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

Jan 16, 2020 • 02:00 pm ET

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

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Presentation
Executive
Brian S. Davis

income from Q3 to Q4 resulted in a 6.7 basis point decline for the margin.

Third, the accretion income for the fair value adjustments recorded in purchase accounting was $9.1 million during Q4 compared to $8.5 million during Q3 for an increase of $670,000. This increased our NIM by 2 basis points.

To wrap it up in conclusion, the 1.4 basis point decline for increased premium amortization for investments plus the 6.7 basis point decline for lower interest events offset by the 2 basis point improvement from accretion totaled a margin decline of 6.1 basis points. With that said, net interest margin was only down 2 basis points on an apples-to-apples comparison.

Finally, I'd like to switch over from the quarter to the year. Our net interest margin for 2018 was 4.42% versus 4.29% for 2019 for a decline of 13 basis points. During 2019, we experienced a decline in our event income of $3.9 million, a decline in our accretion income of $5.6 million and an increase in our investment premium amortizations of $2 million. The total of these three items was $11.4 million or 9 basis points of the 13 basis point decline in net interest margin.

Donna, I'll turn the call back over to you.

Executive
Donna J. Townsell

Thank you, Brian. An apples-to-apples comparison on the NIM is very helpful. Now, we will hear from Chris Poulton about our CCFG division.

Executive
Christopher C. Poulton

Thank you, Donna, and good afternoon. During the fourth quarter, we closed out a strong production year at CCFG. Over this past year, I highlighted our healthy pipeline, which resulted in record new loan originations of approximately $1.1 billion for 2019. For the fourth quarter we originated $384 million in new loans while payoffs in the commercial real estate book slowed a bit, resulting in an overall net loan growth of about $95 million.

Our LA production office continues to be a significant contributor accounting for approximately 40% of production this quarter and just over 35% for the full year. Over time, we expect this region to account for approximately 35% of the overall CRE portfolio.

In addition, we saw increased draws from facilities and other prior commitments as the higher originations over the prior four quarters has started to show up in our net loan balances. We continue to see good demand in our loan pipeline and looking ahead net loan growth will continue to depend on these new originations, plus increased draws on existing commitments currently standing at about $1 billion of future potential fundings and a continued stabilized level of payoffs.

Thank you, Donna. That concludes my remarks from CCFG.

Executive
Donna J. Townsell

Thank you, Chris. Now we will go from land to sea and we will turn the call over to John Marshall to hear about Shore Premier.

Executive
John Marshall

Thank you, Donna, and good afternoon. I always look forward to providing a quarterly update for Shore Premier Finance. The fourth quarter was good for marine and good for the Bank.

To place our performance in proper perspective, let's take