Centennial Bank's owner earns $31.1M

Firm’s first quarter up 14%

Home BancShares, which owns Centennial Bank branches in three states, earned $31.1 million in the first quarter, the Conway firm said Thursday.

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Arkansas Democrat-Gazette

Graphs showing Home BancShares first quarter information.

Net income was up almost 14 percent for the quarter compared with the same period last year.

The bank earned 46 cents a share, slightly below the estimate of 47 cents projected by nine analysts surveyed by Thomson Reuters.

Home BancShares stock fell 22 cents Thursday to close at $34.25 in average trading on the Nasdaq exchange.

It was the 16th straight quarter that earnings were the highest in the company's history, said Randy Sims, chief executive officer.

After buying two banks last year and a total of 12 since 2010, Home BancShares bid on three more banks this week, said John Allison, the bank's chairman.

The three banks range in size from about $250 million to about $1.5 billion in assets, Allison said. The targeted banks are in Florida and Arkansas, Allison said.

"I'm optimistic we may bring some of them home," Allison told analysts during a conference call Thursday. "We're not going to get stupid like some of these people do. We're remaining very disciplined. We're not the highest bidder, I'm sure, but we're the best bidder."

Home BancShares has more ownership by executives and directors than any of its major bidding competitors have, Allison said.

"If you have skin in the game, you're spending your own money," Allison said. "And if you don't have skin in the game, you're spending other peoples' money. And it's not necessarily the price that you get but the quality of the stock that you get and the performance."

Lending for the quarter was slow for Home BancShares, just as it typically is for banks across the country in the first quarter, said Matt Olney, a banking analyst with Stephens Inc.

Loans not covered by loss-share agreements with the federal government were up 2.4 percent in the first quarter, which was less than the 5.1 percent growth in the fourth quarter last year and 10.9 percent in the third quarter.

The bank announced this month that it had acquired $289 million in national commercial real estate loans from the failed Doral Bank of San Juan, Puerto Rico. It hired two former Doral executives and will open a lending office in New York.

Home BancShares didn't originally intend to open the New York office, Olney said.

"They were doing due diligence on a failed bank a few months ago and came across a group of lenders," Olney said. "The more they talked with these lenders the more they thought they fit exactly what Home BancShares wanted to do, growing loans at a nice pace with good credit quality."

The move shows Home BancShares is more interested in growing earnings than worrying where those earnings are geographically, Olney said.

Home BancShares is likely to continue its "scrappy" approach to expansion this year, Olney said.

"I think they'll look at a number of different options," he said. "I think it's all on the table for them right now."

Home BancShares' efficiency ratio was 41.41 percent in the first quarter compared with 41.87 percent in the fourth quarter last year. That means it costs Home BancShares $41.41 to earn $100. One goal of the bank is to reduce the ratio below 40 percent.

Centennial Bank has 82 branches in Arkansas, 60 in Florida and seven in Alabama. The bank has 63 percent of its assets in Arkansas, 33 percent in Florida and 4 percent in Alabama, Sims said.

Business on 04/17/2015

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