Home Bancshares Inc Q4 2025 Earnings Call - Record Profit Driven by Strong Loan Growth and Strategic M&A

Speaker 7: Ladies and gentlemen, welcome to the Home Bancshares Incorporated Fourth Quarter 2025 earnings call. The purpose of this call is to discuss the information and data provided in the quarterly earnings release issued after the market closed yesterday. Company presenters will begin with prepared remarks, then entertain questions. Please note that if you would like to ask a question during the question and answer session, please press star then one on your touch-tone phone. If you decide you want to withdraw your question, please press star then two to remove yourself from the list. The company has asked me to remind everyone to refer to their quarterly notes regarding forward-looking statements. You will find this note on page three of their Form 10-K filed with SEC in February 2025. At this time, all participants are in listen-only mode, and this conference call is being recorded.

If you need operator assistance during the conference, please press star then zero. It is now my pleasure to turn the call over to Donna Townsell, Director of Investor Relations.

Donna Townsell, Director of Investor Relations, Home Bancshares: Good afternoon and welcome to our Fourth Quarter Conference Call. With me for today’s discussion is our Chairman, John Allison, Stephen Tipton, Chief Executive Officer of Centennial Bank, Kevin Hester, President and Chief Lending Officer, Brian Davis, our Chief Financial Officer, Chris Poulton, President of CCFG, and Scott Walter of Shore Premier Finance. The Fourth Quarter capped off a bell ringer of the year for Home, and our team is excited today to share some of those details with you. Our opening remarks today will be from our Chairman, John Allison.

John Allison, Chairman, Home Bancshares: Thanks, and thank you all for joining Home Bancshares’ Fourth Quarter earnings report in our 2025 year-end conference call. I want to thank all of our team members for leading Home to one of the most successful years in our 26-year history. The numbers really speak for themselves. They’re the best numbers we’ve ever produced. Thank you for all you do and continuing to make Home one of the top-performing banks in America. If we’re not the best, we’re certainly one of the most consistently profitable performers year in and year out. We’re certainly a contender. For the full year of 2025, the company earned a little over $475 million in net profit. That’s an 18.2% increase over 2024. And we ran a 2.05 ROI and a 41.29% efficiency ratio, had record revenue of $1,090,000. We had earnings of $2.41 EPS. That’s a 20% increase over 2024.

We purchased for the year 2,890,706 shares for $81.3 million, and so far this year, we bought back about 96,000. For the Fourth Quarter of 2025, we reported $118 million in profit. That’s an 18% increase over 2024. It was about $100 million, as I recall. PPNR was $167,723,000, good numbers, and a 2.06% ROI. For the first time in a while, efficiency ratio of sub-40 at 39.53%. Net interest margin of 4.61%, and we built reserves to about 1.90%. Revenue was $282.1 million and an ROTCE of 16.65%. We purchased 540,706 shares for $14.7 million for the Fourth Quarter. As I said, the numbers speak for themselves. We’re excited about our announced LOI with Mountain Commerce and our entry into the great state of Tennessee.

Having been a founder, I know what it takes to build a good financial institution with all the ups and downs, and I look forward to working with Mountain Commerce’s founder, Bill Edwards, and his outstanding team. I walked in the same shoes as Bill in building our company. Our transaction is triple accretive, and both sets of shareholders will be accruing the benefits of the merger on day one, not some BS earn-back, but from day one. I just want to talk a little bit about the past and what’s happened to bank values and bank stocks. In 1998, we sold our bank for 22.5 times projected earnings and 4.11 times book. It was a really good bank, doing an ROI of 150 plus, but not as strong as home runs today, but really a good bank. What’s happened to the value of bank stocks?

I understand that was a days of pooling, and now we’re on tangible book, but it trades at about 10 times earnings. Where did the money go? Bank stocks have been about cut in half. We have allowed people to self-inflict the damage to ourselves and our industry, not just once, but over and over and over again by dilution, dilution, dilution. We have already run nearly all of the generalists completely out of the bank space. Donna and I were recently at a major bank conference, and a young, sharp female analyst from a well-known national company said, "I can’t get a single PM," portfolio manager is what she was referring to, "of my company to even look at a bank." She said, "Including your bank, Johnny, as good as y’all are, they say no banks, period." So what has created that?

What has led to the fact that generalists want nothing to do with the bank space? I think it’s an attitude. I think it’s because banks have done bad deals that management and boards of directors allow, both in the purchase of long-term low-rate securities that cost shareholders hundreds of millions and billions of dollars, plus in management teams paying too much on acquisitions and diluting their shareholders into oblivion. We’re forcing the good long-term investors completely out of the space. We were told that a three- or four-year earned back to tangible book was acceptable to the investors. That could not be farther from the truth. It should never have been done, and it should never be done again. When does the poor shareholder ever get back to at least even?

Add that to poor operating performances of many of the companies, coupled with a three- to four-year diluted deals and hedge funds that will trade you over two bits. We have inflicted the pain into the entire industry. Look at what bank stocks have done over the past decade. Some dividends are the same, and some are at the same price they were 10 years ago. That’s pretty sad. Look at bank stocks. When you look at one, if you’re thinking about selling, look at the bank stocks and see what their history is for the last five or 10 years. I know you don’t want to hear the facts, but it is what it is. All while the larger banks are performing much better than the small caps and mid-cap banks.

Banks wanting to grow through acquisitions, whose bank stock multiple trades below the multiple they are paying for the bank they are acquiring, are almost always setting themselves up for dilution. Instead of buying, they need to improve their performance and buy back their own stock. Why would you, a bank trading at 1.3 times book, pay two times book? Again, they would be better in most instances to buy back their own stock and improve their performance rather than diluting themselves with a deal that obviously does not work from the start. The math is not complicated. They either work or they don’t work, and most don’t. Home has never intentionally done a diluted deal. Our happy bank transaction did not perform as well early as we expected, but it was certainly not because the math in the deal did not work. It was circumstances beyond our control.

