Home BancShares, Inc.

gentlemen welcome to the home bank shares incorporated first quarter 2025 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 and 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 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 notes regarding forward-looking statements. You will find this note on page three of their form 10-K filed with the SEC in February 2025. 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 Townsend, Director of Investor Relations. Please go ahead.

Thank you. Good afternoon and welcome to our first 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, Chris Poulton, President of CCFG, and John Marshall, President of Shore Premier Finance. Opening remarks today will be from our chairman, John Allison.

Good afternoon. First today, I want to pay tribute to a special friend of HomeBankShare's family, and a director of our company. We've lost a good friend and a strong leader with the loss of Pat Hickman. Hickman was a wonderful asset to the home board of directors, and from a personal perspective, he was a man that walked in the same shoes that I walked in while he was building, happy as I've been building home bank shoes. He was a confidant. Pat lit up a room with his outgoing personality and was a good man of God and always wanted to pray for all of us on the board, and we probably needed it. Someone briefly said, I bet Pat, as he goes through the pearly gates, is telling God about his bank's new CD special. That's Pat Hickman that I remember. We will miss you, my friend, and may God be with your wife, Nancy, and your wonderful family. Good day, everyone, and thank you for joining the start of 2025 with us. First quarter earnings are in, and as I said in the headline, home strength is no accident. couple our strength with peer leading performance methods, and you get the results you get that may be the best first quarter in the entire bank space. Our continued conservative philosophy of maintaining strong capital, excessive loan loss reserves, excellent liquidity, good asset quality, and strong operating efficiencies have led to an almost perfect quarter for the company. The good news is we delivered a near perfect quarter while setting six new performance records. The bad news is it was delivered during uncertain economic times. Hopefully this top tier quarter does not get lost in the shuffle. We continue to maintain the passion, the drive, and the discipline that allows our performance to separate us from the pack by being one of the most profitable institutions in the world. It is our goal to reward our owners and make them proud to be shareholders of HomeBank shares. It's really nice to have the large Texas cleanup behind us, or basically in the rearview mirror. Pretty much done. Plus, it appears we've reached a 10th resolution to the Texas lawsuit we filed a couple years ago. So that may go away along with millions of dollars of expenses that are incurred on a quarterly basis that could disappear in the second quarter. Couple that with strong loan growth, stable margins, and it feels like home may have finally broken out on the earning side. Management has to ride herd every day during these volatile times. That requires constant watching with a laser focus, both internally and externally, and be prepared to shift either to direct the company in an offensively or defensively direction. The bottom line is, as my wife said, regardless, protect the chuck wagon. And that's certainly the most conservative approach. And as I said last quarter, these banks don't run themselves. I'll talk a little bit about the highlights and why they're important to our company. But most of the numbers speak for themselves. Steven will make a few comments about margin. And Kevin will make a few comments about loan. And Chris Poulton will talk about CCFG. Let's go to the numbers. Earnings was a beat. Earnings showed $115.2 million, a record $0.58 per share. That represents a significant breakout in quarterly earnings that has been fixed around $100 over the past several quarters. Reported core earnings of that was $111.9, that's $0.56 a share. I want to bring to your attention that the expense of the Texas lawsuit was in this quarter, and that was $2 million after tax, and hopefully that will be non-reoccurring in the second quarter. Without the expense, the core would have been $114 million and 57 cents a share. Our gain from our equity investment was backed out of the income for core purposes because it's not guaranteed reoccurring. However, management believes our equity investments have certainly been profitable and put us in a position to reap the benefits that otherwise would have been a missed opportunity. That's the business man in me, always reaching for a little extra. Revenue, home was a beat on revenue. We were able to grow revenue faster than interest expense, $260.1 million in revenue. We edged out the fourth quarter of 24 by $700,000 and the first quarter of 24 by $13.1 million. With rates down, we are pleased to continue our plan to top our billion-dollar run rate that we did in 24. Margin, strong improvement on late quarter, up 444 from 439 in the fourth quarter and 413 in the first quarter. Net interest spread improved 11 basis points from December 24. at 358 to 369 for the first quarter of 25. Nice improvement while yield on loans expectedly dropped on the linked quarter basis to 7.38 from 7.49. Loans, strong loan quarter with our community footprint increasing $291.5 million while CCFG declined 103 for net loan growth for the quarter of 187.6. At March 31, we were at a record level on loans at $14,950,000,000. And we're $14,960,000,000 at December 31, 2024. And if I'm not mistaken, we've gone over, ticked over, I don't know if it'll hold, but we've ticked over $15,000,000,000 so far this month. Deposits, strong deposits with an increase of over $395 million for Q1. The increase took us to $17.5 billion from $17.1 billion at the end of the year, which led to a decrease in loan deposit ratio to 85.24, and that's in spite of the strong loan growth. The rate on interest-bearing deposits decreased to 2.67 from 2.80 at year end, I said last quarter, I think the strength of our company being able to pay out all uninsured deposits has served us well. There's always a flight to safety in uncertain times. Home is enjoying the deserving reputation of being able to pay out all deposits in the flight to safety. There is no place like home. Pre-tax net income for the quarter was 56.58%. I don't know how you fuss with those numbers when you bring 56.58% of your revenue to the pre-tax bottom line. Asset quality non-performing loans improved to .60 from 6.7, while non-performing assets improved to .56 and .63. Reserve coverage grew to 312% from at the end of the year, 278%, and non-performing dropped 13 million. As of March 31, 25 non-performing loans were $89.6 million and non-performing assets were $129.4 versus December 31 where non-performing was $98.9 and non-performing assets was $142.4. Capital ratios continue to build. CET1 at 15.4, leverage at 13.3, and total risk base at 19.1. Tangible book value increased to $13.15 from $11.79 a year ago, up $1.86. Book value hit a new record, surpassing the $4 billion mark for the first time in our company history. Return on tangible common equity for the quarter was a strong 18.39. We continue to buy back stock. We have a 10B55 during our quiet period. but had no idea of the opportunity to buy back stock at these prices, and the purchases had been limited by our filing. We purchased over a million shares, right at a million shares, I think in the nose for the quarter, and will remain active in the second quarter. This, too, shall pass, and I think we'll be proud of having been active at these levels. In conclusion, Holmes' powerful balance sheet, coupled with repetitive strong arms, that's now showing a possible breakout, but causes strong margins, conservative growth, good loan quality, massive capital, hands-on management, expense control, and don't forget our discipline, drive, and determination that has led us to pure leading performances. It feels good to be one of the best, and we love to win. We picked this up on, somebody wrote something about it, says that home strength is not an accident. We've kind of picked that up, and we're gonna use that in some ad campaigns. It was quite a quarter, Donna, and I want to thank all the team at Home Buy Shares for a great effort and what I consider a perfect quarter. Donna, I know you're proud yourself of the numbers as well, and I'm going to turn it back to you and let you have it.