Categories

A sample text widget

Etiam pulvinar consectetur dolor sed malesuada. Ut convallis euismod dolor nec pretium. Nunc ut tristique massa.

Nam sodales mi vitae dolor ullamcorper et vulputate enim accumsan. Morbi orci magna, tincidunt vitae molestie nec, molestie at mi. Nulla nulla lorem, suscipit in posuere in, interdum non magna.

What is accrual accounting used for in finance?

A:

Accrual accounting is also known as the accrual basis, or accrual method, of accounting. Its basic premise holds that transactions should be recorded when they occur and not when payments are actually received. Financial accounting, which forms the basis for constructing financial statements, relies heavily on the accrual basis. Accrual accounting is the alternative to the cash basis of accounting, which records revenues and expenses when cash changes hands.

The accrual method is required for (and favored by) most medium and large businesses, relegating cash accounting to small businesses and individuals. Certain financial arrangements create timing gaps between the provision of a service or good and the actual payment for the service or good; perhaps the most common example is a credit account or business loan. These payments may not actually be received during the same accounting period, necessitating the use of accounts payable and accounts receivable to track projected inflows and outflows. Under cash accounting, businesses that sell on credit are not able to report sales until the money is collected.

With accrued income and accrued expenses able to reflect business activity more accurately, investors and lenders have a better grasp of the operational efficacy and overall leverage of a company. The accrual method additionally requires that expenses and revenues match, which complements the matching principle as laid out in generally accepted accounting principles and reflected in the income statement and balance sheet.

Accruals can also be used for taxes and wages, helping to ensure that the full amount of these expenses is recognized. Managers and owners tend to prefer the accrual method because it provides a more accurate reflection of monthly expenditures and profit. For the most part, however, businesses do not have a choice. The Internal Revenue Service (IRS) requires that businesses use accrual accounting once they get big enough, and any business with an inventory must use the accrual method. Only qualifying small businesses can elect to choose between cash and accrual, and they must stick with their decision.

Smaller operations historically favored the cash basis of accounting due to its ease of use. While accrual accounting may have compelled the hiring of an accountant, cash basis accounting could often be handled with a small team or even by the sole proprietor him or herself. The permeation of enterprise software that can perform accrual accounting, such as QuickBooks, is slowly changing the small business reliance on cash accounting.

One negative consequence of the accrual basis of accounting stems from its tendency to ignore time. If a company relies heavily on credit accounts to generate sales, the accrual method does not provide an accurate account of real cash flow. This can cause problems if the company does not track cash flow separately and have an effective accounts receivable collections operation. This can also be of concern to investors and lenders that might see great revenue numbers listed on the income statement, only to later find out that collections were lacking and that the company cannot maintain operations. This is one of the reasons why the statement of cash flows is considered a core financial document.

[…]

Cash flow management issue for businesses of any size

Cash flow management can be a problem for any business. The income statement may indicate a profit, but an underlying condition can show up when the business runs out of cash. The worst symptom is an overdrawn notice from the bank. A lack of operating funds is common and repeatedly the cause of business failure.

Small businesses are vulnerable to cash flow problems since they frequently operate with little or no cash reserves. Sometimes, the owner is too busy to notice negative cash flow. In its simplest form, cash flow literally refers to the movement of cash into and out of the business. Cash flow management includes identifying both the sources and uses of cash. Even if it is possible to raise more money from other sources, such as the owner’s personal funds, sooner or later the timing of cash inflows must match the outflows if the business is to survive. A good tool to have is accounting software such as QuickBooks, Sage One, or FreshBooks that allow the owner to have Internet access to financial reports. Cash flow management can easily become a daily or weekly routine. It’s crucial to enter the data correctly in the accounting software and most programs offer tutorials and online help.

