Home Bancshares (HOMB) Q3 2025 earnings call transcript

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 third quarter was another record-breaking quarter for HOME, and our team is excited to show the results with you. Opening remarks today will be from our Chairman, John Allison.

Thanks, Donna. Welcome to third quarter, 2025, HOME BANCSHARES EARNING RELEASE INC conference call. It's really hard to believe it's already mid-October, and HOME has had another great quarter. I think that's three in a row. So we've added some graphs this time, Donna, to our presentation that you're welcome to look at that run from 93024 to 93025, and I think you'll see in those graphs what we're seeing here at the company. Just talk about some highlights for the third quarter. We have record net income of 123.6, record EPS of 63 cents, revenue of 277.7, pre-tax, pre-provision net revenue of 162.8, P5NR profit percentage of 58.64. That's the best in the last 12 months. That's not 60%, Stephen, but it's pretty close to 60%.

Pretty proud of that. Efficiency ratio, as some naysayers said was going up, was down, and efficiency ratio was the best in 12 months at 40.21. Margin kicked up a little bit. Some said our margin would go down. Our margin kicked up 12 basis points to 456, and that's the best it's been in 12 months. ROTCE continues to remain in the high teens at 18.28%. Just some balance sheet, strength highlights, common equity assets is 18.56%. We continue to grow that. Tangible equity, tangible assets, 13.08%. That continues to grow. And loans hit a record level of $15.18 billion for the quarter. Total stockholders' equity is $4.09 billion. More good news, the Texas lawsuit has been settled, and we've received our first partial payment of the settlement.

We expect most of the balance during the fourth quarter. Hopefully, we'll get it all in this year. We will be lucky if the proceeds will match up with the expensive litigation costs, and that does not include the loss of growth and profits we have suffered over the last couple of years. However, we had no intention of just mildly standing by while damage was being done to our company. Management has a fiduciary responsibility to protect the assets of the shareholder, especially when we did not do anything to any of those people that participated in this fiasco. I believe because our conservative nature, we've been criticized by some, I think that HOME BANC SHARES is not growing fast enough.

We don't really argue with that point, but I have to disagree with that discussion point because timing and discipline matter. Moving too fast or scaling too fast can be fatal. I believe in fixing your existing problems before you make a new move. That's exactly what HOME has been doing for the past three years, dealing with multiple, distinct, unusual problems that arose in the HAPI acquisition that led us to filing a 91-page lawsuit coupled with HAPI's asset quality problems. By the way, it's still a work in progress. ALCI, loss of HAPI private information, defection and loss of personnel. Don't get me wrong, we have some great people at HAPI, and HAPI's performance has rebounded.

I have been involved in over 45 deals in my banking career, but never anything of this magnitude. Enough of that. Forget the bad guys. The saddest part is what happened to some HAPI employee shareholders, who during the merger with HOME, in a tax-free exchange, HAPI shareholders exchanged their private, non-liquid HAPI stock for HOME stock. That is, a New York Stock Exchange publicly traded dividend paying with strong liquidity and a strong balance sheet.

And after getting the HOME stock, they listened to some smoke oil salesman who talked them into selling their home and investing the proceeds into another privately held stupid non-liquid investment. There may be where the biggest lawsuit is, misleading or unsophisticated individuals. It may be too late. Excuse me. It may not be too late. If my information is correct, every one of the investors have lost money in a home, and we were even forced to use the legal system to protect the assets of our shareholders. As bad as it was, the rest of the company stepped up to help us while we fought Texas lawsuit and was resolving the issues in front of us before moving to another opportunity.

In other words, we waited until we had our arms around us for multiple problems before we moved again. During that time, I feel confident we missed several growth opportunities, but we needed to fix what was in front of us first. Well, you can see from the charts, we're back producing top two best-in-class numbers once again. We would have been there a couple years ago had the annoyances of these unusual situations not come up. More good news, during the first quarter of 2025, for all banks over $10 billion, HOME rank number two in the nation in return on assets.

During the second quarter of 2025, for all banks over $10 billion, HOME rank number one in the nation in return on assets. During the third quarter of 2025, HOME outperformed both our first and second quarter ROA. It's early to be able to tell, but we're expecting to be once again one of the best, if not the best, in the market of all banks over $10 billion.

