HOMB’s Disciplined Strategy Leads to a Beat of Management Expectations Despite Continued West Texas Headwinds

Source: Nasdaq GlobeNewswire / 19 Jan 2023 08:15:01 America/New_York

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%
P5_NR (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) 328-4625

Home 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	%
P5_NR (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	%
P5_NR, 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 Balance		Income/ Expense		Yield/ Rate		Average Balance		Income/ Expense		Yield/ Rate
ASSETS
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 Balance		Income/ Expense		Yield/ Rate		Average Balance		Income/ Expense		Yield/ Rate
ASSETS
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
P5_NR (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	%
P5_NR, 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

HOMB’s Disciplined Strategy Leads to a Beat of Management Expectations Despite Continued West Texas Headwinds

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