Home BancShares Reports Record Q3 Earnings and Higher Dividend

Home BancShares (NYSE: HOMB ) reported third-quarter financial results on Thursday. The transcript from the company's third-quarter earnings call has been provided below. This content is powered APIs. For comprehensive financial data and transcripts, visit Access the full call at Summary Full Transcript Donna, Investor Relations Stability, strength and shareholder value creation.

All banks are not created equal in management, profitability, margin and among many other categories. And we certainly work hard at Home to set ourselves apart. We are proud to announce another record-setting quarter here at Home and our team is prepared to provide more details about our performance. Our first speaker today will be our Chairman, John Allison.

John Allison, Chairman Welcome, everyone. It's another strong quarter for Home BancShares, led by record earnings of $129.1 million, or $0.65 a share, for the first nine months of 2026. We remain on a strong path towards my goal—our goal—of $500 million. Or does it sound better to say a half a billion?

I never thought I'd be saying that, but we're on the path for that. For the first nine months of 2026 we produced $380 million adjusted earnings, keeping us on a strong path towards our goal of $500 million. Really, the real difference between the earnings and the adjusted earnings is primarily Mountain Commerce—the merger expense of $12 or $13 million. During the quarter, we paid our new dividend of $0.23 a share.

I know y'all are happy with that. I would think that's a 9.5% increase. And my wife is extremely happy. As y'all remember, she's a dividend hawk for every one increase.

In the last quarter we repurchased 1,300,000 shares for approximately $39.3 million, creating a shareholder buyback yield of 0.69% in the third quarter; second quarter we created a shareholder buyback yield of 0.77% and the first quarter of 0.25%. So total through three quarters: additional shareholder return of 1.71% for the three quarters. We repurchased 3.3 million shares, approximately $94.4 million, with plans to continue stock repurchases during the fourth quarter. Couple that with a new dividend yield of approximately 3%.

It is our goal to return as much capital to our shareholders as prudent to do so. I understand the importance of shareholders because they are the ones who we work for. Being a founder, chairman, owner, operator and largest individual shareholder, I understand the alignment firsthand—management is invested in alongside our shareholders—and we remain committed to sharing the rewards of the company performance with them. That more than confirms the passion and drive to share the rewards with all our shareholders.

Home's earnings power and balance sheet flexibility was shining brightly in the third quarter with record profitability, strong stock repurchases, margin expansion, increased dividend, consistent ROI, strong PPNR, tangible book per share growth, low efficiency ratio. It'll be interesting to see as time goes on in this quarter how we compare to the rest of the industry. We're proud of the fact that we've been named by many companies for outstanding peer-leading performance awards year in and year out.

And as we forge forward on our goal of a half a billion dollars in profit, as I said in the second quarter, Mountain Commerce transaction is performing very well and making a continued contribution to the total company. Based on what I've seen, I'd do that transaction again. We expect additional benefits as we complete the back-office integration during the fourth quarter. Congratulations on a good job to our new Tennessee partners.

I'm proud of the work you're doing. Again, the big surprise like the second quarter was the third quarter average loan growth balances—outstanding. What appeared to be a large down quarter like last quarter turned out to be only down $28 million on average balances from last quarter. That's a result of keeping many of the loans that pay off coming late in the quarter.

Our funding strategy also continued to benefit earnings. Borrowing expenses during the quarter declined by $2.3 million. Decrease in interest expense on deposits was $1.2 million of that, and decrease of $1.1 million in interest expense on Federal Home Loan borrowings and other borrowings as we reduced total borrowings by $200 million during the quarter. Many banks may think their AOCI pain is over because they restructured the balance sheet.

It took hundreds of millions of dollars, in some cases billions of dollars, in losses attempting to repair the damage inflicted by their decisions. The story appears to be repeating itself again as rates continue to climb. Home avoided taking excessive duration risk, maintained balance sheet flexibility and protected shareholder capital. Our disciplined decision not to build a large long-duration securities portfolio has proven to be the right one.

Higher rates still affected our AOCI during the quarter, but impact remained manageable relative to our size. If you remember, we've not bought securities in years to speak of. A key point that differentiates Home BancShares from most banks—as evidenced by the increase in margin for the quarter—is the balance sheet is structured to increase the margin as rates increase. Donna said all banks are not created equally, and they're not created equally, but when rates go up, bank stocks usually go down when it's actually positive for Home BancShares.

As you can see for the quarter, we built this balance sheet to perform through different economic and interest rate environments, and that discipline continues to benefit our shareholders through today. Those pushing public banks to buy low-rate, long-term securities several years ago are now the ones pushing for growth—grow, grow, grow. "Johnny, open up that loan machine." I really bet that few, if any, of them have ever run a bank. Being one of the most profitable and safest banks in the country, year in and year out, has worked for our shareholders.

