Home BancShares, Inc. (HOMB)

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Home BancShares, Inc. (HOMB)

Q2 2014 Earnings Conference Call

July 17 20 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

Tracy French- Regional President


Brian Zabora - Keefe, Bruyette & Woods

Matt Olney - Stephens Inc.

Kevin Reynolds - Wunderlich Securities, Inc.

Michael Rose - Raymond James & Associates

Jon Arfstrom - RBC Capital Markets

David Bishop - Drexel Hamilton

Peyton Green - Sterne, Agee & Leach, Inc.

Brian Martin - FIG Partners



Greetings, ladies and gentlemen. Welcome to the Home BancShares Incorporated Second Quarter 2014 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 and then entertain questions. 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 3 of their Form 10-K filed with the SEC in February 2014. 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

Thanks, Jerry. And welcome to Home BancShares' second quarter 2014 earnings release and conference call. With me today is Randy Sims, CEO; Randy Mayor, CFO; Brian Davis, Chief Accounting Officer; Kevin Hester, Chief Lending Officer; Donna Townsell, Vice President of Corporate Efficiencies and Tracy French, Regional President.

It was just a little over year ago we announced Home BancShares' largest acquisition ever (inaudible) Arkansas deal. The question on everyone's mind was how could Home integrate big one as efficiently as they have done that doesn't ourselves smaller transactions that they done. Only prepared can they executed as efficiently, do they have the experience, do they have the people and do they have the knowledge. Well, I guess the best way to show that is to compare second quarter 2013 just before Liberty with second quarter of 2014 with Liberty. After eight months of -- eight months later after closing and integration of $2.9 billion that was run in 0.80% ROA and efficiency ratio of almost 70% with some major asset quality concerns. Well, here we go, June 30, 2013. We are all pulling around play Conway; we are pretty playing out at Home BancShares that done a strong 1.70% ROA. And after we brought Liberty in the deal we are proud to announce that we did 1.70% for June 30, 2014. Core ROA was 1.79% last year, 1.83% this year. And our pretax pre provision ROA last year was strong 2.85% and this year is 3.27%. Return on tangible common equity last year was 16.97% and this year it's a 21.03% (Refer press release 20.94%). Efficiency ratio Donna Townsend, it was crawling around here last year this time with the 45.50% efficiency ratio and we are not thought might happen is happen we came out with the combined efficiency ratio of 41.09%. Earnings were $17.7 million last year and $28.4 this year, up $10.8 million, that is up 61%, earnings up 61%. I think it was 55% in the first quarter and 61% even stronger in this quarter. We went from $0.31 to $0.43 and I think we lack I don't know to $300,000 deficit, that's a strong $0.43, that's not weak $0.43. And while we did all these, if you remember it from a (inaudible), we really didn't working made no loan loss reserve allocations and while we this year we have added $13 million of loan loss, we have taken a loan loss reserve from 0.93% to 1.17%, that's over $6 million score that I am pretty proud of the results with that. The cause of concern over the asset quality-- the quality the assets acquired in the Liberty transaction. We mopped up portfolio over $100 million. That's the bad news. The good news is that it may not be as bad as we expected. We've had-- we've already taken many of these losses and resolved many of the issues that were outstanding. This might turn around to have positive effect earnings down the road. That's what we do. We purchase companies with poor to moderate operating methods and transformed them with the high performing companies. I want to thank the employees of the former Liberty Bank for their confidence and leadership. I know it has been fast and tough eight months but congrats to all of you, keep your heads high; you have become one of the highest performing banks in the USA. He made the translation from a poor performer to a great performer. Yes, I heard all of the naysayer but the numbers don't lie. It is what it is congrats to all Liberty and Home BancShares' employees. I love it when plan comes together. You heard me say many times if you can't push loan, it is like pushing a rope, if you can't make it happen. It is happen or it doesn't happen. And when it comes the end we will get our fair share of it. I have also heard the good times come to those who wait. Well, I guess fair term. We have a huge pipeline of approved loans. The largest pipeline in the company's history or that I can remember since we started keeping up with it. You know when you think about it for a company that doesn't involved itself in exotic risky transactions, it is a very conserved company that doesn't sell the future in terms an rate even I am totally amazed at the size of this pipeline. And from the looks at the next loan committee, it's not stopping. We are very busy on the acquisition but hoped turned out the couple more deals this year, in addition to Bud's Florida Traditions deal which could should close soon. The future for Home has never been brighter. As Liberty on the wraps, Florida Traditions closing, a couple more deals this year and the largest pipeline in the company's history. I think we are in a very positive position for the future. Randy?

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