But it’s much better today, and the bad is mostly behind us. The industry’s poor performance opened the door to invite HOCO into our world. If you think that’s a bad deal, we have no one to blame except ourselves. It is a good wake-up call for every one of us to recognize the insanity of what we are doing to our shareholders, our industry, and our future. The shareholder is who we work for. They are our owners. I’ve watched banks dilute them into infinity because they did not know what they were doing. They will never give you an earned back report. When’s the last time someone sent you an earned back report on the M&A deals over the years? They don’t because they can’t, simply because they don’t work as intended.

The CEO gets a bigger salary because he now runs a much bigger bank, so his salary goes up and the shareholder gets screwed one more time. I’ve labeled this shareholder abuse. We have to clean up our act or we will continue to lose the investment community and they will leave the bank space. It took us a while to screw it up and it’ll take a while to turn it back around, but we need to start today and save our future and realize who our bosses are and who we work for. No more dilution from this point. I know I’ve made a lot of poor performers unhappy and a lot of serial diluters very unhappy by telling the truth, but remember, it’s not your money or you would not dilute your shareholder because you’d be diluting yourself. That’s why I like founders and owner-operators.

They are the best partners in the bank space. The CEO of a bank should only make more money when he’s responsible for increasing the EPS of the bank and make the shareholders a higher, solid EPS increase. Including dividends, Home is up 68% over the last five years. Maybe not the best, but certainly a contender. It appears the stars are lining up in this Trump-led economy and we don’t need to miss this opportunity. The banks had a foot on the throat by the past administration and that foot has been removed by President Trump’s administration. I’m speaking out as a large shareholder today and an owner-operator with the majority of my net worth tied up in this company. We care about performance and we know who we work for, and my entire executive team is vested in the stock. The same as I am.

This is not our job. It’s our future. We try to distinguish ourselves from the pack by being one of the 10 or 12 best-performing banks in the country, but at the end of the day, the investors see us as a bank. They paint us with the same brush during all four quarters of 2025. After removing the credit card companies, the auto finance companies, Home was first, second, or third of all banks over $10 billion in ROI, sporting a 2.05 for the entire year. In spite of all the craziness in the bank space, Home has had a record year because we did not make those ridiculous, stupid mistakes because it’s our money and our future. Donna, I think I have probably said enough and made enough people mad today, but it is what it is. Back to you.

Donna Townsell, Director of Investor Relations, Home Bancshares: Thank you, Johnny. Congratulations on a great year and thank you for the insightful industry update. Our next report now will come from Stephen Tipton.

Donna Townsell, Director of Investor Relations, Home Bancshares0: Thanks, Donna. As Johnny mentioned, the Fourth Quarter was another strong performance for Home and Centennial Bank, and by all accounts, 2025 was a great success. Continued strong earnings, asset quality metrics, and capital generation all capped off by our announcement of the Mountain Commerce Bank acquisition in December. Highlighted by strong revenue and continued net interest margin expansion, we were able to produce an adjusted return on assets of 2.05% and adjusted diluted earnings per share of $0.60. The reported net interest margin improved to 4.61%, up five basis points from Q3 and up 22 basis points from the same period a year ago. The core margin, excluding event income, was 4.56% versus 4.53% in Q3. The loan yield declined by 13 basis points to 7.23%, but was offset by a 15 basis point decline in interest-bearing deposit costs to 2.47%.

Total deposit costs were 1.91% in Q4 and exited the quarter at 1.86%. Deposit balances improved by a little over $150 million in Q4 and showed growth of $334 million for the full year of 2025. Non-interest-bearing balances remained stable in Q4 and comprised 22% of total deposits. A top-tier efficiency ratio continues to be a focus and priority for us, and while we had some tailwinds in revenue for the quarter, I’m proud to report an adjusted efficiency ratio of 39.53% for Q4 and 41.29% for the full year of 2025. Loan production was one of the highlights for the quarter, at over $2.1 billion, highlighted by nearly $1.2 billion from the community bank footprint, with $600 million of that origination volume coming from Florida. Capital levels continued to grow throughout the year, with common equity tier one capital ending at 16.3% and total risk-based capital at 19.1%.

As we’ve mentioned previously, we’re thrilled to be partnering with Bill Edwards and Mountain Commerce Bank in the vibrant middle and east Tennessee markets. Our conversations have gone extremely well so far. We filed the regulatory applications that is for earlier this week and anticipate a quick process there. We’re excited to welcome the MCB employees, customers, and shareholders to the Home family soon. With that said, I’d like to thank our regional and division presidents and all of our bankers on another quarter and a great 2025, and I’ll turn it back over to you, Donna.

Donna Townsell, Director of Investor Relations, Home Bancshares: Thank you, Stephen. Next is a lending update from Kevin Hester.

Kevin Hester, President and Chief Lending Officer, Home Bancshares: Thanks, Donna. Another year is in the books here at Home BancShares, and from a lending perspective, it was one of the best ever. When you combine the fourth quarter loan growth of $400 million with the loan growth that we posted through the first three quarters of the year, total loan growth for the year was $922 million or 6.24%. Both CCFG and the community bank footprint contributed to the fourth quarter loan growth, and this marks nine out of the last 10 quarters in which we posted organic loan growth. I do want to point out that the fourth quarter loan growth number was higher than we anticipated because of $150 million in payoffs that did not occur as scheduled. Even though the origination pipelines remained strong, the migration of these payoffs into 2026 may dampen early loan growth expectations.

Asset quality remained strong with a sequential decline in criticized assets and no material change in the NPA and NPL ratios. We continue to work through the small group of problems that we’ve discussed previously, and I have both good and bad news on the DFW apartment loan that we discussed last quarter. The loan sale agreement that we were trying to get closed fell through, but we have applied the significant hard deposit to the balance, and our carrying value is at a materially lower number. We continue to work with other parties to move this credit out of the bank. The Texas C&I credit continues to be a work in process. As I mentioned last quarter, it could end up going to non-accrual before we get it out of here, and that looks like that could be the case, so stay tuned on that.

We enter the new year with a seasoned lending staff that is focused and understands our credit culture. I expect very good things from them, and while it will be tough to compete with 2025, we believe that 2026 will be equally as successful. With that, Donna, I’ll send it back to you.

