Home BancShares Q3 Earnings Call Highlights

Home BancShares (NYSE:HOMB) reported record third-quarter earnings of $129.1 million, or $0.65 per share, as the bank cited margin expansion, disciplined funding costs, continued share repurchases and progress on a large Texas commercial-and-industrial credit.

Chairman John Allison said adjusted earnings for the first nine months of 2026 totaled $380 million, keeping the company on track toward its stated goal of $500 million in annual earnings. He said merger-related expenses from the Mountain Commerce transaction accounted for most of the difference between reported and adjusted results.

“It’s another strong quarter for Home Bancshares,” Allison said, pointing to record profitability, a rising net interest margin, tangible book value growth and capital returns to shareholders.

Profitability and Margin Expansion

Stephen Tipton, chief executive officer of Centennial Bank, said Home BancShares generated a 2.11% return on assets and a 16.54% return on tangible common equity during the quarter. The company’s tangible common equity ratio was 13.48%.

Reported net interest margin increased 2 basis points from the prior quarter to 4.53%. Core margin, excluding event income, rose 3 basis points sequentially to 4.50% and was 4 basis points higher than a year earlier. Tipton said the core margin reached 4.55% in September, following a rate increase that took place midway through the month.

The company’s loan yield, excluding event income, averaged 6.91% during the quarter and exited at 6.90%. Interest-bearing deposit costs averaged 2.37%, while total deposit costs were 1.83% for the quarter and 1.81% in September.

Management said the balance sheet remains positioned to benefit from additional increases in interest rates. The company has about $1.2 billion of fixed-rate loans maturing during the next 12 months, with a weighted average rate of 5.72%, in addition to approximately $7 billion of variable-rate loans. Asset-liability modeling indicates that a 100-basis-point increase in rates would raise net interest income by nearly 6%, Tipton said.

Allison said the company’s decision to avoid building a sizable long-duration securities portfolio has helped preserve flexibility as rates have risen. While accumulated other comprehensive income declined by $65 million during the quarter, he noted that tangible book value per share still rose $0.03 to $15.35 despite that mark, dividend payments and repurchases.

Capital Returns and Mountain Commerce Integration

Home BancShares paid its new quarterly dividend of $0.23 per share, a 9.5% increase from the prior quarter. The company also repurchased 1.3 million shares for about $39.3 million in the third quarter.

Through the first nine months of the year, Home BancShares repurchased 3.3 million shares for approximately $94.4 million. Allison said the company intends to continue repurchases in the fourth quarter and expects to maintain its long-standing buyback program beyond that period. Management also reiterated its objective of eventually repurchasing the shares issued in connection with the Mountain Commerce acquisition.

The company expects to complete the back-office integration of Mountain Commerce during the fourth quarter, with conversion scheduled for the weekend of Nov. 6. Tipton said the company’s expected annualized cost savings from the deal remain slightly above $5 million, with additional savings expected to begin after conversion.

Loan Production, Deposits and Funding

Loan production moderated to $850 million in the third quarter as the company maintained its underwriting and pricing standards. Tennessee contributed nearly $70 million in production, according to Tipton. Loan payoffs totaled $1.01 billion, though management said the pipeline of unfunded commitments remained above $3.8 billion.

Kevin Hester, president and chief lending officer, said the company sees sizable lending opportunities across its footprint and expects loan growth conditions to improve. However, he said underwriting discipline remains a priority, particularly as competitive pricing and loan structures persist in some markets.

Legacy deposits declined by $358 million in the quarter, primarily because of lower municipal balances, September tax payments and a reduction in wholesale deposits acquired through Mountain Commerce. Noninterest-bearing deposits totaled $4.21 billion, representing more than 22% of total deposits.

Management described deposit competition as intense across its markets but said it continues to negotiate deposits on an individual basis rather than broadly advertising high certificate-of-deposit rates. Tipton said the company models a 40% beta for checking and savings accounts and a 100% beta for CDs.

Credit Resolution Progress

Allison said Home BancShares expects to resolve its large Texas C&I nonaccrual credit during the fourth quarter. Roughly 80% of the borrower’s assets are under a signed purchase agreement, while the remaining assets have a preliminary agreement subject to one contingency, he said.

The first transaction, involving marine equipment and floating stock, is expected to produce proceeds in the $85 million range and remains subject to Coast Guard approval. A second transaction involving fuel tanks carries a $17.5 million bid, with expected net proceeds of about $16.5 million. Allison said the combined proceeds of roughly $101 million to $102 million would exceed the company’s $91 million carrying value on the credit, potentially resulting in about a $10 million recovery.

Management also discussed a CCFG nonperforming loan of less than $15 million tied to a pre-development residential property in the Los Angeles area. Chris Poulton, president of CCFG, said the company has initiated foreclosure proceedings but is giving the borrower an opportunity to reinstate the loan. If that does not occur, the company could proceed with a loan sale or sell the property through foreclosure.

Hester said overall asset quality remains solid. Management said it does not expect a provision for credit losses in the fourth quarter if anticipated recoveries materialize, and Allison said resolution of the Texas credit would push reserve coverage of nonperforming loans above 300%.

About Home BancShares (NYSE:HOMB)

Home BancShares, Inc is a bank holding company headquartered in Conway, Arkansas. Through its principal banking subsidiary, Centennial Bank, the company provides a range of financial services to individuals, businesses and institutions.

Centennial Bank offers deposit accounts, residential and commercial real estate lending, consumer loans, commercial and industrial financing, treasury management, online and mobile banking, and other traditional banking services. The bank serves customers through a network of financial centers and digital channels.

Home BancShares was established in 1998 and has expanded through a combination of organic growth and acquisitions.