Home BancShares, Inc.

Greetings, ladies and gentlemen. Welcome to the Home Bank Shares Incorporated fourth quarter 2024 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. The 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 the touchtone 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 cautionary note regarding forward-looking statements. You will find this note on page three of their Form 10-K filed with the SEC in February 2024. At this time, all participants are in a listen-only mode, and this conference 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 Townsall, Director of Investor Relations.

Thank you. 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, Tracy French, Chairman of Centennial Bank, Chris Poulton, President of CCFG, and John Marshall, President of Shore Premier Finance. To open our discussion on the quarter, we will begin with some remarks from our Chairman, John Allison.

Okay, thank you, Donna. Welcome to Home Bank Share's fourth quarter and year-end earnings release and conference call. The final quarter of 24 did not disappoint with strong performance of another $100 million profit quarter. And that is after taking a hurricane reserve of $16,700,000 as an abundance of caution we had as the second hurricane hit. HomeSteel completed our first $400 million profit year. Actually, we earned $402,241,000, plus home's first year to exceed $1 billion in revenue, the best performance in our 26 years. Think about the number. Your company brought 40% of the revenue to the after-tax bottom line. Simply 40% of the billion is $400 million, and that's what we earned. I am sure there are not many banks in this country with the ability to accomplish that feat. I'm very proud of our team for this great accomplishment. Additional Hurricane Reserve dinged EPS by $0.06 per share for the quarter and ROA by 23 basis points. We're not crying over spilled milk because we think it's prudent to maintain strong capital. But EPS would have been 57 cents, and ROI would have been exactly 2% for the quarter. I want to congratulate our team with Stephen and Kevin's leadership in managing the net interest margin. I'll let them talk more about it in a few minutes. But if you remember, our models and a lot of your models show a decrease in income as rates come down. But as Tracy says, That is only a snapshot in time that does not properly give management credit for strong expense reduction in interest expense and strong loan yields. As I've said in the past, strong loan yields by Kevin's group and low interest expense by Stephen's group makes for peer leading margin. The question is, can home improve in 24? I know it's early, it's early in the year, but we're running slightly ahead of what we did last year. With interest rates possibly going up or holding steady, I don't believe they're going down. I see it today they may have gone down a little bit. I think we'll continue our strong run rate into 2025. The only difference, only exception will be the actual increase in expenses for 2025. We have broadcasted for a couple years that we're going to clean up, do what we call the Texas cleanup, which we did. And while we were doing Texas cleanup, we just continued to do a clean sweep of all asset quality with a total charge off of $53,394,000, of which $47.6 million was loans in Texas, or 89.1%. That left a balance of about $5.8 million from Arkansas, New York, Shore, Premier, Florida, and even Alabama we charged off $8,000. plus any specific reserves that we thought were appropriate. I really feel good about the asset quality cleanup, and I'm certain that I've overkeeled again, as you know my history of doing that, but I wanted to put home into a position for a grade 25. Expect recoveries in the $30 million range over time, and probably you'll start seeing some of the recoveries this quarter. Let's go to the numbers. That income of $100.6 million for the quarter, or 51 cents, Record income of $402,241,000. You remember last year, we got hit with the Fed for the failed bikes, and that took us down below that, and we didn't quite make our $400 million, but we hit it this year. We had record revenue for the quarter of $258.4 million. And catch this, we had record revenue for the year of $1,017,000,000. That's quite a mark. I didn't realize we'd hit a billion, but I'm glad that we did. Strong net interest margin remains at 4.39%. Return on assets for the quarter was 177. I think it was for the year, too, Brian. I think it was 177 for the month.