A deficit needs to be addressed when there is negative cash flow. Two options exist: Spend less or increase revenues. Many small businesses struggle to get spending under control. Oftentimes, they do not have proper expense management policies in place. If spending less isn’t an option, it may be time to look at accounts receivable and inventory. Collections could be made sooner or less cash can be tied up in inventory. For certain types of businesses that have substantial accounts receivable, the owner might be able to utilize a factoring provider to gain immediate access to revenues. Trade credit is another avenue to slow cash outflows by asking suppliers if they offer extended terms or special financing.

When a mature business needs help with their current cash flow situation, sometimes another set of eyes can spot problems and offer solutions. The Small Business Development Center offers assistance to businesses that may be struggling by helping them to understand their financial statements and identify areas for improvement. Sometimes a small loan or line of credit can be in order, and a business plan will help persuade a lender. Ultimately it is about understanding the business’s cash flow cycle. A controlled cash flow will more than repay the time and effort given to achieve it. It may save the life of the business.

Gordon Smith is a business specialist at the Small Business Development Center at Clovis Community College. Call the center at 769-4136 or visit www.nmsbdc.org/clovis

Share this post:

[…]

Lease or Loan? What You Need to Know to Decide

When farmers consider acquiring equipment, they often think of their payment option as a “lease versus buy” decision. In any economic environment, when preserving owner or shareholder capital is an important goal, financing equipment through a lease or loan will enable your business to preserve its cash.

Choosing Your Financing Option

Whether you finance equipment through a lease or loan, each has its advantages. In evaluating your options, it is important to look at each alternative to determine which will best balance usage, cash flow and your financial objectives. To help determine the most appropriate option, consider the following questions.

10 Considerations in a Lease or Loan Decision:

1. How long will the equipment be required?

Generally speaking, if the length of time the equipment is expected to be used is short term (which usually means 36 months or less), leasing is likely the preferable option. Equipment expected to be used for longer than three years could be a candidate for either a lease or a loan.

2. What is the monthly budget for the equipment?

As with any ongoing business expense, consider the monthly cost for a piece of equipment and how it fits into your budget. In general, leasing will provide lower monthly payments.

3. Will the equipment become obsolete while it is still needed for the operation?

Protection against obsolescence is one of the many benefits of equipment leasing, since the risk of obsolescence is assumed by the lessor. Certain lease financing programs allow for technology upgrades and/or replacements within the term of the lease contract.

4. Is the equipment going to be used for a specific contract or can it be used for other projects?

Often, the business objective of equipment is for it to be revenue-producing. If a piece of equipment has limited use within a specific contract and won’t be used for other projects, it’s not ideal for it to be idle while you continue to make payments on it. It makes sense to stop the equipment expense when the income from it ceases, which you can do with a lease.

5. How much cash would be required up front for a lease and for a loan?

Leasing can often provide 100 percent financing of the cost of the equipment as well as the costs for transportation, delivery, installation set-up, testing and training, and other deferred costs (e.g., sales tax). Loans usually require a down payment and don’t include the other cost benefits. Ask how much of a down payment is needed and assess the availability and desirability of allocating company capital for that down payment.

6. Can the company use the depreciation or would the company get a greater benefit from expensing the lease payments?

The tax treatment of the financing arrangement is an important consideration in choosing between a lease and a loan. A loan provides you with the depreciation tax benefit; with a lease, the lessor owns the equipment and realizes the tax benefit, which is usually reflected in a lower monthly rent payment for your business as well as the ability to expense the payment. In many instances, if your business cannot use the tax benefit, it makes more sense to lease than to purchase through a loan because you can trade the depreciation to the lessor in exchange for better cash flow.

7. How will a working capital facility be impacted?

Many businesses have an aggregate line of credit through a bank that they can use for inventory purchases, improvements and other capital expenditures. Depending on the lending covenants, it is often possible, as well as preferable, to preserve your bank working capital by leasing equipment through an equipment finance provider.

