Home BancShares, Inc. (HOMB)

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Home BancShares Inc (HOMB)

Q2 2013 Earnings Conference Call

July 18, 2013 2.00 PM ET


John Allison - Chairman

Randy Sims - CEO

Randy Mayor - Treasurer and CFO

Donna Townsell - VP, Corporate Efficiencies

Brian Davis - Chief Accounting Officer and Investor Relations Officer

Kevin Hester - Chief Lending Officer


Jon Arfstrom - RBC Capital Markets

Michael Rose - Raymond James

Matt Olney - Stephens

Andy Stock – Maryland Capital

Brian Martin - FIG Partners

Kevin Reynolds – Wunderlich Securities

Joe Fenech - Sandler O’Neill



Greetings, ladies and gentlemen. Welcome to the Home BancShares Incorporated Second Quarter 2013 Earnings Call. The purpose of this call is to discuss the information and data provided in the quarterly earnings release issued this morning. The company presenters will begin with prepared remarks then entertain questions.

(Operator Instructions)

The company has asked me to remind everyone to refer to their cautionary note regarding forward-looking statements. You will find this note on page three of their Form 10-K filed with the SEC in March 2013.

At this time, all participants are in a listen-only mode, and this conference is being recorded. (Operator Instructions) It is now my pleasure to turn the call over to our first presenter, Mr. Allison.

John Allison

Thank you, Amy. Welcome to Home BancShares’ second quarter earnings release and conference call. With me today are the two Randy, Sims and Mayor; Donna Townsell, Brian Davis, and Kevin Hester, and you will be hearing from all of them

This is really been a busy quarter for our team. Not only to maintain our strong and expected performance, but along with the announcement of the Liberty transaction which add an additional $2.9 billion worth of assets. Having worked on the Liberty transaction for 10 years, I wouldn't real sure it was going to come to fruition we continue to work on other opportunities, with Florida opportunities in Arkansas I think I told you at the end of last conference call that we were leaving to go top of the seven banks in Florida and we did and we found some really great opportunities there, may be we’ll get back to those at some time. I wasn't sure the Liberty deals was going to close until it happened, it's kind of like of a fading girlfriend that I had years ago, she kind of fade in and fade out, and this one would get hot and then it disappears so I'm just going to kind of cover some of the – okay that's about the good examples I could come up with. No more, -- I am just going to hit few highlights and Randy, Sims and the team will get more specific on the numbers, but we had record ROA this quarter and also record core ROA, the numbers are really pretty nice. Efficiency ratio was extremely strong and we had improvement in our legacy asset quality, actually we had asset quality numbers ticked up a little bit, but that's as a result of Tallahassee and Tampa, the two deals we did and that is to be expected as we walk through there, had a little loan growth showed a little bit. End of period was much stronger than the average, but Kevin will talk about that in some time, they also have a pretty strong pipeline.

Interest income remained strong and the margin as you will see remained very strong. And return on tangible common equity was again strong, and earnings of $17 million or $0.31 a share. Liberty, talk a little bit about the Liberty deal. It was a great fit for Home. They have great people, operating in great markets, in great facilities and truly is a game changer deal for Home BancShares. Potentially it’s Home's best deal ever, it depends on some banks, how long it takes to bring it to our standard and did we miss anything on the asset quality side at Liberty, hopefully we didn't.

But I told you last quarter that we had more opportunities and we had time and money and again some of those deals are still out there. Maybe Randy Mayor said, Johnny, you waited eight days you brought another one. But that's not really true. I just – we're looking at some opportunities and run some numbers and my job is to focus on those deals that make the more sense for us long term.

We didn't banish stock this quarter because we were saving our money for a rainy day and looks like we found a rainy day. It looks like a found a deal, and I think I told you last time we’re going to keep our powder dry and we did do that. And we will use our liquidity to help with this transaction and Brian Davis will talk more about the numbers today on that.

On the dividend side, we have fallen – our stock run up a little below a 1.5% kind of semi-target that we have. We are not going to catch that up now, I don’t think, because we need our money for these transactions. It's our intention to pay off $52.5 million of small business lending at Liberty once that transaction closes, and $30 million in cash, so we're kind of sitting on the cash right now.

But all and all it's a great quarter, and great opportunity with the Liberty Deal, it kind again it was the game changer deal that I have looked at for some time. I'll turn it over to our CEO, Randy Sims for a better look at the numbers.

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