Home BancShares, Inc.

Ladies and gentlemen, thank you for standing by. The Home and Bank Shares first quarter earnings call will begin shortly. If you would like to register a question at any time, please press star 1 on your telephone keypad. Thank you for your patience. Greetings, ladies and gentlemen. Welcome to the Home Bank Shares Incorporated first quarter 2024 earnings call. The purpose of this call is to discuss the information and data provided in the quarterly earnings release issued this morning. Company presenters will begin with their 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 to remind everyone to refer to the cautionary notes regarding forward-looking statements. You'll find this note on page three of the form 10-K filed for the SEC in February 2024. At this time, all participants are in this 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 Townsend, Director of Investor Relations.

Donna Townsend Thank you. Good afternoon and welcome to our first quarter conference call. With me for today's discussion is our Chairman, John Allison, Tracy French, President and CEO of Centennial Bank, Stephen Tipton, Chief Operating Officer, Kevin Hester, Chief Lending Officer, Brian Davis, our Chief Financial Officer, Chris Poulton, President of CCFG, and John Marshall, President of Shore Premier Finance. To open our discussion on the quarter today, we will begin with some remarks from our Chairman, John Allison.

Thank you, Donna, and welcome, everyone. Welcome to Home Bank Shares' first quarter earnings release and conference call. We released our results this morning prior to the market opening, and overall, it was a good start to a volatile year. Anytime you conduct the trends with positive results across the board on net interest income, revenue, EPS, margin, increases in both loans and deposits while maintaining our strong liquidity position and reducing expenses by over $3 million, below the first quarter of last year, 23, is a big win. Home with our Fortress balance sheet is one of the strongest banks in America, and having the ability to pay out all uninsured depositors should provide comfort for all our customers and shareholders. As I've said in the past, we will not be the highest when it comes to paying rates on your money, but you will not have to worry about getting your money anytime you need it. During this crisis, we have never run a CD ad paying these outrageous, unprofitable prices for deposits, like many trouble banks are doing today. This did not happen by luck. Your management team has maintained, as we're choosing, remained very conservative during what appears to be a mirror image of the inflationary Volcker times of the late 70s and the early 80s. We have been active in recognizing the danger of the Volcker years and have managed accordingly. This one is not over yet and will not be over this year. Inflation is and will continue to be with us for the foreseeable future. Our government is totally responsible for this situation. Irresponsible spending is the direct cause of all our inflation in this country. Both Republicans and Democrats and more so Democrats are spending like drunken sailors and even trying to relieve student debt in an attempt to buy votes with our money. They caused it and now Powell and the Fed is desperately trying to stop it by avoiding a recession. Really, they should all be punished for their action. Their stupidity is the reason for an inflationary problem. The problem is that most of them couldn't run a washing machine. The buck stops with them. We have not felt the full impact of the increase of oil prices rolling into our economy. Coming from the manufacturing business, the impact of oil is not just at the service station, as we learned through experiences past oil spikes, but multitudes of products derived from oil or byproducts thereof. Earlier this year, the market was signaling six cuts. Let me say this. If we had to have six cuts, Donna, this country would have been in lots of trouble. I made that statement earlier in front of her, and she said, we wouldn't have been in trouble. And I said, I didn't say us. She said, make clear that we say the country would have been in trouble. We called for higher for longer before that was popular. We forecasted one and not more than two rate cuts. I'm beginning to believe that may be high. The only caveat coming is politics. I think instead of cutting rates, because it's not the right time, the Fed needs to consider raising rates again. President Clinton, when inflation was sticking its ugly head up during his term, surprised everyone with a 50 basis point jump in rates when no one expected it. Within a short period of time, he dropped back 25 basis points, but he did stop in place. They say the president has no control over the Fed or the chairman, but it did during the Reagan administration. When Volcker was calling the White House to meet with President Reagan by Chief of Staff Jim Baker, the meeting took place in the library and not the Oval Office. And according to Volcker, the president never said a word. Baker asked Volcker to sit down. And then he looked at it and said, the President of the United States is ordering you not to raise rates during an election year. End of meeting. I just finished the book and that little jewel was in. I thought I'd share it with you because it does, maybe politics do involve themselves. By the way, Volcker thinks the reason for the library meeting was not, was because there's no recording device in that room. And as Richard Nixon found out in the later year, there was one in the whole office that paved the way. for the Watergate fiasco. The profitability of our bank is simply based on earnings, revenue, and expenses. I understand that's a simple approach to looking at our company, but how much revenue was generated over the quarter, and how much did it cost us to generate that revenue? Therein lies the efficiency ratio. How much does it cost to make a dollar? We have to give credit where credit's due, and that belongs to the revenue side and the retail side of our company. Our loan teams have continued to write loans in a way that is accredited to our overall yield. As a result, it has been pleasing to watch the overall yield of the entire book continue up to hit a new high of 7.34%. And that is without any event income, I believe, Stephen, is that correct? All while maintaining strong asset quality. Congratulations to our entire lending team. It is because of you and your strong relationship that you've developed one-on-one with our customers. You continue to answer the call to do the best for our owner shareholders and provide opportunities for home to remain one of America's best and most profitable companies. During the quarter, our lenders originated $954 million in loans at a record rate of 9.28%. Only about 40% of that funded, I think. Less than half?