Donna Townsell, Director of Investor Relations, Home Bancshares: Thank you, Kevin. And now Chris Poulton has an update on CCFG.

Donna Townsell, Director of Investor Relations, Home Bancshares1: Thank you, Donna. Fourth quarter was a busy one for CCFG. We originated over $800 million in loan commitments, resulting in $236 million in net loan growth. This pulled outstanding loans into positive territory for the year with just under $200 million or 10% growth for the year. You may recall that during the year, loan balances dipped to approximately $1.7 billion before rebounding and closing the year at over $2 billion in total outstanding. For the year, we originated just under $2 billion in loans and received just over $1 billion in paydowns, payoffs. Both of these figures are a bit higher than average.

Similar to Kevin’s comments, I would say that as we turn attention to 2026, I do expect paydowns to moderate growth in the near to midterm, but much like this past year, future funding and new volume may largely offset expected paydowns over the course of the year. Donna, I’ll now hand the call back to you.

Donna Townsell, Director of Investor Relations, Home Bancshares: Thank you, Chris. Johnny, before we go to Q&A, do you have any additional comments?

John Allison, Chairman, Home Bancshares: That was a great quarter and a great year overall. We hung in there pretty good. We didn’t make the mistakes, and hopefully our investment community will appreciate our efforts. So anybody else have anything to say? Brian had any comments today?

Brian Davis, Chief Financial Officer, Home Bancshares: It was a really good year. We blew it out and did quite a bit better than we even had budgeted.

John Allison, Chairman, Home Bancshares: Do you remember I didn’t vote for your budget last year? I said it wasn’t 427 or something like that.

Brian Davis, Chief Financial Officer, Home Bancshares: 425.

John Allison, Chairman, Home Bancshares: 425.

Brian Davis, Chief Financial Officer, Home Bancshares: I was the only one voting against it, but it turned out good. It turned out much better. I knew we could do better. I thought y’all were laying behind a little or maybe you were. So anyway, I guess we’re ready to go to Q&A, Donna.

Donna Townsell, Director of Investor Relations, Home Bancshares: Okay. Operator, we’ll turn it back over to you.

Speaker 7: Thank you. If you would like to ask a question, please press star followed by one on your telephone keypad. If you would like to withdraw your question, please press star followed by two. When preparing to ask your question, please ensure your device is unmuted locally. First question comes from John Armstrong with RBC. Your line is open. Please go ahead.

Speaker 2: Thanks. Good afternoon, everyone.

Speaker 9: Hi, John.

Speaker 2: Hey there. Just maybe it’s a question for Kevin or for you, John, but what do you attribute the growth to for the quarter? I know you flagged the payoff that didn’t happen, but you still had a strong growth quarter relative to what you’ve had historically. Are the pipelines changing, or is there anything else that you feel is driving this stronger growth?

Speaker 9: Hey, John, this is Kevin. So I mean, the size and the geography of the loans is similar. It’s the same. Most of our larger loans tend to be construction loans. Those fund over, let’s say, 18 months. This quarter, we had a couple of larger loans that were fully funded because they weren’t construction. That helped, and we see that from time to time. If they’re big loans, they make a difference. Pipelines were strong. I think it was helpful the last quarter that there wasn’t a lot of rate movement. I think that when rates start dropping, then we see people doing crazy stuff, and we’re seeing that. That’s happening, but if we’re higher for longer, then I think that slows down a little bit, and that always helps us. So it’s a mixture of two or three different things.

It just happened to all come together and make it a little bit higher than what we thought it was going to be.

Speaker 2: Okay. Okay. But pipelines are pretty consistent. They haven’t really changed that much?

Speaker 9: Not really, no.

Speaker 2: Yeah. Okay.

John Allison, Chairman, Home Bancshares: I was a little surprised. I was pleased. Johnny, I was pleased with the loan growth, and we had, I think Chris might comment. I think you had a large payoff that didn’t happen. Chris, you want to comment?

Donna Townsell, Director of Investor Relations, Home Bancshares1: Yes. I think that’s fair. I think two things for us in the quarter. One was we had a loan that closed at the beginning of the quarter that we had originally scheduled to close in the third quarter. I think we had talked about that before as well, that it slipped into the fourth quarter, and then we had a payoff that we expected in the fourth quarter that slipped to the first quarter. So if you look at things on a rolling four quarters or rolling three quarters basis, it all kind of evens out, but sometimes you get both those things happening in a quarter, and your number pops a little bit. But I just view it as a little bit of timing.

John Allison, Chairman, Home Bancshares: I think Shore had a pretty good month too, December. Scott, you want to comment? Kev, I lost you, Scott. Are you on mute? I don’t know where Scott is. Maybe we lost him, but he had a good December. We were scheduling earlier. He had one of his best months in December, so that gave us a little kick in the butt.

Speaker 2: Yep. Yeah. He probably gave us the most eloquent answer on mute, but I noticed that was good. Johnny, just one more thing. Just overall reserve level goals. I know you’ve expressed the desire to keep the reserve levels high and maybe grow them a little bit, but is 190 enough considering what you’ve seen with pretty stable and good quality credit?

John Allison, Chairman, Home Bancshares: Yeah. You know I’ve always run one of the 2% reserve, and I always run with a 2% reserve. And we had a little settlement this time. You don’t normally run at a 3% pre-tax pre-provision ROA like we did this quarter. So we had a little extra money, and I thought it was a good time. I think I said in the past, if we get an opportunity, we’ll build reserves. And I just like a 2% reserve. When we get an opportunity, we’ll probably continue to take that up. So if we don’t get an opportunity, we won’t take it up. Yeah, it’s plenty. The reserve is plenty. But we don’t know what’s going to happen next, right? We just don’t know what’s going to happen. Something’s going to happen. We don’t know what’s going to happen. However, it looks pretty good for us for the future.

I mean, it looks like countrywide, it looks like we may have a 2026 may be a good year for all of us, and 2027 may be even a better year. So I’m pretty excited about what the future yields.

Speaker 2: Yep. Okay. All right. Thank you for taking my questions. Nice job.