8. How flexible does your business want the financing terms to be?

A lease can provide greater flexibility, since it can be structured for a variety of contingencies, whereas with a loan, flexibility is subject to the lender’s rules. If your business has continuing use for the equipment at lease termination, extended rentals, purchase options, trade-ups and return options are available. The lease term allows your business to match all expenses to the term of the equipment’s use, including income tax expense, book expense and cash expense. Most importantly, as mentioned previously, the expense stops when the equipment is no longer required.

9. Do you anticipate the need for additional equipment under your financing agreement? If your business is planning for growth, you can enter into a master lease that will allow you to acquire multiple pieces of equipment under multiple schedules with the same basic terms and conditions. This provides greater convenience and flexibility than a conditional loan contract, which must be renegotiated for additional equipment acquisitions.

10. Who can help me evaluate what’s best for my business? Whether you finance equipment through a lease or loan, each has its advantages. When making the decision between a lease and a loan, it is highly recommended that you consult with your accounting professional, as well as draw on the resources of your equipment financing provider to enable you to secure the best possible terms for your lease and/or loan.

These are some of the key considerations that should go into the lease versus loan decision-making process. For a lease/loan comparison and online tools, visit www.equipmentfinanceadvantage.org/ef101/llc.cfm .

[…]

Tax refund loan alternatives

Taxes » Tax Refund » Tax Refund Loan Alternatives

Just discovered you’ll be getting a tax refund? Don’t let your enthusiasm for spending that unexpected money get the better of you.

Some taxpayers, upset at the delay until Jan. 31 of the start of the federal tax-filing season, might consider offers to get their refund money sooner via private programs. In recent years, attorneys general have filed suits against refund anticipation loan, or RAL, operations for failure to disclose full costs of the products to consumers. Consequently, RALs are effectively unavailable. But alternatives, such as refund anticipation checks, remain and, say consumer advocates, can be just as costly.

Share this story LinkedIn Delicious Reddit Stumbleupon Email story

Thanks to today’s technology, there’s really no need to pay extra just to get your hands on your tax money a tiny bit sooner. If instant cash is more a desire than a need when considering a quick refund, consider these alternatives:

Go electronic. Abandon the traditional paper return sent via the U.S. mail and file from your computer. You’ll get the money almost as fast as you would with a refund anticipation loan and get it without paying any loan fees or interest. In fact, you may not need to pay for anything. An Internal Revenue Service partnership with tax preparers and software companies offers free online tax preparation and e-filing to some taxpayers. For the 2013 filing season, the Free File program kicks off Jan. 31. Last year, the income cutoff was $57,000, regardless of filing status. An inflation adjustment of $1,000 increases that amount slightly to $58,000.

For the past few years, the IRS has also expanded the online program to include taxpayers who make more money. Via the Free File Fillable Tax Form option, anyone, regardless of income, can enter their tax data onto online forms and then file them for free directly with the IRS. This is not a tax software program, but simply blank forms you can use via computer, and file directly, rather than filling them out by hand.

The IRS says that any e-filing option you use will get you your tax refund much more quickly than mailing a paper return. Whereas paper filers could wait up to eight weeks for their refunds, most electronic filers can expect their tax checks to show up in their mailboxes in half that time or less. The agency also points out that the error rate is less than 1 percent for electronic filers.

Direct deposit. Electronic filers who opt for a refund via direct deposit do even better. The IRS says the money generally shows up in taxpayer bank accounts in 10 to 14 days. Even if you file the old-fashioned paper way, having your refund deposited directly into a bank account cuts the time you have to wait for your tax cash. Plus, it’s added protection against lost or stolen refund checks sent via the mail.

Use store financing. If you want your refund to finance a must-have new appliance, store interest rates usually will be better than a refund anticipation loan. Many stores offer free financing for limited time periods. By then, the refund should have arrived and you can use it to pay off the store credit — and pay no interest at all.

Impatience usually wins. “Theoretically, with electronic filing and quicker turnaround on refunds, the need for tax anticipation loans has become obsolete,” says John L. Stancil, CPA and professor of accounting at Florida Southern College in Lakeland.