With the performance of the company back producing pure leading numbers, we're ready to move forward and do a large transaction or a couple smaller transactions. So those of you pushing for growth, the time is right and we agree with you. I said last quarter I was looking for $500 million in income in 2026. I'm holding that number so far this year through three quarters. HOME has earned $357.2 million with one quarter left to go. Add a couple acquisitions and a little growth, and I think the number is achievable and maybe a little better. Last year at this time, we'd earned $302 million. So far, we're up about $55 million this year, or 18.21%. The third quarter showed up 23.6% for Q325, with $123.6 million in income versus Q324 of $100 million.

During the fourth quarter, a bank was selling bonds including a $20 million piece of HOME BANC's sub-debt and a discount and repositioning. They were paying the paper, I guess I say. That they incurred on AOCI losses. And HOME was given the opportunity to buy. And we did buy that. We bought that $20 million worth piece, $20 million piece of our sub debt and picked up $1.9 million gain. Nice trade. Being as profitable as HOME is allows us to move quickly on opportunities. During the third quarter, we opened up an exciting new branch in San Antonio, and we met several of the local business people. Great market. We're wishing Michael Rodriguez, our team leader, and his team in San Antonio market much success.

Strength is no accident. That's our slogan. Another reason HOME has been hesitant on acquisitions is the hesitancy to take on banks' ALCI problems. We're expecting many more bank failures than what happened. We were told to keep our powder dry. We missed on that call on bank affairs, but the big one, the one that most banks got in trouble, we got that one right, the interest rate call. Many banks and their shareholders are and will continue to suffer from an earnings perspective because their management made huge mistakes of investing their liquidity into long-term securities and loans during the low-rate environment that we all experienced, and now they must pay the piper. The problem is how long does it take to fix it?

It relates to how long a bank's duration is on both its loans and security, whether fixed or variable, five years, ten years, some shorter, some longer. Making the decision at home not to invest in long-term securities and loans is the single best decision we have ever made, or I have ever made, in my 50 years of running companies. As I said, when a bank gets in that dilemma, their options are do nothing and write out the duration until the bonds and loans mature, praying all the time that interest rates come down. Or if they have enough capital, they can sell the bonds and or loans at the market and reinvest the proceeds and recognize loss.

This can create a capital problem, forcing banks to raise capital by selling more stock. Since banks trade on the multiple of tangible book value, the losses incurred will reduce tangible book value, thus resulting in a lower stock price. The recovery period can be long and painful, and sometimes a death sentence, as we saw with signature by Silicon Valley and Republic. Regardless of the decision that is made, at this point, there is commensurate damage to the balance sheet based on interest rates, duration, and quality. Regardless of why the bank is trying to recuperate by whatever methods they are losing years of earnings power, either way, if they decide to write it out or recognize an unrecurable loss in income in tangible book, the loss is a loss regardless of how it's presented.

It reminds me of the Fram Oil Filter guy, quote, you can pay me now, pay me later. Or another analogy is, it reminds me of losing Park Place while playing Monopoly. You never get it back. The whole time, watching others that did not make the same mistake, busy sacking up capital as their ship leaves you at the port. Last option is to find a partner that likes your operations, understands your dilemma, and has lots of capital and is willing to use their capital to mark the balance sheet to take the hit immediately, which allows the company to accrete the mark into income over the duration of the paper. A huge example of this is the latest deal that was just done, CMA Co-America, who was acquired and the stock shot up $11.77 in one day.

That was extremely positive for both the buyer and the seller shareholder. There is no easy answer to resolve these mistakes that were made, but if your shareholders will ride with you, maybe you live to fight another day. But regardless, it's not an easy fix. If they don't want to rise, they sell their stock and invest in companies that are already out there that didn't have the problem stacking up equity. Donna, I think that's pretty much it. Companies humming along pretty good, and I told you last quarter that I hoped that we'd have a deal done this quarter. We probably don't have one yet, but we're getting close. Thank you.

Okay, thank you, John. I'm sure when you get a deal, it'll be the right deal. So, patience is a virtue, right? Our next report today comes from Stephen Tipton.

