Q1 2025 Home Bancshares Inc (Conway AR) Earnings Call
Speaker Change: Thank you all for standing by. We'll be starting today's call in one moment's time.
Speaker Change: Greetings, ladies and gentlemen. Welcome to the Home BancShares Inc. First Quarter 2025 earnings call.
Speaker Change: The purpose of this call is to discuss the information and data provided in the quarterly earnings released issued after the market closed yesterday.
Speaker Change: The company presenters will begin with prepared remarks and then entertain questions.
Speaker Change: 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 adore your question, please press star then two to remove yourself from the list.
Speaker Change: The company has asked me to remind everyone to refer to their cautionary notes regarding
Speaker Change: You will find this note on page three of their form, MK, filed with the SEC in February 2025.
Speaker Change: At this time, all participants are in a listen only mode and this conference is being recorded.
Speaker Change: If you need operator assistance during the conference, please press the star then zero.
Speaker Change: It is now my pleasure to turn the call over to Donna Townsell, director of Investor Relations.
Donna Townsell: Thank you. Good afternoon and welcome to our first quarter conference call. With me for today's discussion is our chairman, Jon Allison, Stephen Tipton, Chief Executive Officer of Centennial Bank.
Donna Townsell: Kevin Hester, President and Chief Lending Officer, Brian Davis, our Chief Financial Officer, Chris Poulton, President of CCFG, and Jon Marshall, President of Shore Premier Finance.
Opening remarks today will be from our chairman, Jon Allison.
Donna Townsell: Good afternoon. First of all, we'll paint tribute to a special friend of Home BancShares family.
Donna Townsell: and a director of our academy. We've lost a good friend and a strong leader with a loss of past hitmen.
Donna Townsell: Whitman was a wonderful asset to the home board of directors, and from a person perspective, he was a man he walked in the same shoes as I walked in while he was built and happy as I've been building Home BancShares. He was a cop of I.
Pat lit up a room withers outlawed in personality.
Donna Townsell: and was a good man of God and always wanted to pray for all of us on the board, and we probably needed it.
Speaker Change: Someone recently said, I bet Pat, as he goes through the propaganda, he's telling God about his Banc's new 3D special, that's Pat Hickman and I remember.
Speaker Change: We'll miss you, my friend and my God, be with your wife Nancy and your wonderful family.
Speaker Change: Good day everyone and thank you for joining the start of 2025 with us. First quarter earnings are in, and if I said in the headline, home strength is no accident.
Speaker Change: A couple of our strengths with peer leading performance methods and you get the results you get that may be the best first quarter in the entire bank space.
Speaker Change: Our continued conservative philosophy of maintaining strong capital, excessive almost 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 mid or perfect quarter.
Speaker Change: while saying six new performance records. The bad news is the idea to deliver
Speaker Change: Hopefully this top tier quarter does not get lost in the shuffle. We continue to maintain the passion, the drive, and the different that allows our performance to separate us from the pack by being one of those profitable institutions in the world. [inaudible]
Speaker Change: It is our goal to reward our homes and make them proud to be a shareholder of Home BancShares.
Speaker Change: It's really nice to have the large Texas cleanup behind us are basically in the rear view mirror pretty much done
Speaker Change: Plus to the peers, we've reached a tenth resolution to the Texas Laws that we filed a couple years ago.
Speaker Change: So that may go along with millions of dollars of the expected that are incurred on the quarterly basis that could disappear in the second quarter.
Home, may it finally broken off on the outside. That's right.
Speaker Change: Management has to ride herd every day during these volatile times, that required constant watching with a laser focus both internally and externally and be prepared to shift even to direct the company and offensively or defensively direction.
Speaker Change: The bottom line is that 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 in sales.
Speaker Change: I've talked a little bit about the highlights and why they're important to our company, but most of the numbers speak for themselves. Stephen will make a few comments about margin, and Kevin will make a few comments about loan, and Chris Poulton will talk about CCSFG.
Speaker Change: Let's go to the numbers. Arning's loads of beat. Arning showed 115.2 million, a record 58th censorship that represents a significant workout in correlated arms that has been fixed around 100 over the past several quarters.
Speaker Change: reported core earnings of that was 111.9, that's 56 cents a shitter.
Speaker Change: I want to brand you attention that the expense of the Texas lawsuit was in its quarter, and that was two million dollars after tax and hopefully that will be line reoccurring in the sector quarter [inaudible]
Speaker Change: Without the expense, the call would have been 114 million and 57 cents a share.
Speaker Change: Our gain from our equity investment was backed out of the income for core purposes because it's not guaranteed reoccurring.
Speaker Change: However, management employees are 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 and they are always reaching for a little extra [inaudible] I'm sorry. I'm sorry.
Speaker Change: Revenue, home was beat on revenue. We're 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,
Speaker Change: We're pleased to continue our plans to top our bay and dollar run rate that we did in 24.
Speaker Change: 413 in the first quarter. Maddie to spread improved 11 basis points from December 24 at 358 to 369 for the first quarter of 25. Mass improvement while yielding loans expectedly dropped on the link quarter doses.
to 7.38 from 7.49.
Lange, Thrawn, One Book. [inaudible]
Speaker Change: for Net Long World for the quarter of 187.6. At March 31, we ran a record level on loans at 14,000,000,000,000,000,000,000,000,000,000,000
Speaker Change: and 14B and 960B and at December 31, 24. If I'm not mistaken, we've gone over Tipton, we've taken over 15B and so far this month.
