The previous version of an earnings release issued under the same headline earlier today by Home BancShares, Inc. (NYSE: HOMB) included an error in the registration link for the live conference call. The correct link is: https://www.netroadshow.com/events/login?show=17d9ca49&confId=75610 and is now reflected in the Conference Call section of the earnings release below:
HOMB Run in '24. Company Completes Texas Loan Cleanup and Cleans the Asset Bases for '25, While Hitting New Records of $1 Billion in Revenue and $400 Million in Earnings
CONWAY, Ark., Jan. 15, 2025 (GLOBE NEWSWIRE) -- Home BancShares, Inc. (NYSE: HOMB) ("Home” or the "Company”), parent company of Centennial Bank, released quarterly earnings today.
| Quarterly Highlights | |||||
| Metric | Q4 2024 | Q3 2024 | Q2 2024 | Q1 2024 | Q4 2023 |
| Net income | $100.6 million | $100.0 million | $101.5 million | $100.1 million | $86.2 million |
| Net income, as adjusted (non-GAAP)(1) | $99.8 million | $99.0 million | $103.9 million | $99.2 million | $92.2 million |
| Total revenue (net) | $258.4 million | $258.0 million | $254.6 million | $246.4 million | $245.6 million |
| Income before income taxes | $129.5 million | $129.1 million | $133.4 million | $130.4 million | $112.8 million |
| Pre-tax, pre-provision, net income (PPNR) (non-GAAP)(1) | $146.2 million | $148.0 million | $141.4 million | $134.9 million | $118.4 million |
| PPNR, as adjusted (non-GAAP)(1) | $145.2 million | $146.6 million | $141.9 million | $133.7 million | $126.4 million |
| Pre-tax net income to total revenue (net) | 50.11% | 50.03% | 52.40% | 52.92% | 45.92% |
| Pre-tax net income, as adjusted, to total revenue (net) (non-GAAP)(1) | 49.74% | 49.49% | 52.59% | 52.45% | 49.16% |
| P5NR (Pre-tax, pre-provision, profit percentage) (PPNR to total revenue (net)) (non-GAAP)(1) | 56.57% | 57.35% | 55.54% | 54.75% | 48.22% |
| P5NR, as adjusted (non-GAAP)(1) | 56.20% | 56.81% | 55.73% | 54.28% | 51.46% |
| ROA | 1.77% | 1.74% | 1.79% | 1.78% | 1.55% |
| ROA, as adjusted (non-GAAP)(1) | 1.76% | 1.72% | 1.83% | 1.76% | 1.66% |
| NIM | 4.39% | 4.28% | 4.27% | 4.13% | 4.17% |
| Purchase accounting accretion | $1.6 million | $1.9 million | $1.9 million | $2.8 million | $2.3 million |
| ROE | 10.13% | 10.23% | 10.73% | 10.64% | 9.36% |
| ROE, as adjusted (non-GAAP)(1) | 10.05% | 10.12% | 10.98% | 10.54% | 10.00% |
| ROTCE (non-GAAP)(1) | 15.94% | 16.26% | 17.29% | 17.22% | 15.49% |
| ROTCE, as adjusted (non-GAAP)(1) | 15.82% | 16.09% | 17.69% | 17.07% | 16.56% |
| Diluted earnings per share | $0.51 | $0.50 | $0.51 | $0.50 | $0.43 |
| Diluted earnings per share, as adjusted (non-GAAP)(1) | $0.50 | $0.50 | $0.52 | $0.49 | $0.46 |
| Non-performing assets to total assets | 0.63% | 0.63% | 0.56% | 0.48% | 0.42% |
| Common equity tier 1 capital | 15.1% | 14.7% | 14.4% | 14.3% | 14.2% |
| Leverage | 13.0% | 12.5% | 12.3% | 12.3% | 12.4% |
| Tier 1 capital | 15.1% | 14.7% | 14.4% | 14.3% | 14.2% |
| Total risk-based capital | 18.7% | 18.3% | 18.0% | 17.9% | 17.8% |
| Allowance for credit losses to total loans | 1.87% | 2.11% | 2.00% | 2.00% | 2.00% |
| Book value per share | $19.92 | $19.91 | $19.30 | $18.98 | $18.81 |
| Tangible book value per share (non-GAAP)(1) | 12.68 | 12.67 | 12.08 | 11.79 | 11.63 |
"The fourth quarter was a strong finish to 2024, pushing us across the finish line to our first $400 million year in earnings. I'm always proud of the strength of our company, but I'm especially proud of a quarter where margin is up, legacy loans are up, deposits are up, revenue is up, earnings are up, and we managed to swallow an asset quality cleanup that began with legacy loans from Happy Bank and led to a company-wide cleanup. Our strong balance sheet, capital and loan loss reserve allowed us to make a proactive cleanup that puts this in the rear-view mirror for HOMB and sets us up for an even greater year in 2025,” said John Allison, Chairman and CEO of HOMB.
Operating Highlights
Net income for the three-month period ended December 31, 2024 was $100.6 million, or $0.51 diluted earnings per share. When adjusting for non-fundamental items, net income and diluted earnings per share on an as-adjusted basis (non-GAAP), were $99.8 million(1) and $0.50 per share(1), respectively, for the three months ended December 31, 2024.
