Conway bank has record quarter

Centennial owner tops expectations

Home BancShares, which owns Centennial Bank offices in Arkansas, Florida and Alabama, reported a record net income of $17.5 million in the first quarter, up 21 percent from $14.5 million in the first quarter last year, the Conway bank said Thursday.

The bank had earnings of 62 cents per share for the quarter, up from 51 cents in the first quarter last year, beating the projected earnings of 61 cents a share from a Bloomberg News survey of six analysts.

Home BancShares rose 16 cents a share to close Thursday at $38.15 in trading on the Nasdaq exchange.

It was the eighth-straight quarter the bank has reported the most profitable quarter in its history, John Allison, the bank’s chairman, said during a conference call Thursday.

Loans were down about $10 million in the first quarter compared with the same period last year, Allison said.

Finding good loan opportunities has been a problem for all the publicly traded banks in Arkansas, said Matt Olney, an analyst with Stephens Inc. Olney owns no stock in Home Banc-Shares. Stephens expects to seek compensation from the bank for investment-banking services in the next three months.

“This environment is not presenting too much opportunity for loan growth,” Olney said. “Most banks’ loan growth will be below [analysts’ expectations] this quarter.”

Home BancShares could make one or two acquisitions this year, Allison said.

There are 14 banks in Florida with $3 billion in assets or less that are for sale, Allison said. Home BancShares has studied those and decided to do more research on seven of them.

Executives with Home BancShares will visit the seven banks next week to get more information, Allison said.

Being a geographic fit with Home BancShares is one of the major factors the bank considers in buying a bank, Allison said. Other considerations are how profitable the purchase would be for Home BancShares, the condition of the target bank’s balance sheet and Home BancShares ability to make loans in the new market, Allison said.

Home BancShares also considers whether the seller is realistic on the price it wants, Allison said.

Another important consideration is whether the bank being purchased has a good management team that can bring business to Home BancShares, said Randy Sims, chief executive officer of the Conway bank.

Home BancShares is targeting potential acquisitions in the $100 million to $1 billion asset range, Olney said in a recent research report on the bank. Allison said Thursday that Home BancShares has the capital to buy a bank with $3 billion in assets if it is a good fit.

Even though most of the bank’s previous acquisitions have been failed banks, Home BancShares is most likely to focus on more traditional purchases of healthy banks this year, Olney said.

The bank plans to open a branch in Pensacola, Fla., this spring and one in Seagrove, Fla., this summer. Before those additions, Centennial has 54 branches in Florida, 46 in Arkansas and seven in Alabama.

Business, Pages 25 on 04/19/2013

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