Speaker Change: The pilot's stronger pilots would 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 London's pilot ratio to 85.24, and that's in spite of the strong loan growth. [inaudible]
Speaker Change: The right-of-interest burn 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 plight to safety in uncertain times [inaudible]
Speaker Change: Home is enjoying the serving reputation of being able to pay out all the posters.
Speaker Change: in the flight to safety. There is no place like home. Protects mid-income for the quarter was 56.58.
Speaker Change: I don't know how you fuss with those numbers when you bring 56.58% of your revenue to the free tax bottom line.
As that quality non-performing homes improved to 0.6L from 6.7. [inaudible]
Speaker Change: While non-performing assets improved to 0.56 and 0.630, Reserve Coverage grew to 312% 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 decent to 31, where non-performing was 98.9 and non-performing assets was 142.4.
Speaker Change: Captain Ray Schoes continued the battle for ET1 at 15.4, Leverage at 13.3, and Tom Rispice at 19.1.
Speaker Change: Townsville Book Value increased to $13.15 from loan dollars and $79.00 a year ago up $1.86. Book Value had a new record of surpassing the $4 billion mark for the first time in our company history.
Speaker Change: Return on Chancellor Common Equity for the quarter was a strong 18.39. We continue to buy back stock. We have a 10B5 file during our quactor, but have no idea the opportunity to buy back stock at these prices and the purchases have been limited by our filing. Thank you.
Speaker Change: We purchased over a million shares, right at a million shares, I think on the nose for the corner, and we'll remain active in the second quarter. This too shall pass, and I think we'll be proud of having been active at these levels.
Speaker Change: It concludes that home's powerful balance sheet coupled with repetitive storms that's now showing a possible workout because a strong margin is concerted growth [inaudible]
Speaker Change: Good home quality, massive capital, hands-on management, expect control, and don't forget our discipline drive and determination that has led us to pure leading performance. It feels good to be one of the best and we love to win.
We picked this up.
I don't even know. Somebody wrote some about it, is it?
Speaker Change: Home Strength is not accident. We've got to pick that up and we're going to use that in some ad campaigns. It was quite a quarter-bind. I want to thank all the team at Home BancShares for great effort and what I consider a perfect order.
Speaker Change: I know you're proud yourself of the numbers as well and I'm going to turn it back to you to expect you to have it.
Speaker Change: Thank you, Johnny. Congratulations on a fantastic quarter. Our next report today will come from Stephen Tipton. Thanks, Donna. We talked last quarter. We mentioned that we would be pleased as the margin could remain fairly stable.
Stephen Tipton: I'm very proud to report that the Corps of Margin continue to expand in Q1. For the quarter, excluding event income, the net interest margin was 4.42% versus 4.36% in Q4, or an increase of six basis points.
Stephen Tipton: March ended slightly lower than quarterly average, primarily due to the continued build of liquidity from the increase in deposits.
Stephen Tipton: Best liquidity will allow us to continue to work on negotiated deposit pricing in an effort to bring those costs down.
Stephen Tipton: We're excited about the deposit growth we saw in the quarter at nearly $400 million, highlighted by strong growth from all of the Florida regions, and an increase in overall core non-intersparing balances.
Donna Townsell: Congrats. All of our bankers as 2025 looks to be off to a great start. I'll turn it back over to you, Donna. Thank you, Stephen. Next, we will hear from Kevin Hester on the lending portfolio.
Kevin Hester: Thanks, Donna. As Johnny mentioned, I'll ask that quality metrics improved in the first quarter with no new material concerns noted. And his favorite coverage from the fourth quarter cleanup were in process with nearly $7 million recovered from the fourth quarter charges.
Kevin Hester: 90 days ago I indicated that I expected total recovery on the cleanup to exceed $30 million over time, and I still believe that is the case. As expected, MPAs were reduced in the first quarter and I anticipate further reduction in Q2.
Kevin Hester: All of that and solid loan growth driven by the community bank markets. But Jonty said it almost perfect quarter, Donna Becky. Thank you, Kevin. And now Chris Poulton will provide an update on CCFG.
Thank you, Donna.
Chris Poulton: This quarter, we celebrate our 10th anniversary at Home BancShares. For those that may be looking to mark the anniversary, I'll tell you that the traditional gift is aluminum or ten.
Speaker Change: I'll be honest with you, I was a little disappointed when I discovered that.
Speaker Change: Over the past 10 years, CCFG has funded over $15 billion of loans and has grown the portfolio over $1.7 billion. Representing cumulative average growth rate of over 10%. We think about as a pretty good start.
Speaker Change: I'll talk today specifically about our commercial and industrial loan book. It was noted earlier that the CCFG portfolio declined approximately $100 million in the first quarter. This decline, as well as last quarter decline, occurred exclusively in the CNI portfolio.
Speaker Change: Historically, had two types of credits in our commercial portfolio. The first single credit broadly syndicated in middle-market loan, and the second structured facility secured by portfolios of middle-market corporate loan.
Speaker Change: As of this quarter, we've effectively exited a single credit broadly syndicated in middle market loans.
Speaker Change: At its peak, this portfolio was over $200 million, and today it stands at less than $10 million, with just four credits remaining.
Speaker Change: In addition, over the past year, we exited empaturity or refinance several structured facilities as we rotated out of prior facilities and chose to take a pause on new commitment, pending the election and potential rate volatility in tariff impacts.
Speaker Change: Going forward, as we search for an equilibrium point with DNI bloke, we expect to add back to the structured portfolio. Historically, DNI is represented approximately 20% of the total portfolio. Today, it stands at less than 10%. Over this prior year, we've created capacity to selectively add back to this book.