During the quarter ended December 31, 2024, the Company recorded an additional $16.7 million in credit loss expense as a result of Hurricanes Helene and Milton. This provision, along with the $16.7 million provision recorded during the third quarter of 2024, brings our total hurricane reserve to $33.4 million. The two hurricanes spanned across the third and fourth quarters, and the amount of time it takes for customers to settle with insurance will no doubt increase, with two back-to-back events. As of December 31, 2024, the Company had $110.9 million in loans on deferral as a result of the two hurricanes. No additional provision for credit losses on loans was recorded for the quarter ended December 31, 2024, as the current level of reserves was considered adequate for the loan portfolio.
Our net interest margin was 4.39% for the three-month period ended December 31, 2024, compared to 4.28% for the three-month period ended September 30, 2024. The yield on loans was 7.49% and 7.60% for the three months ended December 31, 2024 and September 30, 2024, respectively, as average loans increased from $14.76 billion to $14.80 billion. Additionally, the rate on interest bearing deposits decreased to 2.80% as of December 31, 2024, from 3.02% as of September 30, 2024, while average interest-bearing deposits decreased from $12.87 billion to $12.86 billion.
During the fourth quarter of 2024, the Company paid off its $700.0 million advance from the Federal Reserve's Bank Term Funding Program ("BTFP”). This improved the net interest margin by six basis points. In addition, during the fourth quarter of 2024, there was $1.5 million of event interest income compared to $573,000 of event interest income for the third quarter of 2024. This was accretive to the margin by two basis points.
Purchase accounting accretion on acquired loans was $1.6 million and $1.9 million for the three-month periods ended December 31, 2024 and September 30, 2024, respectively, and average purchase accounting loan discounts were $19.1 million and $20.8 million for the three-month periods ended December 31, 2024 and September 30, 2024, respectively.
Net interest income on a fully taxable equivalent basis was $219.5 million for the three-month period ended December 31, 2024, and $217.8 million for the three-month period ended September 30, 2024. This increase in net interest income for the three-month period ended December 31, 2024, was the result of a $12.1 million decrease in interest expense, partially offset by a $10.3 million decrease in interest income. The $12.1 million decrease in interest expense was due to a $7.2 million decrease in interest expense on deposits and a $4.8 million decrease in FHLB and other borrowed funds resulting from the payoff of the BTFP advance. The $10.3 million decrease in interest income was primarily the result of a $4.5 million decrease in income from deposits with other banks resulting from the payoff of the BTFP advance and the declining interest rate environment. In addition loan interest income decreased by $3.6 million and investment income decreased by $2.3 million. The overall decrease in interest income and interest expense is primarily due to the declining interest rate environment as well as the reduction in the average interest earning assets and liabilities.
The Company reported $41.2 million of non-interest income for the fourth quarter of 2024. The most important components of fourth quarter non-interest income were $11.7 million from other service charges and fees, $9.9 million from service charges on deposit accounts, $8.4 million from other income, $4.5 million from trust fees, $3.5 million in mortgage lending income, $2.8 million from dividends from FHLB, FRB, FNBB and other, $1.2 million from the increase in cash value of life insurance and $850,000 from the fair value adjustment for marketable securities. This was partially offset by a $2.4 million loss on OREO.
Non-interest expense for the fourth quarter of 2024 was $112.2 million. The most important components of non-interest expense were $60.8 million from salaries and employee benefits, $27.5 million in other operating expense, $14.5 million in occupancy and equipment expenses and $9.3 million in data processing expenses. For the fourth quarter of 2024, our efficiency ratio was 42.24%, and our efficiency ratio, as adjusted (non-GAAP), was 42.00%(1).
Financial Condition
Total loans receivable were $14.76 billion at December 31, 2024, compared to $14.82 billion at September 30, 2024. Total deposits were $17.15 billion at December 31, 2024, compared to $16.71 billion at September 30, 2024. Total assets were $22.49 billion at December 31, 2024, compared to $22.82 billion at September 30, 2024.
During the fourth quarter of 2024, the Company had a $59.5 million decline in loans. Our community banking footprint experienced $121.1 million in organic loan growth during the quarter ended December 31, 2024, and Centennial CFG experienced $180.4 million of organic loan decline and had loans of $1.82 billion at December 31, 2024.
Non-performing loans to total loans were 0.67% and 0.68% at December 31, 2024 and September 30, 2024, respectively. Non-performing assets to total assets were 0.63% at both December 31, 2024 and September 30, 2024. Net charge-offs were $53.4 million and $1.5 million for the three months ended December 31, 2024 and September 30, 2024, respectively. As previously noted, during the fourth quarter of 2024, the Company completed an asset quality cleanup project. The charge-off detail by region for the fourth quarter of 2024 can be seen below.
| (in thousands) | Texas | Arkansas | Centennial CFG | Shore
Premier Finance | Florida | Alabama | Total | ||||||||||||||||||||
| Charge-off | $ | 47,774 | $ | 2,108 | $ | 1,973 | $ | 1,457 | $ | 637 | $ | 10 | $ | 53,959 | |||||||||||||
| Recovery | 174 | 181 | - | 15 | 193 | 2 | 565 | ||||||||||||||||||||
| Net charge-offs | $ | 47,600 | $ | 1,927 | $ | 1,973 |
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