John Allison, Chairman, Home Bancshares: Thanks for your support, John. You’ve been a supporter since 2006, I think. I appreciate it.

Speaker 7: We now turn to Stephen Scouten with Piper Sandler. Your line is open. Please go ahead.

Speaker 8: Hey, good afternoon, everyone. I guess maybe going back to loan growth for a second. I think, Kevin, you said no major changes, nothing different, but I did see one larger loan kind of get flagged, a potential larger energy loan get flagged in some publications, and just curious if that’s a sector that you guys are lending to any more significantly now at this point in time, and if there’s any kind of larger or chunkier loans that were within the quarter’s results.

Speaker 9: Hey, Stephen. This is Kevin. So that particular loan’s a loan we’ve had for some time. I think we upsized it a little bit. That may be why it got flagged, but it’s a customer we’ve had for a while. I don’t know that it’s indicative that we’re really diving into that market anymore. It’s just a really good opportunity that we liked very well and felt like we could size up and got very comfortable with. So will we do that again? We might if we see things we like, but that’s one we’ve had for a while. It’s not a brand new relationship.

John Allison, Chairman, Home Bancshares: Stephen, that was part happy was in that credit, syndicated credit for, I think it was five or six banks in it at one time. And the lead bank, if you remember, got in trouble, and we took everybody out. So from an all-credit perspective, it may be the best all-credit in the country. And that’s not something we’re a little nervous about some of those markets, but we like his credit a lot. We like his operator a lot. He’s done extremely well. By the way, that’s a $350 million credit, and it’s at about $280 million now. So that’s not the credit that topped the loans up for the quarter.

Speaker 8: Got it. Got it. Super helpful. Thank you there. And then maybe thinking about deposit growth for a minute. I mean, do you feel like you can drive enough deposit growth to fund the opportunities you guys have on the loan side? And kind of how do you think about the loan-to-deposit ratio from here? I know you used to be willing to run it pretty hot, but I think lately you’ve said maybe keeping it between 90% and 95% would be the goal. Just wondering how you’re thinking about that.

Speaker 9: Hey, Stephen. This is Stephen. Yeah, I guess last part first. I mean, mid-90s% is probably where we would target. We ended the quarter at 89%. Mountain Commerce will increase that very slightly. They’re running a little hotter than we are, but something in the mid-90s%. I mean, I think our approach is we’ve long said we don’t run CD ads. We advertise the company’s strength. There’s certainly opportunities to be a little more aggressive at times from an interest rate perspective if we have to. And the markets that we’re in are certainly potential deposit providers for us down the road, particularly in parts of Florida. So we’re optimistic, and I think optimistic in Tennessee as well that the company’s strength and our size and branding that Bill and his team will be able to capitalize on that from a deposit growth standpoint too.

Speaker 8: Yeah, that’s great. Appreciate that, Stephen. And then just maybe last thing for me. I did notice, obviously, I mean, the reserve at 190. I’m not particularly concerned about anything on the credit side with you guys. Ton of capital, ton of reserves. But I noticed the 90-day delinquencies on the Shore Premier book did increase a little bit. And I know you said they had a good month in December, so maybe that’s just episodic. But just wondering if there’s any kind of change in your view about that line of business and kind of how it’s performing or how trends are going there.

Speaker 9: Hey, Stephen. This is Kevin, so we’ve got three or four single loans that are kind of one-off in nature that it’s just taken longer to get through the process to get them back and get them sold than we would like, and it’s a function of just going through your repossession process. Nothing major.

John Allison, Chairman, Home Bancshares: One boat that we’ve talked about for six months now was arrested. We’re in at 50% on the dollar, the $10 million boat. We got less than $5 million, or maybe we probably got $5 million in it now. We can’t get it out of the court system. The guy just keeps the attorney had a cardiac problem. I mean, every kind of excuse in the world they keep doing, but we’re in good shape on that boat.

Speaker 9: We’ve had the boat for nine months. I mean.

John Allison, Chairman, Home Bancshares: Yeah, we’ve had it for nine months. We got arrested for nine months. We’re paying a ticket on it. It’s eaten, by the way. So it’s just getting it out of the court system is a hell of a problem, and you’ll see $5 million of that pop up and go away pretty quick when that happens. He says he’s going to pay for it, and he says he’s going to refinance it, and he begs the court, and the judge gives him another 30 days. I don’t know. It’s frustrating. The boat will be 20 years old before we get it back, I guess. I hope not. They had a good. I talked to them this morning about exactly what you said about we see anything. One of them was a guy shot himself.

I mean, it’s a lot of scattered stuff, and probably we got four or five others that probably I said, "Think about the fact that what you loaned on it and what we’re going to get out of it and how much loss is in there. And maybe you need to improve our loan to value a little bit on the origination." As it turned out, only half of these were we had originated. The other half we had bought in pools. So I feel better about that.

Speaker 8: Got it. That’s great color. Thank you, guys. Congrats on a great 2025. Look forward to watching another great year here in 2026. Appreciate the time.

John Allison, Chairman, Home Bancshares: Hey, thank you. And thanks for your support. You’ve been a great supporter, and we all thank you for that. We know you wrote the best report on us this time, so thanks.

Speaker 7: We now turn to Matt Olney with Stephens. Your line is open. Please go ahead.

John Allison, Chairman, Home Bancshares: Hey, thanks for taking the question, guys. Appreciate all the details on the loan pipelines. I was looking for more color on loan pricing. Some of your peers are talking about incremental data points around loan pricing getting a little bit tighter more recently. I’m curious what you’re seeing and hearing with respect to competitive pressures in various markets from CCFG to the Community Bank.

Speaker 9: I’ll cover this, Kevin. I’ll cover the Community Bank. I mean, we’re seeing some really silly stuff. I mean, it’s one-off here and there. It’s different groups in different locales, so it’s not one group. But I mean, we saw a deal of floating at prime minus 75 with a no floor, a ceiling of 6, and you can fix it at any point during the next 10 years. I don’t know how you compete with that. So I mean, there is crazy stuff out there. I think it does slow down a little bit when you don’t have rate drops. If we stay here for a little while, maybe that gets a little better, but it’s silly.