Speaker Change: Meanwhile, our commercial real estate book, which represents the core of our loan book.
Speaker Change: The stable to op over the quarter and up about 5% over the past year. The new loan pipeline remains active. Over the past 12 months, we originated just over a billion in new loans and I would expect to meet or exceed that total in 2025.
Speaker Change: These past 10 years have been the most rewarding of my career, and I wanted just to take a moment to think everyone that has supported the growth of this business over the years. And please, we've been able to build a foundation to continue growth and success, hopefully in the years ahead. Donna, I'll hand it call back to you.
Don: Thank you, Chris. Congratulations on your two-year anniversary. It's been a pleasure. Johnny, before we go to Q&A, do you have any additional comments? Well, I just want to say that I think we're going to do some, send Chris a roll with 10 fall or something.
Now don't, don't spoil the surprise.
Don: Appreciate that. We'll get a big role for each of you. I appreciate it. So yeah, I appreciate that. I
Don: I didn't realize it was ten, so anyway. Thank you. I don't have anything else to remember to speak for themselves. We're going to go straight to Q&A, let everybody ask what they want to ask.
Breast Quarter, though. Great job for everyone. So, not everyone. Thanks.
Don: I don't know. I don't know. I don't know. I don't know.
Thank you [inaudible]
Speaker Change: If you would like to ask a question, you can do so by pressing star, followed by one on your touch clean keypad. If you change your mind and would like to remove yourself from the list, you can do so by pressing star, then two.
View for the briefly well-quested questions are registered?
Speaker Change: The first question we have comes from Michael Rose, with Raymond James, please go ahead.
Hey, good afternoon you guys. Thanks for taking my questions.
Speaker Change: Really solid quarter, you know, kind of all around, but I wanted to get a sense from you guys, you know, obviously this quarter's growth was strong, but just in general, what you're hearing, you know, from your customers, and I think an increasing number of banks are just citing. [inaudible]
Speaker Change: Yeah, some, some, you know, tap-ed-ness from borrowers and yeah, I specifically wanted to ask about
Speaker Change: about the boat lending. And if there's been any drop-off in demand there, and maybe just where pipelines are, just a general color on what your borrowers, what you're hearing and seeing from your borrowers, just giving some of the uncertainty out there. Thanks.
Hey Michael, this is Kevin. Michael, this is John.
Speaker Change: Go ahead, Jon. Talk back straight. Get out of the talking, Jon.
John: Oh, yeah, no, it's just because Michael had mentioned the boat loan specifically. Michael, what we have seen, I guess in the in the in the first quarter, is elevated. [inaudible]
Volume, compared to 1Q of 24 [inaudible]
and a large part of that.
because one of our European manufacturers, are the actors.
John: A significant relationship of ours has been offering to subsidize the pricing and so that has tended to elevate the option volume and that that has largely done.
Mask, I guess, some of the uncertainty around the tariffs.
But Kevin, do you want to speak in general?
Kevin Hester: Yeah, Michael, from a community bank footprint, I think what you stated is what we're hearing from a lot of people too, I mean there's
John: There's some uncertainty, obviously, over what's happened in the last month, and that may...
John: That may keep some projects that may be are, you know, kind of in the development stage and the planning stage, it may slow some of those down.
John: in our core markets. So, you know, I'm hopeful that that will be short-term, but...
John: You know, still a lot of activity and a lot of good things happening [inaudible]
Speaker Change: Very helpful. And then maybe if I could just take it to the kind of the puts and takes on the margin for Stephen.
Speaker Change: How much, you know, pull forward or repricing opportunity is there on the
Speaker Change: on the depositor or liability side. And it's good to see, you know, Longield still, you know, holding in there above, you know, well above 7%, obviously down Q and Q. But can you just give us an update on kind of where new production.
Speaker Change: yields are, and then maybe how we should think about the margin here in the near term. Obviously, if the growth continues to come through, that would be a helper. Thanks.
Speaker Change: Sure, they're Michael. So several questions there. I guess production in Q1 was a little over 800 million weighted average coupon was 775.
Speaker Change: So still hanging in there fine, North of Prime. On the deposit side, just here recently we have a last couple weeks that have kind of tried to re-ignite a little effort on negotiated checking, saving, so those kinds of things. A lot of that's going to obviously...
Speaker Change: Depend on competition. You had a call earlier this week with our president and you're still here and you know banks.
Speaker Change: You know, offering four and a half, you know, percent. So we have to compete there and
Speaker Change: and protect the franchise and we'll do that. But there's probably some opportunity on checking and savings to try to clip a little off here and there depending on what happens with the bed and then on the CD portfolio. We've got
Speaker Change: We've got 600 million maturing this quarter. We've got about 400 million next quarter. Got of a billion eight that we have, I think 85% or more maturs within 12 months, so we're pretty short on the CD portfolio and we should see.
Speaker Change: You know, 10, 15, 20 basis points potentially come down as those come through. So yeah, I think margin overall, you know, I think same message as we have for quite some time now would be, you know, pleased to see it kind of hold in the range that it's in.
Speaker Change: Cash in March was up with the deposit bill and that weighs on the metric itself but that's come back in a little bit here lately just with tax payments going out over the last couple of weeks.
Speaker Change: Very helpful. Maybe just finally last one for me, you know, Johnny, I think you mentioned this in the outset.
The credit cleanup around happy being just about.
Speaker Change: Don, you know, you had a net recovery this quarter. Anything that you're seeing out there both in your core markets and also in Texas that gives you any sort of pause and are there any, you know industries or or verticals that you're you're putting a little bit more eyes on at this point just just given the tariff and certainly. Thank you.