But ultimately, a refund anticipation product is a personal preference, not a fiscal issue for taxpayers. The prospect of cash a few days earlier appeals to those who value speed over cost, such as the person who stands impatiently in front of the microwave complaining that it’s taking too long for dinner to be ready.

Companies that offer quick refund options are well aware of such impatience, and that’s why some opportunities survive even as electronic filing increases, especially in the past two years when official filing was delayed.

But if you can squelch your refund appetite for just a few days, then you — and your bank account — will be better off.

advertisement

Related Links:The skinny on paying estimated taxes7 ways to get organized for the tax yearFree File 2014 opens Jan. 17Related Articles:Picking the proper 1040Tapping a Roth for 60 days10 must-know IRA terms […]

NAMA generated €2 billion in cash in H1

NAMA accounts for the second quarter of this year show the agency has generated €2 billion in cash during the first six months of 2013.

Total cash generated since NAMA started to the end of the accounting period was €12.6 billion. A cover letter with the unaudited accounts says the agency has generated in excess of €13.7 billion in cash up to October 22

The accounts also said the agency has agreed a €1 billion loan facility with the special liquidators of IBRC for working capital and cash collateral. At the end of June, €139.6m of this had been drawn down

The accounts show that interest income for the first six months of this year amounted to €658m. Total administration costs for the first half of the year amounted to €55m.

The agency paid a dividend of €2m to the private sector shareholders who own 51% of the NAMA master SPV, the special purpose vehicle structure used to keep NAMA debt off the states balance sheet.

The accounts show that the agency holds cash balances of €3.4 billion, after making bond redemptions of €6.25 billion. It will pay down another €1.25 billion of NAMA bonds during the fourth quarter of this year to meet Troika targets for repayment of debt.

The agency made an operating profit of €501m for the first half of this year – but this is before any impairment charges are deducted. It has increased its impairment provisions by €385m over the period, and has cumulative impairment provisions of €3.6 billion, or 14.4% of loans. This compares to 12.5% at the end of December 2012.

After impairments, the operating profit fell to €115m. A tax charge of €61m leaves the unaudited profit for the first half at €54.7m.

Unaudited total assets are stated at €38.5 billion, while total liabilities are stated at €37.8 billion.

NAMA said it has approved 237 applications for rent abatements from small and medium sized businesses that are struggling to survive. The agency says its current rate of approval for rate abatements is 97%, and to date the rent abatements agreed have an aggregate annual total value of €14 million.

NAMA announced a €2 billion capital investment plan in May 2012, to finance the completion of part developed properties. To date the agency has approved €1.9 billion in advances to debtors, of which over €1 billion has been drawn. €874 billion of the approved advances relate to projects in Ireland.

It has also set aside €2 billion for vendor finance – to part fund the sale of properties on its books. To date over €345m in vendor finance transactions have completed.

[…]

Alternatives to payday loans for small business finance seekers …

Image alternatives-to-payday-loans-for-small-business-finance-seekers_203_515380_0_14041612_500-150x150.jpg


Alternatives to payday loans for small business finance seekers

October 2, 2013 in ,

Share this:

The Great Recession forced businesses in a number of different sectors to rethink the way they operate. From how they obtain capital to how they market products and services, executives have found creative ways to navigate the lean times in order to survive. In particular, the recent economic downturn changed the manner in which entrepreneurs address small business finance.

In the past, startup leaders could rely on loans from large and community banks. However, once the economy began to take a turn for the worse, traditional lenders had to tighten their standards because small business prospects were not as optimistic and many startup loan applications represented major financial risks for bankers. As a result, a large portion of small business turned to alternative lending sources. According to Rohit Arora, CEO of Biz2Credit who recently wrote an article for Fox Business, payday lenders were more willing than banks to extend immediate credit, which attracted small business owners looking for short-term solutions.

In some instances, these institutions can provide useful services. However, many in the industry offer high interest rates, which can be difficult to manage because they need to paid off in short time frames. Arora noted that short-term lending does not help small businesses because the practice can create a cycle of debt for many borrowers.