Thanks, Donna. As Johnny mentioned, the third quarter was another strong performance for HOME and Centennial Bank and produced records in several areas. Highlighted by strong revenue and continued net interest margin expansion, we were able to produce an adjusted return on assets of 2.10 percent, The reported net interest margin improved to 4.56%, up 12 basis points from Q2, and up 28 basis points from the same period a year ago. The core margin, excluding event income, was 4.53% versus 4.43% in Q2, driven by an increase of two basis points in the overall loan yield and a decline in interest-bearing deposit costs of two basis points.

Deposits ended slightly lower in Q3, down $161 million, driven largely by customer tax payments made in July. We continue to focus our regions on growing core deposits and relationships, evidenced by wholesale deposits only comprising 2.3% of total liabilities. Although the adjusted efficiency ratio improved to 40.95%, our president and leadership group are closely monitoring core expense trends and controlling those in a tight range. Loan production was strong this quarter at nearly $1.3 billion, highlighted by $800 million from the community bank footprint, with more than half coming from our Florida regions.

Congratulations to our regional and division presidents and all of our bankers on another great quarter. With that, I'll turn it back over to you, Donna.

Thank you, Stephen. Next, we will hear from Kevin Hester on the lending portfolio.

Thanks, Donna. Asset quality improved overall again in the third quarter with improvements in NPLs, MPAs, past dues, and total criticized loans. As you know, there's always good and bad as you work through problem loans. On the good side, I'm pleased to announce that we have the DFW apartment nonaccrual loan under an agreement for sale with a hard deposit of over 10% of the purchase price and a closing date in the fourth quarter. However, on the large Texas C&I credit that we charged down at year end, they continue to struggle to recover, and it is entirely possible that it moves to nonaccrual before it gets to a resolution. At this time, we still do not believe that there is any additional loss in this relationship.

Despite the headwinds resulting from heavy payoffs in September, we were still able to post loan growth of $105 million for the third quarter, continuing our recent history of linked quarter loan growth. The third quarter of 2025 marks eight times in the last nine quarters in which we have posted organic loan growth From time to time we have been questioned by analysts and investors about our level of loan growth being less than others that they cover or follow and we always state that we will take what the market allows Frothiness in the overall market generally leads to aggressive pricing and leverage by our competitors, and we will not participate in those situations. On the other hand, periods of volatility lead to banks exiting asset classes or markets, and generally results in improved pricing and leverage, and we usually fare well during those times.

That said, I would like to take a moment to point out that regardless of which situation that we are in, I believe that we are not given enough credit for whatever level of loan growth that we post. Keep in mind that because we are best in class in both net interest margin and efficiency ratio, our loan growth produces greater results than our peers.

We have posted year-to-date loan growth of $522 million, which results in an annualized growth rate of 4.71 percent. Not a bad number, and certainly more than the percentage increase in GDP over that period. However, we operate at a net interest margin of 4.48% and an efficiency ratio of 40%, compared to a net interest margin of 3.59% and an efficiency ratio of 55% for all banks from $10 billion to $50 billion. When you add the effect of our best-in-class NIM to that nominal loan growth number, the impact feels like loan growth of $653 million or 5.89% annualized in terms of our peers.

Layer in the effect of our better-than-peer non-interest expense, and that impact grows even further to 6.73%. The point of this analysis is to highlight that lower performing peers must post much higher nominal loan growth results just to provide the same profitability impact as the 4.71% that we've posted year to date. This focus on high performance in all areas when combined with even reasonable loan growth is the formula for a best-in-class ROA. Donna, that's all I have. I'll give it back to you.

Thank you, Kevin. Appreciate the color on that important analysis on loan growth. Now, Chris Poulsen will provide an update on CCFG.

Thank you, Donna. Good afternoon. Q3 was quite busy for CCFG, but you might not know it from our asset number. We ended the quarter down about $60 million from Q2 as payoffs, slightly outpaced new funding. That masked what was an active quarter for originations with just under $400 million of new loan commitment. There were a couple of loans closed at the end of the quarter that funded post-quarter, and a few loans that we had anticipated to close by quarter end that pushed into Q4. All of that to say, we've already seen our loan balances bounce back in the first few weeks of October, and based on what we see in the pipeline, I do expect growth from here.