Speaker Change: Michael, this Kevin again, not from a general sentiment. We ask that question in every presentation. We're asking our lenders about that individually.
Speaker Change: that affects even within an industry people differently. So, I mean, we're just dealing with that from a one-off.
Speaker Change: Individual Perspective, but certainly talking about that in every, every size of the wheel.
Speaker Change: Okay, great. Really early yet to know. I mean, you haven't really seen where they're gonna land and what's gonna get hit and what's not. So it's a little early. We're having the discussions, but there's no definitive answers.
for the well-placed.
Speaker Change: Thank you, Michael. Yes, it's typical. Yeah, thanks guys and Chris from Grassland 10 years. I got a Slurpy Cooper on your way. Thanks guys. Appreciate that.
Thank you.
Speaker Change: We have the next question from Catherine Mealor, who is KBW, please go ahead when you're ready.
Thanks. Good afternoon.
Electronon, Catherine
Speaker Change: Jon, you mentioned about expenses that there were still about two million in elevated legal expenses that had to do with the Texas lawsuit and that would hopefully not be recurring next quarter. So do you think?
Speaker Change: Excluding now, we actually see expenses come down from this level, or that just kind of pays for natural growth on over the next couple of corners.
Speaker Change: of expenses this quarter, and you'll be at one ten nine, so you're right at one eleven, so our management team is working hard to keep that, and I'm not going to...
Speaker Change: I didn't bust out of this quarter because we had the elevated legal expenses. We were in the middle of deposition selling that lawsuit and we don't want all of them all involved anyway. That may be that it pairs that there's a resolution that's come to that and maybe everybody will continue. Everybody have signed off but we're working up towards that. That's all.
Speaker Change: You know, the 111 is a good number. I think that's the number we had last year and we're still operating with a dishier, so I'm pretty pleased with the Stephen's management of the expense
Don't count on it coming down any farther than that.
Speaker Change: It's been really good expense control. [inaudible]
Speaker Change: And then maybe my follow up on the margin was just on loan yields. Can you just kind of give us a sense to where new and productions coming on. We talked a lot, just kind of quarter about competition, being a little bit more intensive quarter, just kind of curious how we should think about the pace of loan yield over the next couple of quarters. And then we talked a lot, just kind of a little bit more, just kind of a little bit more, just kind of a little bit more.
Speaker Change: Hey Catherine, the Stephen, I'll make the comment there. Kevin had anything he wants to just you know in general, I think
Speaker Change: mentioned earlier, coupon, and Q1 production was at $7.75, that's $7.60 or so kind of from the community bank.
Speaker Change: Group, so a little north of Prime and then, you know, minutes for Chris's portfolio. You know, we're hearing
Speaker Change: You know, from our from our lenders, you know, competition is, you know, quoting some things in the sixes and and, you know, we may have to deal with that at some point, but you know, as y'all know, we're disciplined in our approach and
Speaker Change: You know, I think we can kind of hold behind where we're at, Kevin.
No, that's good. No, that's happy to agree to that.
Speaker Change: Okay, great. And then, and maybe just one on the margin, if we are in a, in an environment where we start to see rate cuts, and maybe, Johnny, I love your view. And if you think we're going to get him or not, but, um, but just as we get into an environment, potentially, we see more rate cuts this year. Can you just remind us on the sensitivity to the margin and how you think the direction of your margin will go with those cuts?
Speaker Change: Yeah, so, you know, from an Alco standpoint, I think we show about 6% decline in a down 100 scenario, I think Johnny and Tracy have said for a long time our view just on the Alco model and it being a snapshot in time.
Speaker Change: I think we have three right cuts built into our 2025 budget and actually showed a little expansion.
Speaker Change: throughout the year, you know, and what our budget produced. So, you know, again, I think a lot of that factors on competition and, you know, what we have to do to protect the the franchise, but overall I think in this, you know,
Speaker Change: 440ish range, you know, where we're at today would be, would be pleased [inaudible]
I'm great. Thank you. Great quarter quarter.
Thank you. Thanks for gathering.
Thank you. You have Jon Arfstrom with RBC now.
Thanks for your afternoon.
Speaker Change: Hi, John. Can you hear me all right? Hey there. Um, I'm I'm I'm I'm I'm I'm I'm I'm I'm I'm I'm I'm I'm I'm I'm I'm I'm I'm I'm I'm I'm I'm I'm I'm I'm
Speaker Change: Johnny, what are you, what are you thinking on the buyback and capital preferences from here? You would still?
Speaker Change: You still prefer, you know, kind of looking around for M&A or do you think at this point you'd rather be buying back stock?
Oh, if we found the right there, we do want [inaudible]
We better, we have
Speaker Change: Pay off, Kevin, that looks like Brian , you'll talk about what we are coming at.
Sure, we probably will pay off some subdebt.
Speaker Change: It's subdup that we acquired from Happy. It'll be about 140 million. It's currently about 5.5%. But unfortunately, it pops to 9.7% on July 1st. So our plan is to try to get board approval later this afternoon to pay that off on the July 31st. It will be about 1.5% on July 1st. It will be about 1.5%.
Speaker Change: That'll lower our wrist-bice capital right shows about 76 basic points once we do that.
yeah it it
Speaker Change: about nine and a half, so we're not going to play that. So we'll pay it off. We got cash paid off with us paid off. Yeah, and we've got almost 582 million cash at the holding company, so we're good there, and we're strong on capital, so I'm good with paying it down.