John Allison, Chairman, Home Bancshares: When yesterday they asked for a 160 or 70 reduction in rate, I told them I’d never done that before. I’ve never done a 160 or 170 reduction in rate. So anyway, they’re starting. I mean, it’s starting. The kids got the money, and they’re running with it. So this is the toughest part. This is the toughest part of the cycle that we’re going through as rates come down is watching these people. One yesterday, Kevin said that it has no floor. And you can set it anytime within five or 10 years, whatever it is. It’s hilarious. But I mean, that’s what you got to deal with, and you got to live with it. It’s just part of banking. It’s a silly, silly part of banking, but that’s what it is.

Speaker 9: Yeah. I’d say our group’s navigated through all of this competitive environment really well. I mean, I think the Community Bank originations in Q4 were about 690, and I think in December, reflective of the last two drops, we’re in the 675 range on a coupon plus fees. So I mean, our folks are still doing a great job and getting the yield they should.

Speaker 8: Yeah. Good. Well, I appreciate that color. And then, just, I guess, following up on the margin overall, I mean, the core margin continues to move higher. I think we’re at 350 or 453 this past quarter. Curious kind of what you see the puts and takes on the margin as you move into 2026.

Speaker 9: Matt, we said for a year now we just hope to keep it flat, and it’s continued to go up a little bit. So I guess we’ll say we hope to keep it flat. Maybe it’ll go up a little bit. A couple of things there. I mean, and I guess it ties into your question on competition, but I show we’ve got about $1.2 billion in fixed-rate loans that mature over the course of this year that are in the aggregate about $540 million. So there should be some room to bring those up if competition allows, if everybody doesn’t trade all this away. So there’s some room there. Our CD portfolio is pretty secure. There may be a little bit of room there as those mature and are able to work rates down. But again, kind of same thing, competition. Yeah.

I mean, if you exclude event income, we were at 456 for the quarter. We actually ended December at 459, so we’ve kind of got a good jumping-off spot for Q1 here. But I think overall, if we can keep it, if we can hold it in this range, we’d be pleased.

Speaker 8: Yep. Okay. Well, appreciate the color, and congrats on the year, and looking forward to see what you guys can do in 2026.

John Allison, Chairman, Home Bancshares: You bet. Thanks for your support.

Speaker 7: We now turn to David Rochester with Cantor Fitzgerald. Your line is open. Please go ahead.

Speaker 0: Hey, good afternoon, guys. I wanted to start on the great loan growth you guys had. It looked like there was some pretty serious multifamily growth in there with some of that coming through CCFG. I was just curious what got you guys to take a big swipe at multifamily this quarter. What did you like about the loans? Were they larger, more granular? And should we expect to see more of a focus on that in ’26?

Speaker 9: Hey, Dave, you mentioned Chris. I’ll let Chris answer for him, and then I can give a little bit of a color on the Community Bank side.

Speaker 0: Great. Thanks. Yeah, Dave. Yeah, we had a couple of loans this quarter where we had some clients that purchased the multifamily, either purchased multifamily loans or purchased multifamily assets, and we were levering those. So I don’t know that we necessarily stepped back a few months ago and said, "Let’s do a lot of multifamily." A lot of what we do is we have a kind of a roster of clients who we’ve done business with for a long time, and they talk to us about the things they’re doing, and then we decide if we’re going to do those. There happen to be a lot of multifamily right now. What we are seeing in multifamily is there’s a particularly bad vintage of multifamily from like 2021-ish range, plus or minus months, where that vintage hasn’t done that well.

And so some of those are now trading hands, and a lot of my clients buy either distressed or semi-distressed or expiring loans and things like that. So I think that’s really what drove that this quarter. Gotcha. So I mean, if that’s a particular vintage, and I would imagine those came up on resets and whatnot, it’s just something that maybe we could see over the next couple of quarters at least as a nice driver for growth?

Speaker 9: I like the trade. We’ll see how many more there are, right? These happen to come along right now. I think there’s a few more potentially coming through. So again, I think it depends a little bit, I would say, but we like that trade. We think there’s probably more to go there, but how much of that we’ll end up doing, we’ll just have to see. It’s a little bit about whether our clients are full up on it now or not as well.

Speaker 0: Earlier, you guys had talked about a lot of your production, your loan production was in Florida. Was a lot of this in Florida?

Speaker 9: For CCFG, no. A lot of Sunbelt and some New York, but we generally don’t do a lot of Florida because I think the bank has a great team down in Florida that’s given the bank pretty good exposure to Florida. I have a little bit in Florida, but we don’t really concentrate on Florida.

Speaker 0: Yep. Okay. Which in expenses we’re doing.

Speaker 9: It’s good to say.

Speaker 0: Oh, I’m sorry.

Speaker 9: Go ahead.

Speaker 0: Go ahead. Sorry about that.

Speaker 9: I was going to say it’s a good segue to the community side. Some of our growth will be, as we said before, construction stuff. That’ll be things that we’ve already closed that are now funding. So that’s part of the third quarter. We still got a really good. There are some really good places in Texas and Florida to put new projects. And so that’s what the Community Bank is mostly focused on. And I think you’ll continue to see that as long as there are good markets for us.

Speaker 0: Yep. Great. Appreciate that color. Maybe just one last one on expenses. Those are down a little bit this quarter on a core basis, and you guys have done a really great job keeping a lid on the run rate all year. How are you thinking about that run rate heading into 2026?

Speaker 9: I’ll take it. Yeah. I mean, if you look at where Q4 was, we had about $500,000 in merger expense. You take that out, we were just shy of 114. We’re going through the budget process now. It looks like 1%-ish in terms of growth on a standalone basis. Obviously, we’re targeting the MCB acquisition early this year. That’ll add some to the run rate before we get to the end of the year and get the integration happening there. But I think fairly well controlled. And aside from merit increases and things this time of the year, we should be in good shape.

Speaker 0: Yeah. No, it sounds great. All right. Thanks, guys. Appreciate it.