Despite becoming a more likely source for small business lending, Arora warned against using such services and offered a few viable alternatives.

SBA Loans
Arora suggested that small business owners should consider applying for loans from Small Business Association (SBA) programs before seeking funding from payday outlets. He noted that the SBA is dedicated to helping small firms refinance high costs debts through a series of useful initiatives that can be beneficial for struggling companies looking to restructure their credit. In particular, business owners should explore the options associated with SBA Express products and the 504 Jobs Act Debt Refinance program.

Small dollar bank products
One of the major disadvantages of payday lender products is that they come with incredibly high interest rates. According to Nerd Wallet, it’s not out of the ordinary to find a payday loan that has an annual percentage rate (APR) as high as 700 percent. Despite the massive premium, short-term small business funding solutions are in high demand, most likely a byproduct of habits established during the economic downturn.

As a result, many traditional lenders have started to offer short-term loan products. However, many of these services are much more affordable and are regulated more stringently so that APRs are reasonable. The source noted the example of the National Credit Union Association that recently created the Short Term Small (STS) Loan Program. Under the initiatives regulations, federal credit unions can offer short-term loans from $200 to $1,000 with an APR no higher than 28 percent.

Return to traditional sources
During the last year, the economy has been rebounding and many traditional financial institutions are starting to offer more support to small businesses. Therefore, it may be possible for businesses to successfully apply for loans at a number of national and local banks. Although the amount of these loans may be lower, bank lending is often a safer option than payday advance products.

Over the coming months, there may be an increase in traditional loan extension from these banking sources. If this occurs, small business leaders stand to benefit greatly because they are often more likely to construct a positive long-term relationship with traditional bankers than other financial service providers.

Entrepreneurs can rely on BuildMyBiz to offer the latest news and trends that pertain to starting and operating their small business.

Share this:

[…]

Scott+Scott, Attorneys at Law, LLP Reminds Cash Store Financial Services, Inc. Investors of Upcoming Deadline in …

NEW YORK, Aug. 16, 2013 (GLOBE NEWSWIRE) — On June 27, 2013, Scott+Scott, Attorneys at Law, LLP filed a class action complaint against Cash Store Financial Services, Inc. (“Cash Store” or the “Company”) in the United States District Court for the Southern District of New York. The complaint, which seeks remedies under the Securities Exchange Act of 1934, was filed on behalf of those persons and entities who purchased or otherwise acquired Cash Store securities (CSFS) between November 24, 2010 and May 13, 2013, inclusive (the “Class Period”).

Investors who purchased Cash Store stock during the Class Period and wish to serve as a lead plaintiff in the class action must move the Court no later than August 26, 2013. Members of the investor class may move the Court to serve as lead plaintiff through counsel of their choice, or may choose to do nothing and remain absent class members in the lawsuit. If you wish to view the complaint, discuss the Cash Store litigation, or have questions concerning this notice or your rights, please contact Scott+Scott (scottlaw@scott-scott.com, (800) 404-7770, (860) 537-5537) or visit the Scott+Scott website for more information: http://www.scott-scott.com.

There is no cost or fee to you.

Cash Store is a pay-day lender based in Alberta, Canada. The Company primarily operates in Canada, where it maintains 579 branches under the banners “Cash Store Financial” and “Instaloans.” During the Class Period, Cash Store was traded on the NYSE under the ticker symbol “CSFS.”

The securities class action charges that, throughout the Class Period, Cash Store made a series of false and misleading statements concerning the Company’s financial condition that caused the Company’s shares to trade at an artificially high price.

Specifically, the complaint alleges that Cash Store made a number of false and misleading statements in its quarterly and annual financial statements in which it overvalued a major loan portfolio it had acquired. Additionally, the Company understated its liabilities associated with a class action settlement.

