Home Bancshares, Inc. (Conway, AR) (NASDAQ:HOMB) Q3 2019 Earnings Conference Call Transcript

Oct 17, 2019 • 02:00 pm ET

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Home Bancshares, Inc. (Conway, AR) (NASDAQ:HOMB) Q3 2019 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Greetings, ladies and gentlemen. Welcome to the Home BancShares Incorporated Third Quarter 2019 Earnings Call. The purpose of this call 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 3, of their Form 10-K filed with the SEC in February 2019. [Operator Instructions] It is now my pleasure to turn the call over to Mr. Allison.

Executive
John W. Allison

Thank you, Jeff. Good afternoon everyone and welcome to Home BancShares Third Quarter 2019 Earnings Release and Conference Call. With me today is Tracy and Chris and John are on the phone. Brian Davis, Jennifer, Randy, Donna, Kevin and Steven and they all will be available after the presentation. Some of them will be presenting today. The quarter was now noisy, lot of moving parts, including we chose to call a $47.5 million BOLI. The result of which we had a one-time $3.7 million tax associated with it. The yield was -- I don't remember the exact [Indecipherable] that team, so we decided to call, we think we can do better with the money.

There were elevated pay-offs in this quarter and will continue into the next several quarters. Several years ago we instituted prepayments on many of our credit and that decision has elevated our income for this quarter and will continue in the future. We will remain disciplined on both loan rates and terms and not fall in the trap of being categorized as stupid binder. If we are correct, we think there is a little slowdown in the market and we're not opposed to that. We normally originated about $852 million a quarter, but this quarter we only originated $710 million, with New York doing $248 million of that at 6.52% and [Indecipherable] doing $462 million at 5.63%. There were less opportunities in most of our markets and many banks are racing after those few deals that are out there. It appears to be a race to the dumbest, we call it -- they're just giving the stuff away, with rights from both banks and [Indecipherable] often subors, coupled that with 10-year interest-only, add in little non-recourse and give 80% leverage and he won that deal. Congratulations, you have just won the stupid war. Excuse me, with banks and bankers are collapsing rates in terms, like a pup tent in a Hurricane.

We're going to do the right thing here and not sacrifice our future for short-term brag around. We have made the decision that let $300 million to $400 million loss because the right term and leverage are not conducive to long-term profitability of our Company. Higher leverage, longer term, low rate is the recipe that most of the crowd appears to be following. Warm Buffet said there is the tendency of executives to madlessly imitate the behavior