John Allison, Chairman, Home Bancshares: Thanks, Dave.

Speaker 7: We now turn to Catherine Mealor with KBW. Your line is open. Please go ahead.

Speaker 5: Thanks. Good afternoon.

John Allison, Chairman, Home Bancshares: Hey, Kevin.

Speaker 5: What’s the follow-up on the margin? I’m great. How are you doing?

John Allison, Chairman, Home Bancshares: I’m good.

Speaker 5: Can you hear me?

John Allison, Chairman, Home Bancshares: When you turn those kind of numbers out, I’m pretty happy, as I said one time before, pretty happy camper. Thank you.

Speaker 5: Okay. I’m glad you can hear me. So my question is just circling back to Mountain Commerce. And just thinking about when we fold that acquisition in on day one, they’ve got a 250 margin. I know you’re going to be able to mark that balance sheet and then probably lower their funding costs over time. But kind of curious how we should think about any initial changes that you’ll make to their balance sheet, either in wholesale CDs or their borrowing, or if that’ll be more of kind of a gradual thing to model in over time.

Speaker 9: Catherine and Stephen, I think from a funding standpoint, I think that’s something we’ll model over time. Like I said earlier, I mean, we’re optimistic that Bill and Kevin and the team, with the larger balance sheet and the strength of the company, can expand relationships and grow deposits in that market that would enable us to maybe work out of some of the wholesale funding that they have. But I think that’ll happen over time. I think, like you said, when you mark the balance sheet, our initial indications are little to no impact on where our net interest margin has run here over the last couple of quarters.

John Allison, Chairman, Home Bancshares: We’ve had some good opportunities already in Tennessee with some. One of them was an Arkansas customer who’s buying something in Tennessee and picked up the phone and called us and said, "Hey, I see you’re going to Tennessee." And I said, "We are." And they said, "Well, I just bought some over, I need $4-$5 million, whatever it was." And so I hooked them up with Bill and his team, and they’re moving on that loan. And then yesterday, day before yesterday, David Carter, a regional president out of Jonesboro, called us, said, "Small world." Somebody he went to school with is one of the largest customers for Mountain Commerce. And Mountain Commerce had topped out with them.

He said, "I’d sure like to do a lot more business with you guys." As it turned out, he’s a big customer of Mountain Commerce, and we can help him. We can help him with his growth in the future. Two good leads. That could be multimillion-dollar credits there. Good stuff from a start, just from announcement. They’ll be able to do bigger deals with our balance sheet behind them.

Speaker 5: Great. Great. Glad to hear that. And maybe on that theme, just with M&A, it feels like you’re on track to close that still early. You said early the first half of the year. We’re kind of thinking beginning of second quarter, but let me know if you have a different opinion of that. And so if that’s the case, how quickly do you think you’d be interested in looking at further M&A as you move through the year?

John Allison, Chairman, Home Bancshares: I think we’re open. Hopefully, we close this April or May, and we’re certainly looking for opportunities from there to do another. We think we could do another one this year. We’re open. We’re open for the right opportunity. Is that what you were looking for, Kevin?

Speaker 5: A great quarter and great year. Thanks, guys. It is. Yeah.

John Allison, Chairman, Home Bancshares: Thank you.

Speaker 5: Thank you.

Speaker 7: We now turn to Brett Rabatin with Hovde Group. Your line is open. Please go ahead.

Speaker 9: Hey, good afternoon, everyone.

John Allison, Chairman, Home Bancshares: Hey, Brett.

Speaker 9: Wanted to go on the M&A topic. I certainly hear all the stuff that you said, Johnny, about buyers in the past, maybe not having done great deals. One of the other things that investors complain about is, "Hey, should you own buyer stocks?" and I think there’s some pessimism that maybe you shouldn’t own buyer stocks. How does that factor into your thoughts on M&A and just what that does to your stock price?

John Allison, Chairman, Home Bancshares: How does it factor in the fact of whether we buy our stock or don’t buy our stock? Is that what the question was? I don’t get the question.

Speaker 9: Yeah. Well, just there’s market sentiment from investors that maybe you shouldn’t own the buyer stocks because they don’t perform very well. And you guys have been inquisitive. I just am curious if hearing that from investors makes you more or less apt to maybe do M&A versus looking to do other stuff organically?

John Allison, Chairman, Home Bancshares: No. We’ll continue to do M&A and our first entree into Tennessee with Bill and his team. We’ll let them guide us in Tennessee, and we’re certainly open to something in that market, but we’re not closing the rest of the markets either. I mean, if we found something in Texas or we found something in Florida that fits our bill, we’d certainly move on it and wouldn’t hesitate, and there’s not a lot left in Florida to speak of. There’s quite a bit in Texas to do, but we’re certainly open to M&A, and so far as us continuing to buy stock back, that’s just one of the things we do. When you run a, if you’ve heard me say this, when you run a 210 ROI, you can buy back stock, and you can increase your dividend, and you can grow tangible common equity all the same way.

I think we grew tangible common equity 16% or something last year, almost $2 a share in growth in tangible common equity on a couple of hundred million shares, so it kind of puts it in perspective. If you don’t make that kind of money, you can’t do that. When you make those kind of returns, it gives you—you can pull, as I say, every capital handle that’s out there and take care of your shareholders with a reward and grow the bank too.

Speaker 9: Okay. I appreciate that color, Johnny, and then the other thing was there’s been a lot of comments about Florida. You just mentioned there was still stuff to do possibly in Texas. Where is the Texas franchise at this point relative to. You obviously had the gain in 4Q. Has all of the noise around all that stuff died down in a net growth perspective for Texas from here? Any thoughts on how the Texas piece is performing and what you might expect from that part of the geography?

John Allison, Chairman, Home Bancshares: It is performing today the way it was supposed to have performed three years ago. So we had a little bit early on, we had a little bit of good performance, and then we kind of fell off. And as you know, the trouble we had out there. And now it’s back. So it is the Texas operation is growing. We had to make lots of changes and lots of cleanups, lots of work to do in that market, but we’re getting there. Our Dallas-Fort Worth area is really cleaning up well, our West Texas area is really cleaning up well. So we’re pleased with that. They’re bringing good loans to the table, and we’re happy with what we see. So it’s probably now where we expected it to be three years ago. That’s probably where it is. I haven’t looked at that exactly, but that’s my feel.