We did and do continue to see positive rotation out of the portfolio, and we have generally been able to replace the loans that pay off with new loans. Through Q3, we originated over a billion dollars in new loans, which is a bit ahead of pace for us as we generally do not hit that mark until Q4. I look forward to sharing our Q4 results with you all in the new year. Until then, I'll hand it back over to you, Donna.

Thank you, Chris. And Johnny, before we go to Q&A, do you have any additional comments?

No, I don't. Thank you. It's up. I hope everybody looks at the charts. I think you'll see what we're seeing or what we're feeling here at the company. I think the charts speak to themselves, Donna.

Okay. We will turn it over to the operator for questions.

Well, the world says as rates come down, we're going to reduce our net interest income. But I have to give credit to Stephen Tipton, who deals with that every day, and Kevin Hester, who deals with it every day also as he writes the loan. So I think they're on top of that. We react in a hurry when there's a rate cut. Stephen, we were at a conference and he left the conference and lowered rates immediately in our company. So we react in a hurry, and I think you can go back over history and see that HOME has been able to maintain a margin where a lot of people have not because of reaction and how management looks at it.

And we have about 13, 15 regions that report upstream, and they move immediately. Those guys know what it is. You don't have to hold their hand. You don't have to rock them in a rocking chair. They know what's going on, and they react. That team reacts. They already know which moves they're going to make immediately. It's already pre-programmed, and I probably stole a little Stephen's thunder here, but I'll let him take it from here. But I'm proud of how we react to those situations.

No, I'd say this, Steven. I appreciate what Johnny said and agree. I mean, credit goes to the presidents that are out in the field. They're dealing with the customers, and we're able to very quickly go through our negotiated accounts and lower those where we can. We've got rate sheets in all the regions that they go through, and then we've got some indexed municipal accounts that are moving as variable rates move. So, you know, we screen a little asset sensitive, but as Johnny and the group have always said, that kind of goes off the bottle assumptions, and our job is to react to that and try to get rates down to offset the loan side.

Well, we've never seen a CD ad at a HOME BANC SHARES. We don't run them. We just run strength ads with the ability to pay out all of the insured depositors, and we like that position to be in, and we'll continue to do that. This quarter, we paid off sub-debt was $140 million. We had tax times that came up, so deposits are down a little bit. Plus, we had a little loan growth, about $100 million. And so some of those factors impacted. Brian, you got a comment?

No, we did the 140, and then we did another 22.

Yeah, we bought that opportunity to buy a piece of our subdebt back, and we bought that back at a discount. We like that move. So we're not going to be the high guy bidding on money. That's not our game, but there's plenty of money out there if you want it you can get at a reasonable price. So we're not too concerned about it at that point.

Yeah, I think just function of the markets that we're in. Johnny mentioned we just opened the branch in San Antonio a month ago. We've got another location east of Dallas that will be open sometime in the first quarter. I saw the market share data came out a couple weeks ago and there's 1.1 trillion in deposits in Texas and 900 billion in deposits in Florida. We have a meaningful president in both.

You know, you got us plowing new turf here. I don't know what to think about that. I've seen no impact as of yet. I don't think we've seen or felt anything. So maybe it's good to be in the south and be away from Washington, D. C. We have all those unemployed. I'm sure we got unemployed people in Arkansas as a result of it, but I'll tell you more later. You'll probably figure it out. We'll probably all figure it out. It'll be good or bad, right? I don't know the answer that day, but we'll keep plugging. Kevin, you got any comments? You see anything on your end?

No, I haven't seen anything. We've talked about, you know, being able to offer deferments to individuals that are hurt by it. We certainly can and will do that where it's necessary. Other than that, I'm not seeing anything. I've not felt any issues from the government being shut down for 20-something days.

We see if they can, we'll call you, Doug. Is that fair?

Well, interestingly enough, we have an asset quality meeting monthly, and in that asset quality meeting, we cover every past due or problem loan in the entire company. As you can imagine, more has been focused on the Texas book than it has been the Florida book or the Arkansas book, but we go down every loan, and we talk about it. Where we are and what's happening with it. And it's really pretty interesting. We had the, I wrote down the, and I write down, John, what I think the loss is on that loan. If I think it's a million dollars, I put down a million or five million or 10 million, whatever it is, I put it down.

