Home BancShares, Inc. (HOMB)

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Home Bancshares, Inc. (HOMB)

Q4 2013 Results Earnings Call

January 16, 2014 2:00 PM ET


John Allison - Chairman

Randy Sims - Chief Executive Officer

Randy Mayor - Chief Financial Officer

Brian Davis - Chief Accounting Officer

Kevin Hester - Chief Lending Officer

Donna Townsell - Vice President, Corporate Efficiencies

Stephen Tipton - SVP and Credit Risk Management, Centennial Bank


Jon Arfstrom - RBC Capital Markets

Michael Rose - Raymond James

Brian Zabora - KBW

Matt Olney - Stephens

Kevin Reynolds - Wunderlich Securities

Brian Martin - FIG Partners

Peyton Green - Sterne Agee

Eric Grubelich - Highlander Bank Holdings



Greetings, ladies and gentlemen. Welcome to the Home BancShares Incorporated Fourth 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 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

Thanks, Laura. Welcome everyone to Home Bancshares fourth quarter and year end 2013 conference call and earnings release. With me today is regularly team, Randy, Randy, Brian, Kevin and Donna, and they will all give you their perspectives in a little bit on the fourth quarter and maybe some comments on the whole year.

First of all, I would like to tell you the -- I’d like to announce that Bob Birch, one of our Regional President slipped and fell last week. And I guess, he hurt at the rack of rib. I think he broke the rack of rib. So, Bob’s in good shape. He is doing well but he will be out for couple of weeks and we look forward to getting him back. In the meantime, his number one guy, Gordon Silaski has got that under toe in running the company in Noroxin, Orlando.

Well, for the quarter, what a year it was, game changing for Home. Let me take this opportunity to welcome all of our shareholders of Liberty. I’ll like making 764,242 shares. You are now part of one of the highest performing banking organizations in American. This company has run for the benefit of the shareholders, the employee, the customers and the communities in which we serve. You will see this management is aggressive, smart and experience with lots of skill and gain, and they will make the decisions that are in the best interest of all of us.

You’d probably saw in the report that we made one large -- we made a one-time large, one-time charge of $17 plus million in the fourth quarter. That was primarily overpass the redundant contracts, as well as long-term expensive commitments that were resolved by taking this charge. These expenses are over and we will not carry them on our back into 2014. I have to say that we are well on our way to completing our objectives for Liberty for 2014 and we are way ahead of schedule.

There are still a lot of crops in the field to harvest over the next year and we are taking them one at the time. Some of the areas we have not addressed as of yet, we will be addressing in the first three to six months of ’14 and some of the -- our other team members will report about expense side thus far.

Because where our data center was located, we lost some really good talented people in different markets. We wish them the best in the future. We just couldn’t have three catchers and three first [basement] in the game at the same time. But the quality of the Liberty employees that are still with us is superb and I am extremely impressed with their work ethic and the leadership.

There is always disruption as result of mergers and acquisitions. We understand this because of our 13 previous deals at Home and our 20 previous deals we did at our former company.

We deal with these problems immediately and then we move on for team building. Other than a few amount of bumps in the row, this one is going fairly smooth. Liberty was a 0.8, 0.9 ROA performer, none of our regions performed at those levels.

Keys -- our Florida key operations almost the 2, our Florida operations running at 1.4 and you remember those were fell back. Alabama at 1.6 and Arkansas 2 plus. Once Liberty is brought to our minimum performance standards of 1.5, calculate what, excuse me, I am not going to calculate, but our counter stone like me to do that, but you can do the math on a 1.5 ROA and that’s just a starting point.

Well, margin efficiency and loan growth. How is it going? All I can say is good, good, good. I have been -- I am very happy with the covered pools, that’s been something, it’s kind of been a question mark for all of us and I think anybody who don’t field bank is concerned about what impact that might make. But I am very happy with it.

At this point the positive impairments far out way the negative impairments. Keep your fingers cross, but I think we are in good share, so far, so good and congrats to our loan team.

So far as deals, deals are everywhere, Arkansas and Florida, more important than they are in Arkansas. Once the Liberty is fixed, how we will move on to the next deal, if January results, what I am expecting, I will become very active in the month of February.

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