Home BancShares NYSE: HOMB executives highlighted strong first-quarter 2026 profitability, high capital levels and what they described as conservative balance sheet positioning, while also addressing a large Texas credit moved to non-accrual status and outlining expectations for its recently completed Mountain Commerce Bank acquisition.
Quarterly performance and key metrics
In prepared remarks, Director of Investor Relations Donna Townsell said the quarter “sets a strong tone for 2026,” pointing to “sound expense control, consistent operating performance, and attractive returns.” Townsell cited record book value per share of $22.15 and tangible book value per share of $14.87, which she said was up $1.72 year over year, or 13%. She also reported capital ratios including CET1 of 16.7%, leverage of 14.3%, and Tier 1 capital of 16.7%.
Stephen Tipton, Chief Executive Officer of Centennial Bank, reported net income of $118.2 million, with a 2.09% return on assets and a 16.56% return on tangible common equity. Tipton said earnings were “in line with the prior quarter despite two fewer days,” and were up $3 million, or 2.6%, from the first quarter of 2025.
Net interest margin was 4.51%, down 10 basis points from the fourth quarter, which Tipton attributed to the absence of “event income” in the quarter. Loan yields and deposit costs both moved lower: the overall loan yield declined 15 basis points to 7.08%, while interest-bearing deposit costs declined 12 basis points to 2.35%. Total deposit costs averaged 1.83% and exited the quarter at 1.82%, he said.
Deposits, loan activity, and margin drivers
Tipton said deposit balances rose $258 million, driven by Florida regions, while non-interest-bearing deposits increased $126 million to “almost $4 billion,” representing 22.5% of total deposits. Management flagged seasonal outflows tied to tax payments, with Tipton noting expected “headwinds in Q2 from tax payments.”
On loans, Tipton said production softened after what he described as a strong fourth quarter, totaling $917 million in the first quarter, with over half from the community bank footprint. Chief Lending Officer Kevin Hester said ending loan balances fell by “a little over $50 million” late in the quarter, while average loan balances were up $174 million versus the prior quarter. Hester said he expects a continued downward trend in the legacy bank’s balances in the second quarter given “very high” projected payoffs in the second and third quarters, though he added the Mountain Commerce transaction will add more than $1.4 billion in loans.
In the Q&A, Hester said the company’s visibility is typically greater on payoffs than on new production, because new credits are not placed into the pipeline until fully approved. He also provided context on payoffs: Q1 payoffs were about $650 million, following $950 million in Q4, and $750 million-$800 million in quarters before that. In response to another question, Hester said second-quarter payoffs “look like close to $1 billion,” with third quarter “could approach that,” describing these as the amounts needed “to stay even” in those periods.
Tipton also addressed margin sensitivity related to a large Texas loan moved to non-accrual. He said the impact was about $1.6 million for the quarter, equivalent to about five basis points to loan yield and four basis points to net interest margin. Tipton said the reported 4.51% margin “doesn’t have any accrual in that number,” adding that if the loan had been on accrual for the full quarter, margin would have been 4.55% compared with 4.56% in the prior quarter.
Credit quality: Texas non-accrual and other workout items
Chairman John Allison discussed a $110 million Texas credit the company placed on non-accrual during the quarter, describing it as “the same credit we’ve been talking about for 1 year and a half or 2 years.” Allison said the credit had remained current until the quarter and that the company entered a short-term forbearance agreement with “multiple deadlines and requirements,” adding that legal counsel advised the company not to discuss it in depth.
Allison said the company expects either payoff or liquidation of collateral and stated, “We do not anticipate any additional loss,” though he added the company’s capital and reserve position would allow it to manage adverse outcomes. Hester echoed that management sees “a couple of ways to exit this credit during the next quarter or two,” and said reserve coverage of non-performing loans remained “over 160%.” Hester also said criticized assets were flat linked-quarter and early-stage past dues were “below 50 basis points.”
