,052,138 Total stockholders' equity (B) 3,526,362 3,460,015 3,498,565 2,686,703 2,765,721 Goodwill (C) 1,398,253 1,394,353 1,398,400 973,025 973,025 Core deposit and other intangibles (D) 58,455 60,932 63,410 23,624 25,045