Home BancShares Q4 Earnings Call Highlights

Home BancShares NYSE: HOMB capped 2025 with what executives repeatedly called a record year, highlighting double-digit profit growth, strong profitability metrics, margin expansion, and continued share repurchases, while also outlining a pending acquisition that would expand the company into Tennessee.

Record 2025 results and fourth-quarter profitability

Chairman John Allison said the company delivered “the best numbers we’ve ever produced,” and pointed to full-year 2025 net profit of “a little over $475 million,” up 18.2% from 2024. Allison reported full-year return on investment (ROI) of 2.05%, an efficiency ratio of 41.29%, record revenue of $1.09 billion, and earnings per share (EPS) of $2.41, which he said was a 20% increase over 2024.

For the fourth quarter of 2025, Allison said Home posted $118 million in profit, an 18% increase over the prior year’s quarter. He also cited pre-provision net revenue (PPNR) of $167.7 million, ROI of 2.06%, an efficiency ratio of 39.53%, reported net interest margin (NIM) of 4.61%, and return on tangible common equity (ROTCE) of 16.65%. Allison added the company “built reserves to about 1.90%.”

Margin expansion, deposits, and operating efficiency

Stephen Tipton, CEO of Centennial Bank, said the quarter was driven by “strong revenue and continued net interest margin expansion,” resulting in an adjusted return on assets of 2.05% and adjusted diluted EPS of $0.60 for the quarter. Tipton noted reported NIM of 4.61% was up 5 basis points from the third quarter and up 22 basis points from the same period a year ago. Core margin, excluding event income, was 4.56% compared with 4.53% in the third quarter.

Tipton said loan yields fell 13 basis points to 7.23% in the quarter, but that was offset by a 15 basis point decline in interest-bearing deposit costs to 2.47%. Total deposit costs were 1.91% in the fourth quarter and exited the quarter at 1.86%.

Deposits increased by a little more than $150 million in the quarter and grew $334 million for the full year, according to Tipton. Non-interest-bearing deposits were stable and comprised 22% of total deposits.

Executives also emphasized expense discipline. Tipton said the company produced an adjusted efficiency ratio of 39.53% for the fourth quarter and 41.29% for the full year. In the Q&A session, CFO Brian Davis said the quarter included about $500,000 in merger-related expense, and management discussed a standalone expense outlook implying about 1% growth, excluding the impact of the pending acquisition.

Loan growth and credit: strong production, isolated problem credits

President and Chief Lending Officer Kevin Hester said 2025 was among the company’s best years for lending. He reported fourth-quarter loan growth of $400 million and full-year loan growth of $922 million, or 6.24%. Hester also noted the company has posted organic loan growth in nine of the last 10 quarters.

However, Hester cautioned that fourth-quarter loan growth benefited from $150 million in expected payoffs that did not occur as scheduled, and he said the timing shift could “dampen early loan growth expectations” in 2026 even if origination pipelines remain strong.

In response to analyst questions, Hester described the loan growth mix as similar by size and geography, noting that construction loans typically fund over time, but the quarter included “a couple of larger loans” that were fully funded because they were not construction. He also said loan pipelines have been “pretty consistent” and not materially changed.

On credit, Hester said asset quality remained strong, with a sequential decline in criticized assets and “no material change” in non-performing asset and non-performing loan ratios. He provided updates on two specific issues discussed previously:

• DFW apartment loan: A loan sale agreement “fell through,” but the company applied a “significant hard deposit” to the balance, reducing the carrying value materially. Management said it continues to work with other parties to move the credit out of the bank.
• Texas C&I credit: Hester said the credit remains a “work in process” and could move to non-accrual before resolution. He later said the exposure was roughly $90 million to $100 million, and management did not expect additional loss beyond a prior charge-off taken about a year earlier.

Management also discussed competitive loan pricing pressures. Allison and Hester pointed to examples of aggressive terms seen in the market, describing them as “silly stuff” and suggesting competition could be a key variable for margins in 2026.

CCFG activity and Shore Premier delinquencies

Chris Poulton, president of CCFG, said the unit originated more than $800 million in loan commitments in the fourth quarter, producing $236 million in net loan growth. He said outstanding CCFG loans ended the year above $2 billion, representing just under $200 million of growth (about 10%) for the year. Poulton said paydowns and payoffs were elevated during 2025 and could moderate growth in the near to midterm in 2026, though he expects new funding and volume to help offset paydowns over time.

During Q&A, Poulton discussed increased non-bank competition in commercial real estate lending, describing “refugees from the corporate lending side” moving into CRE as pricing compressed elsewhere. He said paydowns remain elevated, and he expects continued opportunities to originate loans in less “run of the mill” situations where the firm can be helpful to clients.

Executives also addressed a rise in 90-day delinquencies in the Shore Premier Finance portfolio. Hester said the increase was driven by “three or four single loans” and delays in repossession and court processes, including a large boat-related credit the company has discussed for several quarters. He described the issues as “scattered” and not indicative of a major trend.

Capital, buybacks, and the Mountain Commerce Bank acquisition

Tipton said capital levels continued to grow, ending 2025 with a common equity tier 1 ratio of 16.3% and total risk-based capital of 19.1%.

Allison said the company repurchased 2.89 million shares for $81.3 million during 2025 and bought 540,706 shares for $14.7 million in the fourth quarter. He also said the company had repurchased about 96,000 shares so far this year. In Q&A, Allison said he would like to buy back roughly the number of shares to be issued in the Mountain Commerce transaction—“six-plus million shares”—over time.

Management reiterated optimism about the acquisition of Mountain Commerce Bank and the company’s entry into Tennessee. Tipton said regulatory applications were filed earlier in the week of the call and management anticipated a “quick process.” Allison said the deal is “triple accretive,” and he emphasized that benefits would accrue “on day one.”

On integration considerations, management said Mountain Commerce’s funding profile and margin would be addressed over time, including potential opportunities to grow deposits and reduce wholesale funding. Executives also described early business leads tied to the Tennessee expansion and said the larger Home balance sheet could enable Mountain Commerce’s team to pursue larger relationships.

Allison also indicated Home remains open to additional M&A after closing Mountain Commerce, while repeatedly stating the company would not pursue transactions that dilute shareholders.

About Home BancShares NYSE: HOMB

Home BancShares, Inc is a bank holding company based in Conway, Arkansas, operating through its primary subsidiary, Home Bank, National Association. Founded in March 1999, the company provides a comprehensive suite of banking services to individuals, small and middle-market businesses, and public entities. These services encompass deposit accounts, consumer and commercial lending, mortgage origination and servicing, treasury management, and wealth management solutions.

The company's core products include checking and savings accounts, certificates of deposit, and money market accounts, as well as a variety of loan offerings such as commercial real estate financing, equipment loans, agricultural lending, and residential mortgages.

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