On December 10, 2012, the Company revealed that it needed to restate its financial statements and that it had inappropriately accounted for the acquisition of a large loan portfolio in violation of U.S. Generally Accepted Accounting Principles (“GAAP”). Specifically, the Company determined that a $36.8 million premium should have been recorded as an expense. The Company further stated that it was going to restate the fair value of the loans acquired to $50 million from which the Company had paid $116.3 million and that its provision for loan losses for the three month periods ending March 31, 2012 and June 30, 2012 was understated by $3.3 million and $3.7 million, respectively. Significantly, the Company admitted that material weaknesses existed as to the Company’s internal controls and that such weaknesses led to the restatement.

On February 13, 2013, Cash Store announced that it would again have to restate financial statements because the previous annual and interim financial statements improperly calculated the losses accrued due to a lawsuit settlement. Although every financial statement filed with the SEC estimated liability relating to the lawsuit to be approximately $18 million, in reality, the losses were $23.3 million — or approximately 25% higher than previously reported. The Company admitted that its previous financial reports should not be relied upon and that material weaknesses in internal controls for accounting existed during all periods dating back to 2010.

The complaint alleges that, as a result of the foregoing, Cash Store stock plummeted approximately 71.25%, from its Class Period high of $17.10 per share to $3.83 per share at the close of the Class Period, resulting in millions of dollars of losses to class members.

Scott+Scott has significant experience in prosecuting major securities, antitrust, and employee retirement plan actions throughout the United States. The firm represents pension funds, foundations, individuals, and other entities worldwide.

Contact:

Michael Burnett
Scott+Scott, Attorneys at Law, LLP
(800) 404-7770
(860) 537-5537
scottlaw@scott-scott.com or
mburnett@scott-scott.com

[…]

Shareholder Alert: Scott+Scott, Attorneys at Law, LLP Files Class Action Lawsuit Against Cash Store Financial Services …

NEW YORK, June 27, 2013 (GLOBE NEWSWIRE) — Scott+Scott, Attorneys at Law, LLP filed a class action complaint against Cash Store Financial Services, Inc. (“Cash Store” or the “Company”) in the United States District Court for the Southern District of New York. The securities class action, which seeks remedies under the Securities Exchange Act of 1934, was filed on behalf of those persons and entities who purchased or otherwise acquired Cash Store securities (CSFS) between November 24, 2010 and May 13, 2013, inclusive (the “Class Period”).

Investors who purchased Cash Store common stock during the Class Period and wish to serve as a lead plaintiff in the class action must move the Court no later than August 26, 2013. Members of the investor class may move the Court to serve as lead plaintiff through counsel of their choice, or may choose to do nothing and remain absent class members in the lawsuit. If you wish to view the class action complaint, discuss the Cash Store lawsuit, or have questions concerning this notice or your rights, please contact Scott+Scott (scottlaw@scott-scott.com, (800) 404-7770, (860) 537-5537) or visit the Scott+Scott website for more information: http://www.scott-scott.com.

There is no cost or fee to you.

Cash Store is a pay-day lender based in Alberta, Canada. The Company primarily operates in Canada, where it maintains 579 branches under the banners “Cash Store Financial” and “Instaloans.” During the Class Period, Cash Store was traded on the NYSE under the ticker symbol “CSFS.”

The securities class action charges that, throughout the Class Period, Cash Store made a series of false and misleading statements concerning the Company’s financial condition that caused the Company’s shares to trade at an artificially high price.

Specifically, the complaint alleges that Cash Store made a number of false and misleading statements in its quarterly and annual financial statements in which it overvalued a major loan portfolio it had acquired. Additionally, the Company understated its liabilities associated with a class action settlement.

On December 10, 2012, the Company revealed that it needed to restate its financial statements and that it had inappropriately accounted for the acquisition of a large loan portfolio in violation of U.S. Generally Accepted Accounting Principles (“GAAP”). Specifically, the Company determined that a $36.8 million premium should have been recorded as an expense. The Company further stated that it was going to restate the fair value of the loans acquired to $50 million from which the Company had paid $116.3 million and that its provision for loan losses for the three month periods ending March 31, 2012 and June 30, 2012 was understated by $3.3 million and $3.7 million, respectively. Significantly, the Company admitted that material weaknesses existed as to the Company’s internal controls and that such weaknesses led to the restatement.