We will stay the course as we have in the past. I'd rather be known as one of the safest and most profitable banks in the United States than one with problems, losing millions of hard-earned money of the shareholders. We will grow when opportunities meet our standards for credit quality, pricing and shareholder returns. We will stay the course, and you can bank on that.

Regarding our large non-performing loan we've been discussing for several quarters, our longstanding guidance has been we have no additional loss in the large Texas C&I relationship and, in fact, we expect recoveries over time. There's been a lot of positive movement in this credit over the last 90 days. Eighty percent of the assets of the company are under a signed asset purchase agreement that we expect to close tomorrow, next week, three weeks from now—but soon. And the remaining 20% have a preliminary agreement with only one contingency that will be resolved once the first part is sold and completed.

So when the 80% is sold, we understand the other 20% will come right after that. We expect these transactions to close this quarter. The scheduled proceeds from these two sale transactions would result in a recovery of over the current carrying balance. Remaining balances owed and the proceeds would be between the personal guarantors and Home BancShares.

Profitability, as I said earlier, of our company—we had a 166 PPNR, and I think Stephen's going to cover most of those. We came out with a pretty good efficiency ratio of 40.84% for the quarter and a 2.11% ROA, and that's without the Mountain Commerce conversion. Our non-performing ticked up a little bit, but that's not concerning to us at that. I think Chris had a little one that popped up $11 or $12 million, and he's around to discuss it if anybody wants to ask a question.

I'd like to say a special thanks to our team for continuing to produce better numbers almost every quarter in our 26-year life. We're honored to be a continuing top performer year in and year out. Donna, I think that's all the news I have because all the news I have was good, and I have no bad news. Donna, Investor Relations Okay, well no bad news is good news, so thank you, Johnny.

Our next report comes from Steven Tipton. Steven Tipton Thanks, Donna. As Johnny mentioned, the third quarter of 2026 was another strong performance for Home and Centennial Bank. Adjusted earnings were $129.1 million, an increase of $1 million from last quarter.

Performance metrics are again top tier with a 2.11% return on assets and a 16.54% return on tangible common equity, which is on a TCE ratio of 13.48%. The reported net interest margin was 4.53%, an increase of 2 basis points from Q2. The core margin excluding event income was 4.50%, up 3 basis points from the prior quarter and up 4 basis points year over year. The overall loan yield excluding event income averaged 6.91% and exited the quarter at 6.90% while interest-bearing deposit costs averaged 2.37%.

Total deposit costs were 1.83% in Q3 and exited the quarter at 1.81%. Switching to the balance sheet, legacy deposit balances declined in Q3 by $358 million as a result of a decline in municipal deposit balances, quarterly tax payments in September, and the reduction of wholesale deposits from the MCB acquisition. We continue to focus on core deposit relationships in this extremely competitive rate environment. Noninterest-bearing balances now stand at $4.21 billion and account for over 22% of total deposits.

Loan production softened slightly in the third quarter to $850 million, reflective of our conservative approach to underwriting and discipline in pricing. Tennessee contributed nicely this quarter with almost $70 million in production. Payoff volume that we've discussed in the past materialized in Q3 with payoffs at $1.01 billion. Our pipeline for unfunded commitments remains strong at over $3.8 billion.

As Johnny mentioned, tangible book value per share grew $0.03 to $15.35 despite a $65 million increase in AOCI and the share repurchases, a testament to the earnings power and stability of our company. Capital levels remain extremely strong with Common Equity Tier 1 capital ending at 16.7% and total risk-based capital at 19.4% and reserve to total loans of 1.93%. We believe our balance sheet is well positioned to benefit from the recent move in rates and for what looks to be additional rate hikes in the future.

We have approximately $1.2 billion in fixed-rate loans maturing over the next 12 months at a weighted average rate of 5.72% along with $7 billion in variable-rate loans. Asset-liability modeling shows a nearly 6% increase in net interest income in an up 100 basis point scenario. We're proud of the third quarter results here at Home and look forward to another record year as we round out 2026. With that said, I'll turn it back to you, Donna.

Donna, Investor Relations Thank you, Stephen. Kevin Hester will wrap up our prepared remarks with an update on lending. Kevin Hester, Chief Lending Officer Thanks, Donna. Loan balances ended the quarter much better than we anticipated.

When we visited 90 days ago we had some payoffs late in the quarter but also held on to a few that we expected to pay off. Johnny says I'm not very good at forecasting loan balances, so I've got that going for me. I'm not sure if it's correct or not, but for what it's worth, this quarter looks better than the last. We continue to see sizable loan opportunities throughout our footprint, and we're encouraged by the effort that's given by our lenders.

Johnny commented on the large nonaccrual, and while we'd hoped it would be a third-quarter resolution, we're very encouraged by the progress made recently and we believe that the proposed asset sales validate our underwriting and management of the credit. Overall asset quality remains solid and, while nonperforming loans increased 11 basis points quarter over quarter, that increase is due to one CCFG loan that we expect to be resolved in this quarter, and Chris is on the call to provide more color on that. We remain focused on asset quality, profitability and growth, in that order.