It doesn't get the Capitol County getting large
Speaker Change: You know, I think Jamie Diamond said it best. There's nothing wrong with having good liquidity in lots of capital and these kind of uncertain times. So I like our position. I like the fact we can pay out all the insurance depositors. I like having to work just the capital. [inaudible]
Speaker Change: We don't know what's going to happen. We don't know where this is going. I understand what he's trying to do. I don't know if it works, but anyway, we're going to all be in this for a little bit until it gets resolved, one way or the other.
Speaker Change: Okay. Okay. Fair enough. So pay, pay down debt and maybe pick away at the buyback is the near term message? Is that fair?
Speaker Change: Yeah, we'll continue to bow. I wish we had, we've always bowed, 10v5.
Speaker Change: We've picked up about 480,000 shares and there's 10B5, about a million last quarter of this quarter, so we're picked up about it.
Speaker Change: 45480,000 shares, and I assume we'll probably buy another, if they stay down here, we'll continue to buy, you know, what is it continue to sack it up?
Speaker Change: I didn't think we'd get another bite at the apple here but we're getting a pretty nice bite at the apple so I think we'll just keep buying for a while.
Speaker Change: Chris Poulton, on your comments, are you essentially calling the bottom? Are you saying that you'd mention a couple of runoff categories?
Speaker Change: that it feels like you've exhausted that. Are you essentially saying your portfolio could be at a bottom in terms of size?
Speaker Change: I think that's pretty fair. I'd like it to be. You know, we, as I said, a hundred percent of the decline in our portfolios been on the CNI side, we control that, right, we can come in and we can come out of that.
Speaker Change: Wanted to leave a little dry powder coming into this year on commercial because we kind of felt like
Speaker Change: Work great opportunities in the second half of last year on the commercial side, without there...
Speaker Change: Probably be more. We just made our first commitment this month, this year. So we waited until now. We made a new commitment on a facility. So yeah, I'd like to believe that we'll have some pay-offs in the, you know, in the CRE book, but I think the pipeline's throwing up to fill that back up. So.
Speaker Change: I'd like to be a little bigger than we are right now. We're down about one one seven or so. You know, we continue to think two is a good number and I think we'll get I think we'll get back there. It's just not a race to get back there.
Yeah. Okay. Okay. Good. Um, um,
unknown: And then, Kevin just on core growth, core loan growth in the community bank footprint. Is there anything you'd call out that's particularly strong at this point?
unknown: Well, certainly our Southeast Florida group, our Metro groups, there's just a lot of stuff, good stuff happening in Florida.
and even in the Dallas Metro's, I think.
you know, probably call those out. Um, um,
unknown: You know, two key payoffs look pretty high. So that's going to be a little bit of a headwind as we go through the quarter. I'd say we can't overcome it. It is early in the quarter and the pipeline doesn't show some stuff at all. But I'm sure we'll come through that.
I also definitely are a little bit hard.
Speaker Change: Okay, fair enough. Just one comment on ten and aluminum. I see Jon Marshall does not have any foreclosed assets, but
unknown: It's about 5 million and non-performers, so Johnny, maybe there's an aluminum craft in there Yeah, yeah, yeah.
for, uh, for Poulton.
Thanks, Jon, that's all.
Alright, that's all I have.
I'm just waiting.
I've been waiting.
Oh, that's funny [inaudible]
Thank you. We now have Brett Rabatin, we are the Holy Grail.
Hey, good afternoon, everyone.
Speaker Change: I wanted to start back on the recovery and I think Johnny you mentioned you still expect
Speaker Change: to clean up to have 30 million of recoveries over time. Can you talk a little bit about that? You obviously had some this quarter. Can you talk about the timing of that and then just thinking about do you think you can substantiate? [inaudible]
Speaker Change: A 2% reserve if you end up back there and just any thoughts on your provisioning needs you know net of the recoveries you're expecting you
Speaker Change: A large, large portion of those recoveries are the monthly payments on the large charge off that we took, and we expect those to continue. Now, you know, you could have an event somewhere down the road in a sale or something like that that could accelerate that, but
Speaker Change: As of right now, that's me in a half a quarter and we expect that to continue, you know, for as long as they continue to pay it, which we expect to happen. So that's the large part of the 30.
Speaker Change: Most of the other stuff, maybe one other piece, maybe one other piece that hasn't occurred yet, that I'm hoping will happen second quarter. Think it probably can other than that. I mean all of it has happened other than the monthly payment. [inaudible] I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry
Okay.
And then he thought, Johnny, I know it's-
Speaker Change: You've had a 2% reserve in the past and your reserve is still way above almost everyone else. Do you want to grow that in the some certain time or do you think that that's kind of as high as you can get it just given that dynamics?
I don't have to reiterate, but I'm going to do.
Financial Crises [inaudible]
Andrew Franks, 2% always work, and it just-
Speaker Change: Or you were seeing it go back up, you know, recovered with it taking it back up, so but it just managed out for him with the phones and so I think we're at 180 six, we're still at 180 six.
Speaker Change: I'm not the herd to do that, but if I get a chance to go back to 2% at some point of time, I like the reserve. It's a smart thing to do.
Speaker Change: and a conservative way to run this company is to err on error with too much reserves and too much capital. So, you know how we do it, and we get a chance we do it, if we don't, we'll leave it. Probably not going to let it drop. I'm trying to let it drop any from where it is.
Speaker Change: So hopefully we continue to, we know we're continuing to get some recovery on a monthly basis.