And the rest of the group does it accordingly, too. Stephen does it and Kevin does it, and at the end we look at each other, what you put down. And I had the lowest amount of dollars in that asset quality meeting that I've had since I started that process, and that's been years ago. So from that aspect, I'm pretty proud. We got that one Texas credit that we got our eye on. But outside of that, everything's holding together pretty good. Having a deal on that piece of property in Texas that Kevin reported earlier, I'm glad to have that. Hopefully that deal gets closed. We got a 10% deposit, so hopefully that gets done and gets out of the mic.

So overall, I could be, in that one deal in Texas, I'm a pretty happy camper. So I can't say we're the exception. I can't say we're the exception. I think Jamie Dimon said there's cockroaches out there, and there always is cockroaches, but, you know, I'm sure there are some cockroaches that we haven't seen, but I was amazed at the last, at that quality meeting, how many dollars I wrote. I usually write from 15 to 30 million. It's possibly not. Don't get me wrong. I exaggerate a little bit, but I just put the maximum around I think it could be. And we usually always beat that if one of those credits happen. But last time I think I was less than $5 million, John.

Kevin, you got any comment? Okay.

I mean, I can't. That's the best color I can give. We go through them at a detailed level and each come up with our own number. I feel like you do. I think we have addressed. We watch all these closely, and things come out of left field at times, but we feel pretty good about where we're at at this point. Low leverage helps that a lot.

Yeah, I remember back, John, when we had high leverage, and they pitched us the key. So being in a position with low leverage is pretty sweet.

I don't know that it's that we're more willing. I think the pipeline is supporting it, particularly right now. I don't know that it's necessarily a willingness more than, you know, we're finding the right deals. We've got people in the right places in good markets that have kind of hit their niche. The hard thing to project is that we do a lot of construction, and so that means there's a lot of churn in our community bank construction book, and Chris's book is meant to churn over a three- to four-year period anyway. So there is a lot of turnover on a quarterly basis, and that's the hard thing to project. In fact, the pipeline has been really pretty strong for several quarters and continues to look that way.

Yeah, it looks like we just missed, we let the grease pit get away from us in the second quarter. Chris did on a big loan. Looks like that loan is probably going to close. So, Chris, you want to comment on when you think that might close?

Certainly, yeah. We had one that was scheduled to close at the end of the quarter, and our borrower just needed to delay their purchase a couple weeks. I think we're scheduled for Monday right now. That may move around a little bit, but again, that's more just sort of timing issues. We continue to see good demand, so I think that one will probably get done.

So anyway, we were prepared. We thought we were going to be up much stronger than we were, but Chris didn't get that one closed, but I think it's going to get closed. So we're starting out. We usually start out in the hole. We're starting out ahead. I don't know if that means we'll be behind at the end, but usually when we start out strong, we get behind at the end. And then we start out slow and we get strong at the end So we just have to wait and see You never know what your customer thinking He may be buying he may be selling right You don know and he may be working on something for months and then bang he just hits it Hey we got to do this trade That happens a lot But we could have a good run here this quarter.

It could be a nice quarter. The well-priced loans, it could give us a little revenue boost.

You bet.

Well, you know how conservative we are. We have to find the right target. To say that we are not in the M&A business, we are. We have signed the LOI. We will be moving forward on that. It's someone that we like and runs a good business and got a good business, and we're excited about that opportunity. And I'll tell you where it is, it's in the United States, and it's several billion dollars. You'll be able to narrow that down. So we have some LLI, and we have his permission today to say that we've done that. So that's about all. You're not going to get anything else out of me other than that.

We got, I mean, we had the happy mess to deal with, and we got that behind us pretty well. And we just don't move until, I mean, it just creates, if you got a fire out there, put it out. So we had all those multiple problems in the happy transaction. It just didn't. We got that under wraps right now. So it's time for us to move forward. And I agree we have not moved forward, and I admit that, but we are moving forward.