On February 13, 2013, Cash Store announced that it would again have to restate financial statements because the previous annual and interim financial statements improperly calculated the losses accrued due to a lawsuit settlement. Although every financial statement filed with the SEC estimated liability relating to the lawsuit to be approximately $18 million, in reality the losses were $23.3 million — or approximately 25% higher than previously reported. The Company admitted that its previous financial reports should not be relied upon and that material weaknesses in internal controls for accounting existed during all periods dating back to 2010.

The complaint alleges that, as a result of the foregoing, Cash Store stock plummeted approximately 71.25%, from its Class Period high of $17.10 per share to $3.83 per share at the close of the Class Period, resulting in millions of dollars of losses to class members.

Scott+Scott has significant experience in prosecuting major securities, antitrust, and employee retirement plan actions throughout the United States. The firm represents pension funds, foundations, individuals, and other entities worldwide.

Contact:

Michael Burnett
Scott+Scott, Attorneys at Law, LLP
(800) 404-7770
(860) 537-5537
scottlaw@scott-scott.com or
mburnett@scott-scott.com

[…]

Home BancShares, Inc. Announces a 30% Increase in First Quarter Cash Dividend

CONWAY, Ark., Jan. 23, 2013 (GLOBE NEWSWIRE) — Home BancShares, Inc.’s (HOMB), parent company of Centennial Bank, Board of Directors declared a regular $0.13 per share quarterly cash dividend payable March 6, 2013, to shareholders of record February 13, 2013. This cash dividend represents a $0.03 per share, or 30%, increase over the $0.10 cash dividend paid during the first quarter of 2012 and is equal to both the regular and the special cash dividend paid during the fourth quarter of 2012.

During the fourth quarter of 2012, the Board of Directors paid a second dividend for the quarter on December 31, 2012. This dividend has been declared by the Board of Directors as a special one-time cash dividend versus a cash dividend in lieu of the regular quarterly cash dividend for the first quarter of 2013. This special fourth quarter dividend was paid out of current earnings and profits in accordance with IRC Section 316 and therefore, will be entirely classified as a qualifying dividend for income tax purposes pursuant to Section 1(h).

Home BancShares, Inc. is a bank holding company, headquartered in Conway, Arkansas. Our wholly-owned subsidiary, Centennial Bank, provides a broad range of commercial and retail banking plus related financial services to businesses, real estate developers, investors, individuals and municipalities. Centennial Bank has locations in central Arkansas, north central Arkansas, southern Arkansas, the Florida Keys, southwestern Florida, central Florida, the Florida Panhandle and south Alabama. The Company’s common stock is traded through the NASDAQ Global Select Market under the symbol “HOMB.”

This release contains forward-looking statements regarding the Company’s plans, expectations, goals and outlook for the future. Statements in this press release that are not historical facts should be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements of this type speak only as of the date of this news release. By nature, forward-looking statements involve inherent risk and uncertainties. Various factors, including, but not limited to, economic conditions, credit quality, interest rates, loan demand, the ability to successfully integrate new acquisitions and changes in the assumptions used in making the forward-looking statements, could cause actual results to differ materially from those contemplated by the forward-looking statements. Additional information on factors that might affect Home BancShares, Inc.’s financial results are included in its Annual Report on Form 10-K for the year ended December 31, 2011 filed with the Securities and Exchange Commission.

Contact:

Brian Davis
Chief Accounting Officer &
Investor Relations Officer
Home BancShares, Inc.
(501) 328-4770

[…]

Auditor unearths “material weaknesses” at Bailey Bros. Building and Loan

Report of Independent Registered Public Accounting Firm To the Shareholders and Board of Directors of the Bailey Bros. Building & Loan Association

We have audited the the Bailey Bros. Building & Loan Association (the Building & Loan) internal controls and financial reporting as of Dec. 31, 1945. The management of the Building & Loan is responsible for maintaining such controls, along with assessing their effectiveness and conformity with prevailing accounting and financial standards. Our responsibility is merely to express an opinion.