One thing I can confidently tell you from my 65 quarters leading the lending function of this company is that this is the only formula for long-term success in this industry. Donna, I'll give it back to you. Donna, Investor Relations Thank you, Kevin. Well, Johnny, before we go to Q&A, do you have any additional comments?

John Allison, Chairman Well, I think Stephen kind of hit that thing about the quarter. We got an AOCI mark of $65 million, we paid our new dividend, increased dividend, and we bought back 1.3 million shares, and we still grew tangible book value slightly. We didn't lose—tangible book didn't go down. Banks sell on tangible book, and we still increased tangible book value per share.

Very proud of that. And what that says is that Home has amazing earnings power. That's what 2.11 ROA will do for you. I really just want to thank the entire team for continuing to deliver outstanding results nearly every year.

For our 26-year history, Home BancShares has built a consistent record of top-performing banks and the performance reflects the discipline and dedication of our employees across the company. This was another strong quarter for Home BancShares. We produced record earnings, meaningful capital to shareholders, maintained our balance sheet discipline, made encouraging progress on the large credit we've discussed. We remain focused on finishing the year out strong and delivering long-term value for our shareholders.

Past that, I think that's enough for me. Donna, Investor Relations Okay, that sounds good. We will turn it over to Q and A. OPERATOR Thank you.

We will now begin the question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimal sound quality if you are muted locally.

Please remember to unmute your device. Please stand by while we compile the Q and A roster. Your first question is from the line of Steve Skulkin from Piper Sandler. Your line is now open.

Please go ahead. Donna, Investor Relations Are you on, Stephen? OPERATOR As a reminder, please unmute your device. John Allison, Chairman He was going to be in kind of a rural area today.

He may not be making connections. Move on. If he comes back, we'll handle it. How about that?

Let's move on. OPERATOR Your next question is from the line of Woody Lay from KBW. Your line is now open. Please go ahead.

Woody Lay, Analyst at KBW Hey, good afternoon. John Allison, Chairman Hey, welcome. Nice to have you. Hi, Woody.

Woody Lay, Analyst at KBW I appreciate you all having me. I wanted to start on the net interest margin and, you know, higher rates would seem to be a benefit for you all. Was just curious with the hike in September, how you've seen the NIM progress from there and what incremental rate hike could mean for the NIM going forward. Steven Tipton Hey Woody, this is Stephen.

Yeah, I guess first part of your question, you know, the core NIM excluding event income averaged 4.5 for the quarter. It was 4.55 in September. Obviously the rate hike came halfway through the month there, so I think there may be, you know, a little bit of incremental benefit for us and then just, you know, based on our ALCO modeling, like I said in the comments, I mean we show, I think it's 5.6% increase to NI in a 100-basis-point scenario. So that's kind of what, you know, or the way we think about it today.

I mean we're certainly in a competitive environment on loans and deposits. But if we're able to, you know, if we're able to control that on the deposit side and get some lift out of these maturing loans over the next 12 months, you know, I think there's a chance that it could potentially move a little higher from here. Woody Lay, Analyst at KBW Got it. That's helpful.

And then, you know, I was curious on the growth front, you know, based on your opening comments, it seems like you're a little bit more optimistic on growth in the fourth quarter and was curious. Is it, you know, is that a reflection of, you know, competition slowing down? Is pricing becoming more rational? I guess just curious on your thoughts on maybe what's driving that clear path to growth.

John Allison, Chairman This Johnny. I'll take a little of that and give it to Kevin after that. We lost about half a billion dollars of loans due to some unusual circumstances that we have that hit the company over the past 18 months. They're gone now—those unusual circumstances are gone.

But we're back on the loan, we're back on the loan wagon today. We've got lots of good stuff working and I think you'll be pleased to see the loan growth out of Home BancShares. I'll let Kevin speak to that he was referring, and then we'll let Chris comment on it also. Kevin Hester, Chief Lending Officer Yeah, Woody, I don't know.

That may be saying that people are coming back to their senses with the 25 basis points that already occurred going up and the thought that there's probably 75 more coming—that may be playing into where we're at. We're not 100% sure of that at this point, but there's certainly some good opportunities that we're looking at for this quarter. Good sizable opportunities. And it's across the footprint.

It's not all in one place. So we may look back in 90 days and say that, yeah, that is part of it, but I'm not 100% sure that's the case yet. Woody Lay, Analyst at KBW Got it. All right, well, that's all for me.

Thanks for taking my questions. John Allison, Chairman One more comment from me. We're seeing a lot of opportunities out there right now that really look good. I think you'll see coming through.

Chris, you want to comment on CCFG, what you're seeing? Chris Sure. Thanks. Well, a little slow new origination-wise for us in the third quarter.