Our expenses were up a little bit this quarter, so I've already commented to Stephen and Brian Davis and they're going to work on that. So our expenses were up. We still had some expenses out there that we didn't need to have. So we got to work on that. And I don't think we're done. No, I don't think we're done. You get the expenses back to 111, you see what happens, right? So that's more money for us. We've kind of had the wind on our back. We're pretty tough on, if we charge off a loan, we're pretty tough on staying after them until we get our money. So we've had the wind fall, the wind on our back.

We've had some income. We got some this month too, this quarter, haven't we, Brian?

Yeah, I mean, we had several things. We had a $2 million recovery. We had a $1.75 million gain on our lawsuit, and we had $1.9 million gain on our sub-debt pay down.

Yeah, we'll probably have some more recoveries on that lawsuit. I'll probably put it in reserve. So just to build our reserve. We built it a little bit this time. Went from 186 to 187. We'll probably take that extra money. We don't have anything that pops its head up to be charged off. We'll probably put that in reserve.

So, Johnny, I kind of want to challenge you that maybe you can't get expenses down to 111 just so you get at the personal wrong and get them back there. But do you think there really is two, three million bucks to cut if you continue to go to the bank? Do I think there's two or three million that we could gather if we... Is it what you said? Any defenses that you could cut? Yeah, and I think you were at, you know, 13, 14 million, which is phenomenal still.

Hey, Stephen, this is Stephen. Yeah, there's a handful of kind of one-time items in this quarter from an expense standpoint, And then I know we talked a little last quarter around incentives being up in Q2, and they were basically at the same level in Q3 as they were in Q2. So there's obviously some revenue that comes along with that to pay those. But, you know, like Johnny said, we've got our presidents had a good conversation last week, and everybody kind of reviewing their numbers and what opportunities we have to trim where we can.

Chris, that's yours. I was curious what you might say.

Yeah, no, look, I think lower rate environments generally will be beneficial to us because I think people have sat on the sidelines on some transactions or some projects that just don't make sense at a higher rate environment. So you'd like to think that there stimulates a little bit of demand on some things that maybe don't pencil out so well in a higher rate environment. And I assume we get our fair share of those. Yeah, in general, I mean, I think demand for us has been good. You know, we don't really chase growth, but if it comes our way, we'll take it. And I do think in general, you know, you see a hundred point decline from where we were.

You ought to see a few more deals pencil out a little better.

Well, I think that depends on the stock price, but we'll be in the market. Let me say this, HOME will be in the market come tomorrow when we're cleared, right? So we'll be in the market buying stock. So, you know, when there's opportunities, you know, when you look at HOME, we were second in the nation in ROA in the first quarter and first in the second quarter, and we outperformed the first and second quarter, and they take us down 3%, you know, if they're going to take us through the rest of the market, it ought to be down 10%. So, you know, it will come back. Home will come back. Home will bounce back. This is, and all the banks will bounce back at some point in time.

But right now, we're all afraid they're throwing the baby out with the bathwater, and we just have to, as painful as it is, when you come off of a, you know, you see the performance of the company for the quarter, and you come off of that, and you get your ass kicked like this. It's a little frustrating, but it is what it is, and there's a lot of people in a lot worse shape than HOME BANCSHARES is today. So it's just a little frustrating, but we'll be fine. We'll continue to use our stock for acquisitions, and we'll continue to buy our stock back. And, you know, the good news is when you run a 212, 217 ROA, you can increase your dividend, you can buy your stock back, you can pull every capital handle that's out there, and still, as you see, HOME has done, grow your tangible, common equity up pretty strong.

So these people running a . 7 or a 1% ROA, they don't have the ability to do what HOME's doing. HOME has the ability running a 2% ROA to pull every capital handle out there. So we can make the decision of which one we want to pull, or we can pull them all. Don't you agree with that, Stephen?

Absolutely.

I'll let Stephen answer that.

Yeah, this is Steve, Matt. There wasn't much, I'm going to say $100,000 or so in legal expense related to that suit in the quarter. We had a handful of other kind of one-time items and donations. We did a nice donation to the city of Kerrville for from the flood damage earlier this year. So that was in the quarter and a handful of other things. So we're working through all that now. And like Johnny said, a portion of the settlement proceeds were in revenue this quarter and the rest will be in Q4.

