Home BancShares, Inc.

Greetings, ladies and gentlemen. Welcome to the Home Bank Share Incorporated third quarter 2026 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 a touchtone phone. If you decide you want to withdraw your question, press star then one again 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 2026. At this time, all participants are in listen-only mode and this conference is being recorded. It is now my pleasure to turn the call over to Donna Townsell, Director of Investor Relations. Donna, please go ahead.

Thank you. Good afternoon and welcome to our third 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 Scott Walter of Shore Premier Finance. The story of the quarter was 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.

Welcome, everyone. It's another strong quarter for home bank shares, led by record earnings of $129.1 million, or $0.65 a share. For the first nine months of 26, we remain on the strong path towards my goal, our goal, of $500 million. Or it would 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 26, we produced 380 million in 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 23 cents a share. I know y'all are all 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 everyone. Increase in the last quarter, we repurchased 1,300,000 shares for approximately 39.3 million, created 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've 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 ROA, strong PPNR, tangible book for share growth, low efficiency ratio. It'll be interesting to see once we 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 tenancy partners. We're proud of the work you're doing. Again, the big surprise like the second quarter was the third quarter average loan growth balance is 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 at payoffs coming late in the quarter. Our funding strategy also continued to benefit earnings. Bar 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 of losses, attempting to repair the damage inflicted by their decisions. The story appears to be repeating itself again as rates continue to climb. Home avoidance, taking excessive duration risks, 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 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 banks, 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 the day. Those pushing public banks to buy low-rate, long-term securities several years ago are now the ones pushing for growth. Grow, grow, grow. Growth at any expense. They say, 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 back on that. Regarding a large non-performing loan we've been discussing for several quarters or 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. 80% 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 over the current carrying balance. Remaining balance is owed, and the proceeds would be between the personal guarantors and HomeBancShares. 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 211 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.