Home BancShares(HOMB) - 2022 Q2 - Quarterly Report

Financial Performance - The company reported a net income of $20.5 million for the six months ended June 30, 2022, compared to $18.3 million for the same period in 2021, representing a growth of about 12%[14]. - Net income for the six months ended June 30, 2022, was $80,870,000, compared to $170,672,000 for the same period in 2021, reflecting a decrease of approximately 52.6%[26]. - Net income for the three months ended June 30, 2022, was $15,978,000, a decrease of 79.8% compared to $79,070,000 for the same period in 2021[17]. - Basic earnings per share for the three months ended June 30, 2022, was $0.08, down from $0.48 in the same period of 2021[15]. - Basic earnings per common share for the three months ended June 30, 2022, was $0.47, up from $0.17 in the same period of 2021, representing a growth of 176.5%[67]. Asset Growth - Total assets increased to $24.25 billion as of June 30, 2022, compared to $18.05 billion at the end of 2021, reflecting a growth of approximately 34%[13]. - Loans receivable rose to $13.92 billion, up from $9.84 billion, marking an increase of about 41% year-over-year[13]. - Total deposits grew to $19.58 billion, a significant increase from $14.26 billion, representing a growth of approximately 37%[13]. - Stockholders' equity reached $3.50 billion, up from $2.77 billion, reflecting an increase of approximately 27%[13]. Credit Losses and Provisions - The allowance for credit losses increased to $294.27 million from $236.71 million, indicating a rise of about 24%[13]. - The company reported a provision for credit losses on acquired loans of $45,170,000 for the three months ended June 30, 2022[15]. - The allowance for credit losses on total loans receivable was $294.3 million as of June 30, 2022, compared to $236.7 million at December 31, 2021[87]. - The company recorded a $16.8 million increase in the allowance for credit losses related to purchased credit-deteriorated (PCD) loans following the acquisition of Happy on April 1, 2022[102]. Acquisition and Market Expansion - The company plans to expand into new markets through potential acquisitions, including the recent acquisition of Happy Bancshares, Inc.[8]. - The company completed the acquisition of Happy Bancshares, resulting in the issuance of approximately 42.4 million shares of common stock[20]. - The acquisition of Happy Bancshares, Inc. was completed on April 1, 2022, with a total transaction value of approximately $962.5 million, including the issuance of 42.4 million shares valued at $958.8 million[51]. - The Company expects to drive synergies and growth through the integration of Happy's operations and market expansion[51]. Income and Expenses - Total interest income for the three months ended June 30, 2022, was $217,013,000, an increase of 40.5% compared to $154,481,000 for the same period in 2021[15]. - Non-interest income for the three months ended June 30, 2022, was $44,581,000, a 43.3% increase from $31,120,000 in the same period of 2021[15]. - Total non-interest expense for the six months ended June 30, 2022, was $242,378,000, up 66.1% from $145,848,000 in the previous year[15]. - The company incurred merger and acquisition expenses totaling $49.6 million for the six months ended June 30, 2022, reflecting ongoing strategic initiatives[157]. Loan Portfolio and Quality - Total loans receivable increased to $13.92 billion as of June 30, 2022, up from $9.84 billion at December 31, 2021, with significant growth in commercial real estate loans[87]. - The company’s loan portfolio includes construction and land development loans, with a maximum loan-to-value ratio of 85% for improved property[97]. - The company tracks credit quality indicators including net charge-offs and non-performing loans across several states, including Arkansas and Texas[112]. - The risk rating distribution indicates a concentration in risk rating 3 and 4 across various loan categories[114]. Regulatory and Compliance - Management highlighted the importance of navigating regulatory changes and maintaining competitive advantages in the banking industry[8]. - The Company’s common equity Tier 1 risk-based capital ratio was 12.78% as of June 30, 2022, indicating compliance with capital adequacy requirements[179]. Taxation - The effective income tax rate for the three months ended June 30, 2022, was 17.09%, down from 24.07% in the same period of 2021[147]. - The company’s total deferred income tax expense for the first half of 2022 was $(18.65) million, compared to $3.31 million in the first half of 2021, indicating a significant change in deferred tax liabilities[147]. Stock and Dividends - Cash dividends for common stock were $0.165 per share for the periods reported[20]. - The company repurchased 1,212,732 shares of common stock at a weighted-average price of $21.89 per share during the first six months of 2022, with a total of 18,874,067 shares repurchased since the program's inception[150].