Our bank in Kerrville raised $250,000 for the tragic flood to kill those little baby girls, and we matched it. So we had about a $500,000 donation. We feel good about that.

I didn't buy anything from $25 billion down and anything from a billion dollars up. So I can't tell you. The attorneys are already fussing at me. So I knew this question was coming. I said, well, I can't handle it. So it's somewhere between zero and 25 days, I think. So that makes you feel good. I'm not going to go there, and we're going to buy stock. As soon as we can get open, we're going to buy stock. They said, you got to be careful. And I said, I'm going to be careful when I tell you what we're going to do. So Wall Street knows, we always tell them what's happening. So we're fair with that.

We like this operator, I can tell you that. We like the guy. We like this guy. We think he's done a good job, and we think he'll be a great partner. With the strength of having HOME BANCSHARES balance sheets backing him, I think he'll do what he needs to do. That's probably more than I should determine if I can go to this right now. Everybody got drawn in their finger across the road.

Sure, so on the on the variable rate side it's about 6.3 billion or so. There's about three and a half billion that's tied to Wall Street Journal Prime and the rest is tied to SOFR between Chris's book and the community bank portfolio. So that's what's moving this quarter or next that we would consider truly variable. And then on the CD side, we've got some of my notes here. We've got about, we've got over the next three quarters, our CD book, which is relatively small, is also relatively short, so a billion eight or so in total size. We've got about a billion 350 that matures over the next three quarters, and it's an average rate of 367.

So it starts a little bit higher and tails off over the next three quarters. But, you know, we still have to negotiate, deal with competition. We've got peers in market and around our markets that are still north of four, which is frustrating. I will be happy to see the results of the competition Our group has done a fantastic job in negotiating those with customers that want to negotiate and able to retain the vast majority of what we have Whether we can pick up some yield on what coming off over the next three quarters we see just kind of relative to what competition is doing But I would say broadly our folks are negotiating down in the mid threes and lower today Okay, great.

We paid it off in July. It was the happy sub debt that we got that was $140 million. And then we bought back $20 million of our sub debt in September. The $140 million went out at the end of the month.

Stephen had some comment for you. On the 140 we paid off at the very end of July 1st of August, so there's you know two-thirds benefit this quarter.

Thanks, Mr. Chairman. Thank you.

Hey, Brian.

Yeah, that's been our message over the last year or so. You've seen rates come down a little bit. We screen in an ALCO model that NIA goes down 5% or whatever, but that assumes a 40% beta on deposits. Like I said, Johnny's always said it doesn't give management credit for what our team does. So like I said earlier, the President has done a great job thus far addressing deposit rates, and the daily run rate that we monitor has held in pretty good over the last month since the Fed cut rates.

Yeah, we've got, so Q4 we have 478 million in loans, in fixed rate loans that mature at an average rate of 6.17. So there should be some lift potentially on those. Again, kind of depends on what competition does. And I think we've said before we'll defend our balance sheet with competition. And then there's about a billion and a quarter next year in 2026 that matures at an average rate of five and a half, basically.

Yeah, some of that could come up, potentially.

Well, another income, there's about 5.7 million of kind of what I'll call an income. And 1.9, I mean, 1.75 of that is from the lawsuit. And so we'll have another round of gain from the lawsuit on that for next quarter.

It could carry into the... you could have... you don't think it... okay, I think we're gonna get it all. I think we'll get it all, okay. I didn't know if someone might lead over it in the first quarter. Okay, that's it.

Yeah, that's fair. I said the timing of when we paid the happy 140 off was a third of the way to the quarter already. So Q4 will obviously be at full quarters.

Hey Brian, Steve, I'll give you the numbers real quick and then let Kevin give you the color there. So payoffs were between 750 and 800 million for the quarter, so nothing necessarily out of line with where we've been running. The billion three that I mentioned on production was our origination volume, which generally about half of that or so is funded at quarter end because of some of the construction type projects that we do. So that's the color there on payoffs.

Yeah, those payoffs were more heavily weighted towards the end of the quarter. So we had a little higher quarter that we were looking at than it actually ended up because of some stuff that, as Johnny said, moved into fourth quarter and then the payoffs that hit in the third quarter.