Allison and Hester referenced other problem credits, including an issue involving a boat loan and an apartment property in Dallas-Fort Worth. Allison said the boat matter is “set for trial in June,” and said the company has possession of the collateral. On the Dallas apartment exposure, Allison said the credit is in receivership and management expects it will ultimately be sold, adding that “there’s no loss in that for us” and that the company has already “marked” and written down the exposure.
Allison emphasized the company’s reserve and earnings capacity, citing approximately $300 million in loan loss reserves and quarterly pre-tax, pre-provision net revenue he pegged at $150 million-$160 million. Hester added that, as a reference point, the loan loss reserve would cover “15 years of our historical charge-offs” using the last five years’ average charge-offs, including what he called the large “Texas cleanup quarter” in 4Q 2024.
Mountain Commerce integration, expenses, and capital actions
Allison said the company has completed its acquisition of Mountain Commerce and is planning for conversion timing that may delay the realization of cost savings. He said a back-office computer upgrade already in progress means Mountain Commerce won’t begin converting until November, and “maximum anticipated savings will not be realized until probably the end of 2026.”
On expenses, Tipton said core expenses were about $115 million for the quarter. He said Mountain Commerce currently adds about $7 million-$7.5 million per quarter to that number until later in the year, with “the majority” of cost savings expected “middle of fourth quarter” after conversion, though he noted some savings could occur along the way.
The company also highlighted ongoing share repurchases. Tipton said Home BancShares repurchased 507,000 shares during the quarter for $13.9 million. Allison said the company has effectively repurchased the shares issued in its Happy Bancshares transaction and intends to do the same for Mountain Commerce, describing a goal of buying back about 5.5 million shares tied to that deal. In response to a question on capital deployment, Allison said the company has “so much capital right now,” and indicated the company views repurchases and acquisitions as actions it can pursue concurrently.
Private credit exposure and M&A commentary
Christopher Poulton, President of TCFG, said his group grew its portfolio to approximately $2.1 billion, up about $60 million during the quarter, supported by $370 million in new loan production and just under $200 million in payoffs. Poulton said he expects slightly higher payoffs in the second quarter but believes the pipeline can replace balances “either this quarter or the next.”
Poulton also detailed a sharp reduction in private credit exposure. He said TCFG’s private credit balances peaked at just under $500 million at the end of 2022 and are now $87 million, a reduction of more than 80%. He attributed the shift to trends observed beginning in 2023, including new bank entrants, yield compression, looser underwriting, and significant retail inflows into sponsored vehicles. Poulton said remaining exposure is concentrated in “AA-rated structures” with attachment points around 58% of par value, providing what he described as 40% sponsor equity support beneath TCFG’s senior position. He said TCFG remains cautious and is currently “biased towards further reductions.”
On acquisitions, Allison said the company is “certainly in the market” and looking for another fit, while reiterating a strict view against shareholder dilution. In response to a question about relaxing a “triple accretive mantra,” Allison said he is not interested in diluting shareholders and emphasized that the company tells potential sellers it “won’t be your highest price.” He also said he believes acquisition pricing has moderated and pointed to ongoing conversations, including potential opportunities in Florida and Tennessee. Allison added that deals inside existing footprints offer easier integration and more potential cost savings, while noting the company could consider an attractive opportunity outside its current markets if the operator is strong.
About Home BancShares NYSE: HOMB
Home BancShares, Inc is a bank holding company based in Conway, Arkansas, operating through its primary subsidiary, Home Bank, National Association. Founded in March 1999, the company provides a comprehensive suite of banking services to individuals, small and middle-market businesses, and public entities. These services encompass deposit accounts, consumer and commercial lending, mortgage origination and servicing, treasury management, and wealth management solutions.
The company's core products include checking and savings accounts, certificates of deposit, and money market accounts, as well as a variety of loan offerings such as commercial real estate financing, equipment loans, agricultural lending, and residential mortgages.
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