As such, we are compelled to inform you that we have discovered several instances of material weaknesses and deficiencies which may put shareholders and indeed the entire community of Bedford Falls at significant risk. Frankly, the Bailey Bros. Building & Loan Assoc. is a terribly run financial institution. We’ve never seen anything like it.

Much of our concern is centered on the fitness of Vice President William Bailey for the day-to-day management of the firm’s cash accounts. We made several attempts to interview Mr. Bailey as part of our audit, including arranging no less than six separate appointments at which he failed to appear. It was only after arriving unannounced at the Building & Loan’s downtown Bedford Falls headquarters on Nov. 21, that we were able to meet with Mr. Bailey. Our visit did little to allay our concerns.

Upon entering we witnessed Mr. Bailey drinking an unknown substance—we believe it to have been liquor—from a small flask. And when we questioned him about the several missed appearances, he grew visibly distraught and confused, repeatedly showing us a series of strings knotted around his fingers. Perhaps most distressing was the presence of wildlife—we witnessed a squirrel, crow and owl—in Mr. Bailey’s office, which is both a potential health hazard and liability for the Building & Loan.

Let us be blunt. “Uncle Billy,” as Mr. Bailey is known, exhibits clear symptoms of early stage dementia. And while we are sympathetic, his involvement in key operational activities amounts to a threat to survival of this institution. Indeed, it came to our attention that on Dec. 24 of last year Mr. Bailey failed to make a crucial deposit of $8,000 after misplacing the funds. The shortfall nearly resulted in the collapse of the Building & Loan, which was only averted after the wife of Building & Loan President George Bailey, Mary Bailey, undertook an unauthorized, inappropriate and potentially unlawful effort to raise additional capital from shareholders and others, via a frantic Christmas Eve solicitation that apparently consisted of going door-to-door with a large basket.

The missing $8,000 was never accounted for.

During our investigations, we also determined that the episode on Dec. 24 was not the first time the Building & Loan tottered on the brink. Soon after George Bailey assumed control, a run nearly brought down the firm, as the financial panic engulfed the country during the early 1930s.

Mr. Bailey (George) was able to keep the firm afloat but only thanks to the irresponsible and unsound financial practices that have unfortunately became a hallmark of the Building & Loan during his tenure. Our audit unearthed widespread examples of such practices including, but not limited to, co-mingling of personal and institution funds, lax financial record management, sexual harassment, more consumption of alcohol — incredibly — in the course of investment decision making, and the forced involvement of subordinates in spontaneous, silly, mini-parades.

Mr. Bailey’s personal life also raises significant questions about his fitness to continue on as president of the firm. He has been known to consort not only with town floozies but, perhaps even more troublingly, Italians. And in the domestic sphere, he is known to be domineering and verbally abusive. There have also been episodes of violence directed both towards both officers of the law and model bridges.

In our opinion, the Bailey Brothers Building & Loan Association, in all material respects, has failed to maintain effective internal controls and reliable financial reporting standards for the reporting period ending Dec. 31, 1945—and likely well before that. Furthermore, we believe it is incumbent on the board to remove Messrs. Bailey from their leadership roles at the thrift and appoint an interim director with a mandate to completely overhaul the Building & Loan’s organizational structure, with an eye toward maximizing shareholder value.

We have already conducted an exhaustive executive search focusing on the those with experience and expertise in the Bedford Falls regional economy. In something of a coincidence, we feel the best candidate to temporarily lead the Building & Loan would be our own Chairman Henry F. Potter. And we stand ready to offer further advice as necessary.

PotterHouseErnstCooper LLP
Bedford Falls, New York
March 15, 1946

[…]