Speaker Change: We'll build it, but there's always, you know, there's always a little charge up here, a little charge up there. I think we were covered seven million last month. We charged off a couple million and ended up with four and a half or five. So,
Speaker Change: which was the, okay, I heard 90 million out of one of my own girls, what it was, about what it took.
Yeah, okay.
Speaker Change: And then just back on the the M&A topic, you know, I think you're going to tell me that everyone's just kind of in a wait and see mode and if no one has to do something they're just going to wait and see how the environment plays out before proceeding but was just curious on your thoughts on the environment and.
Speaker Change: Well, Brett, we just saw Keynes get that deal down in 60 days. How long has it been since we saw a deal get down in 60 days?
Speaker Change: It's been the last Trump administration. So, you know, it, it, it is a positive reminder, certainly as a positive for banks and French Hill head of the Financial Services Committee.
Speaker Change: First micro 100 years ahead that that's a plus for the banking industry. You got a real viper run in financial services. So I like that the plus, I think Trump is is
Speaker Change: I'm going to be regulated as much as you can. I think it's our opportunity to window. I don't know if it's perfect timing with all of the tariff stuff going on, but
Speaker Change: We're not on a trade right now, but we're not off a trade, so we're open to what makes sense, and we'll do a trade, I'm excited, you think you can cause a deal in 60 days, that really gets pretty exciting [inaudible]
Speaker Change: So from that perspective, I'm more inclined to do something. We're not really on something right now and we're on one last quarter.
Speaker Change: And dude, the text is cleaner, having to get all that crap out of the bank. We didn't want to go forward with that. So anyway, that one could come back at some point in time. And Mayor may not come back at some point in time, but
Well, we're open.
Speaker Change: I just spoke at Commerce Capital, they had a big event in Texas and we spoke there in front of about 120 bikers so
Speaker Change: I told them our door was open if any of them were interested in coming to come on and we'll visit so we're not excluding the M&A deal
Speaker Change: When you run it 2% ROI as we did for the quarter.
We can't get much better than that, can we?
Speaker Change: We just can't, I can't get much better than that. So it's time to bring some assets in and don't we don't need to get stupid with a price We need to back work the money. I told the guys in Texas recently this nice conference I said
Think about it.
Speaker Change: We all work about the same number hours. I don't think they work as many as we do, but anyway, I said, and you're doing a 1% or a 0.9% and I said, we're doing a 2%
Speaker Change: So, think about that and you want to sell your bike, what should I pay you for it? You know, I'll pay you for what it's worth, right? Think about, think through that, you know, you can't come and beat in your chest. I won't two times book. Of course next year we're going to do, we're going to do 1.8. That's what we're going to do next year, right? If you're going to do that good next year. So, just the conversation around was, we're open, but it has to work for both parties. And if we find the right trade, we'll certainly do it. We're going to do it. We're going to do it.
That might you understand what I'm coming from I'm
Speaker Change: Yeah, I don't think that makes great sense. Appreciate the color and congrats on the quarter.
Thank you. Thank you.
Speaker Change: We have the next question from Matt, only with Stephen, please go ahead when you're ready Matt.
Yeah, thanks guys. Congrats on the quarter. Johnny what? Just
Matt Olney: Yeah, just want to continue that last discussion you had on the M&A front and I'm curious if we're if we are seeing faster approvals on deals and you mentioned, you know, 60 days on some of these deals
Matt Olney: Does that allow you to do anything interesting on the M&A side? And some of your periods have talked about it. It's really more comfortable doing multiple deals in the same year.
Matt Olney: If that's the case, you know, it can allow the bank to do, you know, perhaps some smaller deals that they wouldn't have considered in the past, if you can do multiple smaller deals. But you just curious how the change of faster approvals, how that would change your M&A strategy if at all.
Well, it sets me to look at emanate. [inaudible]
Matt Olney: And to be able to get, would we, would we do two or three deals at one time? Well, if one came, another came another came, I guess we would. I don't think we'd announce them all the same day.
Matt Olney: When I wouldn't mind doing a smaller data, we're not any birds doing a smaller data at all.
Matt Olney: You know, the last one we did was with the happy deal, and you know, the trying wreck we ran into there with that deal, but that's that's in the rear view mirror today. As you can see the earnings has recovered. So, I mean, I prefer to do maybe be up.
Matt Olney: I'd prefer to maybe do a smaller day or a more for a smaller day or so, it's just in the
Speaker Change: I'm sure my people would prefer to do one larger deal because it's about as much work to do a smaller deal, as you know, is to do a large deal.
Speaker Change: And you'd have all your focus on one try, but I wouldn't be at birth to do it a couple of smaller deals at all [inaudible]
Speaker Change: And I'm looking, I'm ready to find something. I'm absolutely ready to find the trade it makes sense. I said well ago, we're in a 2.05 or 6th floor of the month. I can't ask for any more than that.
Speaker Change: This team needs some new assets. They need some assets that somebody has run into 1% of our wife that wants to be a partner and come in and let us help them get it to a 2% of our wife.
Speaker Change: I mean, that's our game, right? That's what we've done over the years. It's by a bank that doesn't perform near at the level that home performs and bring it to our level. So that's really our strategy and we're looking for that opportunity.
Speaker Change: But just because I sell it, I'm going to pay somebody to times tangent book. There's not what a handful of us had tried it to the times tangent book. And we tried there, but calls will
Speaker Change: Quarter after quarter after quarter performance of the company. So that's why we tried there and people that are not there, they tried there for a reason. So no disrespect, it is what it is.
Cool.