I looked back at the P&L at the end of the quarter and looked at where our Dallas-Fort Worth and our West Texas operations were performing, and they’re getting the numbers now. They’re part of our system, and they’re operating like the rest of us operate, and it’s back again in the way it should be.

Speaker 9: Okay. Good to hear. And then just lastly on that repurchase comment, are you implying that maybe the pace of the buyback continues at the levels in 4Q, or any thoughts on how aggressive you might be with using the repurchase plan?

John Allison, Chairman, Home Bancshares: Probably. That’s something Stephen and I talk about all during the quarter. And when we see an opportunity and when we’re having a great quarter, then we kind of move on it. And if things slow down a little bit for us, we just kind of, it’s kind of a weekly conversation between he and I. So the answer is probably continue. We like to buy our stock. I’d like to buy back. Mountain Commerce is six-plus million shares. It would probably be my goal to buy all of that back over the next period of time.

Speaker 9: Okay. Great. Turnaround to end the quarter. Thanks, guys.

John Allison, Chairman, Home Bancshares: Hey, thanks. Appreciate the support.

Speaker 7: We now turn to Michael Rose with Raymond James. Your line is open. Please go ahead.

John Allison, Chairman, Home Bancshares: Hey, good afternoon, guys. Thanks for taking my questions. Maybe just tangential to Brett’s question. Just as we think about Tennessee and the opportunities that there, clearly you’ve had a big deal in that market. I think on a pro forma basis, you guys are like 20th in deposit market share in the state from day one once this deal closes. What are the aspirations there? Clearly, as I look at Florida as a case study for you guys, I mean, you guys have made tremendous strides over the years, done a lot of deals. Is the goal to have a similar trajectory? Is it a more targeted strategy? Is it just how would you describe the opportunity set as we think about kind of the intermediate to longer term for what Home could be in the state of Tennessee? Thanks.

I think we’ll just continue to grow in that market. That’s a market that we’ve never been in before. We’ve been in Texas before. We’ve never been in Tennessee before. So we found a guy that’s a founder and who built his own bank and is an owner-operator similar to our operation here. We like that. We like what we see. He stumbled a little bit on his securities and low-rate loans, but we’ll mark that day one. It’s already marked, and we’ll let that. He’ll come out gangbusters pretty quick. We get the expenses out of it over the next 12 months. Outside of that, we’ll let him lead us into that market. I mean, we know people that operate in that market through all the bank conferences. As you know, Michael, we meet all those people. They know us, and we know them.

So who knows what the opportunities are in that market? But we’re certainly open to M&A in the Tennessee market. If we see something there or Bill finds something that he wants to do, we’ll be on it the next day. We won’t hesitate. We have the capital. We have the ability to mark somebody’s balance sheet and fix them overnight, and we’ll use that capital. Everybody’s always said, "What are you going to do with that capital?" And I said, "Well, we’ll use it someday." Well, this is someday. Give us an opportunity to use some of it. I don’t know if that answered your question, but that’s kind of how I’m looking at it. Stephen, you got any different observation on that?

No, I agree 100%. We like what we see in the market so far, and I think Bill and his team can provide some opportunities. We’ve already talked to some names here and there, and we’ll see what happens over the course of this year.

Speaker 9: Now, for sure, it’s a great market and obviously a good deal. So appreciate it. Maybe just one follow-up maybe for Chris Poulton. I think as I’ve talked to banks over the past couple of months, one of the big topics has been just paydowns in commercial real estate and construction, just maybe a little bit of a hangover effect from all the activity that we saw come out of COVID. Are you seeing that at all? And are there opportunities to maybe capitalize as maybe some of those paydowns play out to maybe take some market share? Just trying to get a sense for the business. Obviously, one of your competitors is talking about pretty big paydowns this year. So just wanted to get a sense for the paydown level that we should be thinking about. Is it greater than the past couple of years?

Then maybe what’s the opportunity set as we go forward? Thanks. Sure. Sure. I think paydowns are elevated. I mean, as I said in my comments, we had higher than average paydowns this past year. I think that will continue. There are lots of opportunities for customers to get financing. I would say what we’ve seen more than anything is non-bank entrants into commercial real estate. They’re sort of refugees from the corporate lending side. Pricing has collapsed in corporate lending, and so some of those funds and private lenders have turned their sights to commercial real estate because from the outside, it looks pretty easy, I think, and higher yield. So we are seeing that. I think we’ll continue to see that. I think this is really where the test for us is.

We’ve been doing this for going on 10, 15 years, and we’ve got a good stable of customers who understand who we are and how we can help them make money. And so I think that’s the other side of that, which is I think those people will continue to put money out, and we continue to be an interesting choice for them. If our business was tied to doing a significant amount of volume every year, as in we need to take share or take a certain amount of share, etc., I’d be concerned today because I do think it’s getting harder. Our business has always been tied to finding those small opportunities out there that are a little off the run, etc., that we can be helpful to people on. Those continue to exist, and I think those will probably continue to strengthen.

I’m not sure if that answers the question, but I think we are seeing both those things. If we can pay downs on that, then I think we’ll also see some pressure in the main thing. If I was trying to do $5-$10 billion a year right now, I’d be concerned.

John Allison, Chairman, Home Bancshares: Yeah. Very helpful, Chris. Thanks, everyone, for taking my questions.

Speaker 9: Thanks.

John Allison, Chairman, Home Bancshares: Thank you.

Speaker 7: We now turn to Brian Martin with Janney Montgomery Scott. Your line is open. Please go ahead.

Hey, good afternoon, guys. Thanks for taking the questions. And I just had a couple of follow-ups to things already answered or things already asked on the call. So just maybe, Stephen, just on the or maybe just back to Chris for a minute. Chris, your thought on kind of just given the puts and takes in the year ’26, just kind of how you’re thinking about net growth for the year. I guess is it kind of a mid-single-digit type of growth is how you’d be thinking about it with the origination activity versus kind of the payoffs you’re anticipating?

