Home Bancshares, Inc. (Conway, AR) (NASDAQ:HOMB) Q4 2019 Earnings Conference Call - Final Transcript

Jan 16, 2020 • 02:00 pm ET


Home Bancshares, Inc. (Conway, AR) (NASDAQ:HOMB) Q4 2019 Earnings Conference Call - Final Transcript


Loading Event

Loading Transcript


Greetings, ladies and gentlemen. Welcome to the Home BancShares Incorporated Fourth Quarter 2019 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 3 of their Form 10-K filed with the SEC in February 2019. 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 Donna Townsell, Director of Investor Relations.

Donna J. Townsell

Thank you, Allie. Welcome everyone to the Home BancShares 2019 fourth quarter earnings release and year-end conference call. I'm Donna Townsell, Director of Investor Relations and on behalf of the Home team, I would like to thank you for your continued support and interest in our Company.

Today you will hear from Brian Davis, our Chief Financial Officer; Chris Poulton, President of CCFG; John Marshall, President of Shore Premier Finance; Tracy French, our President and CEO of Centennial Bank; Stephen Tipton, our Chief Operating Officer of Centennial Bank and wrapping up the comments will be our Founder and Chairman, John Allison. Also with us today is Kevin Hester, our Chief Lending Officer and Jennifer Floyd.

Home BancShares' fourth quarter was the best of the year. It was the fourth consecutive quarter of earnings improvement for the year, a beat on both EPS and revenue. Coupled with the best-in-class asset quality, it resulted in $167.8 million in revenue, a 1.94% ROA and $0.44 EPS; what a great way to end the decade.

With that opening headline, I'd now like to turn the call over to Brian Davis to share some information with you about our NIM.

Brian S. Davis

Thanks, Donna. The fourth quarter was another solid quarter for our net interest income and net interest margin. On a tax equivalent basis we recorded net interest income of $141.1 million for Q4 2019, compared to $144.2 million for Q3 2019. The fourth quarter net interest margin was 4.24% compared to 4.32% for the third quarter.

Next I want to give you some color on the 8 basis point decline in margin. First, during 2019 the interest rate environment began to decline. This decline has increased the prepayment speeds on our investment security portfolio. As a result, during the fourth quarter we experienced an increase in investment premium amortization of $468,000 or a 1.4 basis point decline in margin from Q3.

Second, in the third quarter of 2019 we had several interest income events, primarily related to large payoffs. These events totaled $2.8 million of interest income and decreased the net interest margin by 8.4 basis points for the third quarter of 2019. During the fourth quarter, interest -- event interest income was $549,000 and increased the NIM by 1.7 basis points. The lower event interest