Speaker Change: And Johnny, on the topic of just smaller banks, can you put any numbers behind that in terms of how small would you go of versus, you know, how small it's just too small, I guess to consider.
below 300 probably is too small.
Speaker Change: You know, Piver, if it was set next door to Palm Beach or set next door to Miami,
Speaker Change: and it was the end market merger. We might look at something smaller than that.
Speaker Change: It just depends on where it is. If it's out there by itself, then we probably wouldn't be as aggressive on it. If it's in some place where we operate today, then we could be a little more aggressive on it.
Speaker Change: I mean, if you see it, you've heard my story, if you see it, you won't subscribe. We'd love to have the CEO .
Speaker Change: If he doesn't, directly in Florida, we can just pour somebody's bucket because those guys understand us, they know what we're doing, they've been with us for years, you don't have to hold those guys in Florida's hands, they just don't get it. And that's what's happening in Texas too. Our team Arkansas is that way, Texas is that way. Chris runs his own deal in New York, as you know, so. [inaudible]
Speaker Change: If I don't have to hold these guys hands, and if we get an opportunity in a market, even if it's 150 million, it's next door. It might make a lot of sense if it's a creed. If it could be someone a creed. I mean, you know,
Speaker Change: $1.50 million dollars, it adds two cents a share, or you can do $150 million dollar deal next door. It may add two cents a share, so...
Pens on how much it adds to it. [inaudible]
Speaker Change: to the EPS. We're in the business to make money for our shareholders and we're going to make money for our shareholders.
Speaker Change: Most of these people sitting around this table right now, big shareholders of this company. So there is a grassy vet as I am about looking for the next deal.
All right, guys, thanks to Commentary, congrats on the quarter.
Hey, thanks, man. Appreciate it.
Speaker Change: Thank you. We have seen an excuse me with part of the Sandra. Please go ahead Thank you.
Speaker Change: Good afternoon, guys. I don't know if you let Tracy hang around for one last quarter, but I hope you guys are chewing some nasty cigars in his honor maybe.
Speaker Change: He's sitting at the end of the table wanting his mouth right now.
Speaker Change: There you go. See, you guys all should have one, just to honor a moment. Well, I think it's
Been a great time [inaudible]
Um, I guess maybe one last question on the M&A, sir.
Speaker Change: What do you think we need to kind of get the ball rolling on a deal flow perspective? I mean, do we still need lower rates? Is it, you know, marks on our interest rate marks that are keeping deals from getting done? Do we just need higher stock prices? I mean, yes.
Speaker Change: I think most of us thought we have seen a lot more deals in this administration by now. I'm just wondering what you think we need to see to kind of get the ball rolling a little bit more.
You know, I saw Kevin showing his head when he
We need to set lower.
Speaker Change: That'll improve some people. That'll make them want to come out. You know, if that is brought into this long, when you think about it, we're just a tech below two times 10 to a book. We're right at two times 10 to a book. And we were at two five, you know, so we're two six.
Speaker Change: It's all relative. You know, somebody said, well, I'm on a way like to get one six or one seven. Well, when they get one six, I'm probably back to two five or two sets. So it kind of floats back and forth, just educating the sellers to main more than anything else. It is what we need to do.
Speaker Change: As you heard me say, these people that got themselves in trouble with this journey's book, it's hard to make a deal with those people because the mark is so deep into their book.
Speaker Change: But, you know, it's all relative, right? It's based on what we pay for them today and how long it takes for them to heal up.
Speaker Change: Maybe they don't need a lot for a couple of years, so they maybe they don't sell for a couple of years, but it's all about, it all floats about the same. I mean that, that,
Speaker Change: When Trump went in, we got the Trump bump and huge raise the level of all backstops. Well, the tariffs come in and they're going back down. So, you know, we're about where we were prior to the Trump bump.
Speaker Change: I think it's just a matter of indicating a seller because it's a seller who is willing to make a
Speaker Change: He benefits from that, and it's a creative to the company, and he gets to ride our stock, you know, I used to ride a really good quality stock at Paised
It's just an education process to me.
[inaudible]
[inaudible]
Speaker Change: Yeah, yeah, that math you just talked about on the exchange ratio seems to be lost one of the times or seems to be
Speaker Change: maybe some prod and just the absolute number at announcement, which to your point doesn't really make any sense. But that's helpful, Johnny. Um, I guess you, you know, you said something interesting, obviously even in your press release, right? Banking boils down to revenue expenses, right? And y'all's expenses are about as low as it seems like you can get them. [inaudible]
Speaker Change: You're talking about needing more assets to build revenues, but apart from M&A, are there any other levers you feel like you can pull to kind of you know pick up revenue levels more so than they are? Are there any other lines of business or anything else that's on the radar to grow revenues disproportionately?
Speaker Change: I wish I could tell you the answer that was yes but you know we're going to keep on keeping on until we find somebody that wants to do a trade with us. So we're just going to keep on doing what we're doing and I expect the next quarter to look a lot like this quarter.
Speaker Change: So, actually the run rate as up to die was a million-three higher through the same die last quarter.
Speaker Change: We're being three higher this quarter than we were same day last quarter already so I expect us to look a lot like we did last quarter We we had a sale happy had an investment that they sold and I didn't know we had it and it made millions of dollars, so you'll see that coming in [inaudible]
We had
Speaker Change: Another deal was pretty good. Oh, we look like we may have settled the Texas lawsuit. Looks like that is settled. I'm not sure when those proceeds will come in, but days.