You know, you'll see with us each quarter, it's a little bit different. You heard Chris's comments. His third quarter, their book was a little bit down. We got the growth from the community bank market this quarter. It probably will shape up the opposite. If the deal that he has closes next week, it's probably going to be flipped the other direction. So the good news is we have different levers that get pulled at different times. Certainly, Florida and Texas are the markets where there's a lot more activity, and we're plugged into some good areas that tend to see that, and I think that's showing in the pipeline. So, we'll continue to play into that.

Yeah, it's just where the activity is. I mean, Arkansas does well, too, and they're showing growth as well. There's just not as many opportunities as there are in the other two states.

Well, this is from an ALCI problem is the only thing we have. It's a good management team, good operation, they're a good company. So I just think we give them the opportunity with our balance sheet to do some things they haven't been able to do. So I think that's a big plus. It's not a, this one's not a, only from the fact we're sharing our balance sheet with them is to help them with their liquidity and their ALCI. So we'll clean that up. We'll fix that on day one. You'll see them coming out. I think you'll see them coming out pretty strong when we get our arms around it. So it's not a broken company with the, only from the aspect they got in the ALC, as 95% of all banks did throughout the country.

So that's not, they all got that problem. So some people, as I said in my opening remarks, some people take their hit and move on down the road. Some people hope that rates come down. Everybody does different things. And when you, I said in my prepared remarks, you can hook with Somebody's got strong capital like HOME, and we got the ability to spread that over them and help them with their problem and fix it overnight. So that's what we suspect to do, and that's what we'll probably do.

Hey, Michael, this is Kevin. I'll take the last one first. So I think Johnny mentioned on the last call that it's not been our history to go out and look for. It's not been part of our real plan to go out and find teams of people and bring over lots of teams outside of a HOME BANC. HOME BANC has been our M&A strategy for, you know, really our life. And then you would bend through two long court cases that had, you know, that were part of that. It's kind of that same mentality. So it's just not something that we've done a lot of. Would we do it in certain circumstances? Sure, we would. We'll do it.

We'll do it the right way. And it has to fit our culture. And I think that's probably the bigger thing in all of this is our culture. What does our lending culture look like? And we have one and we follow it pretty closely. And so to the degree that a group fits that, we'll bring them in. It's not our main strategy. Our strategy has been HOME BANC. I think it tends to be things that we can go in and fix because we do a pretty good job of that over the course of our lifetime. So I think that's why you haven't seen that particular part from us. Is it the time to grow?

We're in some pretty good markets that I think will withstand any weakness that comes into the market. I like our Texas and Florida markets for staying above that. So we continue to follow our lending strategy and our policy, and if it underwrites well and we like it, we like the people that we do business with, and it results in growth, we'll do that.

Thank you. Appreciate it. Thank you.

Well, thank you. Thanks everyone for joining today. It's as hard as this entire bunch worked for the last 90 days. It's not a good day to release earnings. I'm sure it won't be long, they'll get to that high level themselves and we'll be kicking out some additional income. We'll continue to perform at a high level and hopefully with a new acquisition or two, they'll report, they'll come in and shortly won't be long, they'll get to that high level themselves and we'll be kicking out some additional income. I couldn't be more pleased with the stock price going down today. As I said, they throw the baby out with the bathwater. When you report the best ROA in the nation, I would suspect we probably got one of the best, and your stock's off 3%.

But as Stephen Scott said, he said you're better than most people. So I guess we're one of the best of the worst today. So anyway, I do appreciate everyone's support and HOME will continue to do the right thing month after month and quarter after quarter. And we'll be standing when others may not. So anyway, thank everyone for your support. We'll talk to you in 90 days. Donna, you got any comments wrapping up? Steven, anybody got it? Brian? Kevin, you got a comment on the quarter?

No, great quarter. I think we've hit all the highlights and we'll keep trying to do better.

Yep. Donna, you got any comments? Brian?

No, I'm good. Kevin, you got anything else?

I'm good. All right, well we appreciate it. Thank you very much. We've got an important meeting Friday, and then we'll be back to work. Our people can rest all day Saturday and Sunday, because Monday we've got to go back to work. Thanks.