Speaker 9: That’s what I’m currently estimating, right, so assuming the payoffs that we think and the fundings that we think and where we generally come out on lending, I’d be happy with that, and then you have to throw into it, would you get a payoff you weren’t expecting or things like that? You might, but again, I think over a long enough period of time, whether that’s quarter to quarter or month to month or over an 18-month period of time, etc., I can’t tell you within the calendar year what that looks like, but I would expect we’ll continue to grow. I believe that to be true. We usually find those opportunities. One of the things we talk about here is the universe expands and we grow. I think that’ll still continue to be true, and that’s what we’re projecting.

Speaker 7: Gotcha. Okay. Thanks for that. And then maybe just one or two for Stephen. Stephen, just on the excuse me, on the margin and expenses, I think expenses you were talking about, about $115 million a quarter. If you use your $114 number, that’s kind of the standalone run rate and expenses, and then just factor in the acquisition. Is that fair? And then just the second one on the margin, just the biggest pressure point in the margin today, if you do see some potential compression, where you anticipate that could come from?

John Allison, Chairman, Home Bancshares: Yeah. I mean, that’s fair on the expenses. That’s what we’re showing from a budget standpoint. We’ll certainly strive to do better there, and we’re talking with our presidents every day on where we can do. On the margin, our folks have done a fantastic job this year navigating the rate decreases and being able to certainly hold on to customers and grow relationships while getting rates down. It feels a little bit today that outside pressure from the loan side is kind of the wild card. I mean, you heard Johnny say earlier about a customer that was looking for a 150 basis points rate decrease, Kevin’s comments about some stuff we’re seeing from competition. So whether that stands to tighten things up a little bit, we’ll see.

but I mean, I still think we get our fair share and protect our franchise and what we have and try to keep it in this 4.5% range would be pleased with.

Speaker 7: Gotcha. Okay. That’s helpful. And maybe just one for Johnny on the you talked a bit about the M&A, just kind of the pipeline today on M&A. And I guess any commentary just on smaller versus larger deals, how you’re thinking about the next 18 months or so, where you’d be looking more?

John Allison, Chairman, Home Bancshares: In terms of the geography, we’ve got enough in Texas right now that we could get some savings there. We certainly have enough in Florida to get some savings, not particularly in Tennessee yet, but one of those markets, a Florida deal would probably make us. I mean, that would probably make more sense for us right now. However, unless Bill brings a Tennessee deal from some opportunity he thinks would be good for us. So I’m open. I’m just open. I think there’s opportunities. And matter of fact, I know there’s opportunities in all three states right now. So we’ll just have to see which one makes the most sense. We’re not going to dilute our shareholders, as you heard. We’ve never done that, and we’re not going to do that.

Well, we may have diluted them a little bit early on and happy for a couple of years, but that wasn’t an intentional dilution. That happened to us. But since then, we never did it before, and we won’t do it again. So we’ll find the right trade to do that as long as our currency we continue to perform the way we are, and our currency holds up the way it is. It gives us the ability to do those transactions. So I guess my word to those that are running one through is get themselves to a 2% before they go out and do something. It just makes all the sense in the world.

Speaker 7: Thank you. Okay. Yeah. No, you’re welcome. And maybe just the last one for me was just, I don’t know, maybe for Brian Davis. Just Brian, is kind of the noise or the extra income in the quarter relative to the Texas resolution. I mean, is fee income kind of a core number around $45 million? Yeah. Call it $45 million. Is that kind of a clean type of quarter as you look at some of the noise that was in there this quarter on the fee income side?

John Allison, Chairman, Home Bancshares: Yeah. The $4.9 million was really the only noisy thing that we had in non-interest income, so.

Speaker 7: Yeah. Okay. That’s a good look. Okay. Just wanted to make sure of that. And then the last one was just for Kevin. Maybe Kevin, you went through the commentary about non-performing. Can you just give a little thought or maybe just maybe I missed what you said in terms of what the puts and takes were on credit, what could be resolved in the next quarter or two, or kind of what’s the status of those couple of credits?

Donna Townsell, Director of Investor Relations, Home Bancshares: So, the DFW apartment credit, the sale that we were working on, the notes that we were working on, fourth quarter fell through, but we had a pretty good size deposit that was hard that we applied. So we’re still working with others, and we hope we’ll get that moved soon. It may take a little longer than I’d like, but we’re still working. Texas C&I credit, we’re working it through. I think it may get to non-accrual before it gets resolved. But again, we don’t think we’re going to have any additional loss there. We took a charge off a year ago, fourth quarter, and we think that we’re okay there. So we’re just continuing to work through. It’s the same problems we’ve been talking about for a couple of quarters. And sometimes it takes a little while to get rid of a problem.

Speaker 7: Yeah. And how big are those credits, Kevin, ballpark in terms of the apartment and the C&I?

Donna Townsell, Director of Investor Relations, Home Bancshares: The apartment’s 10. C&I credit’s about 90.

Speaker 7: 10 to 90.

Donna Townsell, Director of Investor Relations, Home Bancshares: 90 to 100.

Speaker 7: Perfect. Okay. Perfect. Thank you, guys, for taking the questions, and look forward to a great ’26.

John Allison, Chairman, Home Bancshares: You bet. Thank you for your support. We appreciate it.

Speaker 7: This concludes our Q&A. I’ll now hand back to John Allison for any final remarks.

John Allison, Chairman, Home Bancshares: Thank you, everyone, for joining the call today. It was a great quarter, a great year for Home BancShares, and we appreciate all your support. We’ll continue to be. We’ll represent your investment properly and do the right thing and hopefully make the right investments. For all our shareholders, we are a shareholder pro-shareholder company, as you know, and we’ll continue to do the right thing for the shareholders. That’s about it. Anybody else got a comment before we close out today? Thank you very much for your support. Have a good day, and we’ll talk to you next quarter.

Speaker 7: Ladies and gentlemen, today’s call is now concluded. We’d like to thank you for your participation. You may now disconnect your lines.