Speaker Change: possibly if you come in next quarter, and as bad as I hate to say it, we have a wish we didn't have it wasn't
Speaker Change: Life insurance policy for Mr. Hickman Pat. I'd much rather had him than the money so got that coming in so
Speaker Change: We got a good start on next quarter, and the run rides out the May and 3 through the day. So that tells you kind of what I'm thinking. I'm pretty happy.
Speaker Change: We just need to find somebody that wants to partner. Thank you very much.
Speaker Change: Stay with us if they want to or go to the house if they want to. We're ready.
Speaker Change: Yeah, no, that makes a lot of sense. I appreciate the call. Everything else kind of I had is already going to ask the fantastic quarter yet again. Appreciate the time.
Speaker Change: Hi, I'm Stephen. Thank you. We appreciate you a lot. You have a great reputation as an good job.
Speaker Change: Thank you. We have another question on the line from Brian Martin with Johnny Montgomery. Please go ahead, when you are ready.
Hey guys.
Hey, Brian . You don't have me. It's me. Yeah.
Speaker Change: Yeah, maybe just one for Kevin. Just Kevin in terms of the NPA resolution and glass court, you kind of talked about direction where you thought the NPA's could trend to here as you kind of work through.
Speaker Change: The credits, can you just kind of remind us where you think the NPs will kind of shake out here over the next couple of quarters as you kind of work through some of these credits?
Yeah, there's still probably another...
Well...
Speaker Change: Another 12 or so that I'm hopeful to move this quarter.
Member of Care Credits, it takes those to move and
Speaker Change: Those are improving. One of the three actually is cash flowing. It's now cash flowed for two months on P and on what would be P and I payments.
Speaker Change: And the other one of the other two is really close, but you're probably six months. You've got to have six months of that sort of activity before you move it out. So they get best case. You know, one of those is probably a third quarter. [inaudible]
Speaker Change: 3rd to 4th quarter activity, and from there, from the 12 million I said early, it takes that to get anything else out of any size, because everything else from their own is pretty small.
Speaker Change: Okay, and that the memory care one that could go later in the year, third or fourth quarter, how big is that one?
Speaker Change: The one of the three is about six. The second one that's close is eight or nine-ish. Somewhere in there.
Speaker Change: Okay, so you could still see a good chunk, you know, both of those could go in the second half of the year later in the year that's possible.
possible. Yes, possible if the current trends continue.
Speaker Change: Okay, gotcha. Then I don't know if you mentioned it, Kevin, if I missed it in your opening remarks, just kind of your the lone pipeline in community bank pipeline today.
Speaker Change: Can you give to some color on that is how you're feeling about that is you're giving the uncertainty that's out there and that's how you're looking to throw about it I know you mentioned some pay off.
I think the pipeline itself, the production pipeline is...
Speaker Change: Pretty good. I wouldn't say that it is as strong as it was.
The last half of this quarter is just ended.
Speaker Change: I think the challenge is going to be the pay-offs, the elevation of pay-off second quarter if those do come through. That's a headwind, not saying we can't get there, but it's going to take some things happening that aren't on the pipeline yet.
Speaker Change: You know, we're talking about some stuff that could hit there, but
It'll just we'll just touch see how that plays out.
gotcha
Speaker Change: Brian , I think his chair feels kind of shook her body up a little bit.
Speaker Change: We'll see how that goes, but I think it's got our buzz attention a little bit [inaudible]
Speaker Change: Yeah, I think you get another quarter down the road. It's maybe a little bit more clarity. You'll you'll feel better about how things are how the pipeline is feeling or shaping up. And maybe just the last one. [inaudible]
Speaker Change: for Stephen, back to the margin for just a minute, Stephen, I think you said, I don't know if you said where you exited the court. I think there's some liquidity that came in and can you just remind us where you exited, exited the month and just kind of what you're starting point is for the margin, as we go into second quarter. [inaudible]
And then it just has to relate that Stephen just [inaudible]
Speaker Change: The pressure point, as far as, you know, it sounds like maybe I'm understanding, right? The risk to the margin moving lower is the competition. At this point is that what you count is kind of the greatest risk to maintaining the margin.
Speaker Change: Yeah, hey, Brian . Yes, I would agree with that last statement. We'll see how rational everybody is over the next quarter and the second half of the year, but it sounds like it's still pretty aggressive on both sides of the balance sheet.
Speaker Change: So as mentioned, the margin, excluding event income for the quarter was $442, the same number there for March was $438, that had...
Speaker Change: 2 or 300 million more and average cash balances in March than we had in February . So that's driving that number down some. But like I said, you know, in that 4-4 range, you know, plus your mind as a couple is this.
Yeah, words feel like we can operate. All right.
Speaker Change: Gotcha. Okay, I think that's all for me. So congrats on a great start to 25 and we'll look forward to seeing you some more quarter in Team 2Q.
Speaker Change: Thank you, Brian . Yeah, thank you. I think kind of wrapping up now, Donna, that's all right. It was a great quarter. I expect this quarter to be as good or better than last quarter.
Speaker Change: I don't see any reason, you know, we've done it, I've run in y'all at any conferences, he said, what do you want to happen, nothing, nothing. We just want to leave it like it is, where we got the Home BancShares is what we call a humming right now, and it's humming about as good as it's ever hum, so we're pretty pleased to miss the end
Speaker Change: We'll talk to you in 90 days and hopefully we have as good or better news and maybe a deal by then. So thank you very much for your support.
[inaudible]
Speaker Change: Thank you all for joining the Home BancShares Inc. Conference call, Cisco has now concluded, thank you for your participation and you may now disconnect [inaudible]