Thank you. Good afternoon, and welcome to our second quarter conference call.

Me for today's discussion is our Chairman, John W. Allison Stephen Tipton, Chief Executive Officer of Centennial Bank Kevin D.

Hester, President and Chief Lending Officer Brian S. Davis, our chief financial officer Christopher C.

Poulton, president of CCFG and Scott Walter of Shore Premier Finance. Home Bancshares reported another solid quarter generating a record net income as adjusted of $128 million while significantly expanding our balance sheet and maintaining strong profitability.

Loan growth, stable margins, and improving book value, underscoring the strength of our franchise. Most importantly, we accomplished all of this while maintaining strong credit discipline and preserving the profitability that has long differentiated our company.

Our team is prepared to provide you with more details about the quarter with our opening remarks today coming from our Chairman, John W. Allison.

Well, thanks, Donna. it is been another quarter come and go.

Second quarter of 26 was sure full of records. For the record.

Sure lots of records for the record. Excuse me.

There were a couple of items that I think we should talk about. Number 1 is our merger with our friends with Mountain Commerce.

it is evident that some of our merger earnings came through a little earlier and a little stronger than we anticipated. As we felt some of the earnings impact, in the first quarter.

I got to lock that. Because this trade was nondiluted, and therein lies the benefit of a nondiluted trade.

A successful merger is where the 2 companies should be creating more value together than either company can achieve separately. Our view, the meaning of that is 1+1 should equal 3, not 1.75.

With our deal being a 3, both groups immediately start sharing the benefits of their union. In this merger, Mountain Commerce and Home Bank shareholders will equally enjoy the ride together.

Perhaps the biggest surprise of the quarter, though, was the surprising loan growth with a legacy footprint. We were forecasting a negative $600 million in loans and actually had a plus $26 million.

that is a $626 million swing on the loan side. As a result, we will no longer forecast next quarter's loan growth.

Obviously, we do not do a very good job of that. Problem is that our customers are really a group of outstanding loyal entrepreneurs that are constantly looking for opportunities we only learn about most of the time when they need a funding request.

Many of them do a deal on the spot, commit to do a deal on Monday, and say we will close on Thursday with cash. The good news is we know their limits, and they know our limits.

Second quarter performance speaks for itself. During the quarter, we incurred approximately $12.7 million of merger related expenses.

Excluding these expenses, the earnings were and you are going to get to hear it again. EPS is 64¢ and earnings of $128.1 million after tax.

that is an 8.4% increase from the last quarter and almost 12% from 6/30/25. Addition, revenue of $295 million at 10.6% from the prior quarter from 266.7.

Adjusted pretax pre provision net revenue reached a company record of $171 million. When you adjust for the efficiency ratio, it came out 40.46.

Good job by both teams, Mountain Commerce and Home Bancshares on the expense side. And an adjusted ROA of 2.09.

Stable margin of 4.51 same as last quarter, up 6 basis points from 36 to 25. And I said good job for MCB and Home on the expense side.

On a justice basis, these performance numbers are some of the best our company has ever run. I want to thank all our associates for an amazing quarter.

That includes our new partners, Bill Edwards, and his outstanding Tennessee team. We have completed the conversion of our legacy company in June and I think it went as smooth and as good as it could be expected.

Now on to Mountain Commerce. We stepped up stock repurchases during the quarter.

From first quarter, we repurchased 500 thousand shares. And this quarter, we repurchased 1.5 million.

I said our goal was to repurchase over a short period of time the shares that we issued in the Mountain Commerce transaction, and we are already approaching the halfway mark. On M&A, we are looking at some other opportunities But with the nonperforming loans that we told you about last quarter, our stock took a drop even though it was a 2% plus ROI.

And, again, repeating is 1 of the top most profitable banks in America. The top 10.

We have been on a group we have been on a good opportunity, but because our stock was temporarily depressed, and we hold our standards high, because we do not dilute our shareholders, our bid was not acceptable to that opportunity. We will hope to revisit that company as soon as our stock is recovered.

As to the large nonperformer, there has been significant movement from last quarter's report. But we stand by our comments that we expect no further loss.

The loan was non-performed, and no income was recognized in this quarter for the loan or this would have even been a stronger quarter. While work remains, we are encouraged by the progress.

That has been done this quarter. I have to say here that, Kevin D.

Hester, David Carter, and Mike Cook, want to give special thanks to them. They spent a lot of time on this nonperformer.

They took the bull by the horns. And protected the shareholders and Home Bancshares and thank you guys for a great job.

that is a solid testament to the quality commitment standards of our people. Mike Cook, now taking over the leadership a while back, took over the leadership of the Dallas region.

That region now reflects the credit culture of Home's operating and underwriting standards. it is certainly nice to have those loan problems for the most part behind us now, but there is some work to be done.

However, I think we see the light at the end of the tunnel. In our environment where industry loan growth remains challenging, exceptional loan growth should always be examined carefully.

Growth generally comes from a combination of pricing, structure, terms, or credit standards. And when there is robust standout extraordinary loan growth in an environment that does not support that kind of loan growth once you look closely at the right structure and terms.

it is extremely important that your team from the top down to the junior lender must have lending experience And not only lending experience, but quality lending experience with skin in the game. At home, that starts with me at the top as an asset quality who is spending my 6th decade in the lending process.

We believe in quality lending. I have been involved in over 50 M&A deals Happy was certainly the most difficult.

But even with all the problems associated with the acquisition, we have worked our way through those problems with a good partnership of happy and home employees together. We opened a new branch in Rockwell, Texas led by Cain Pierce.

We are excited about that. Glad to be in Rockwell.

And this is a new branch, not a replacement. New events included hiring our first in house counsel, mister Jeff Campbell, who will fill the role of corporate counsel We want to welcome Jeff to the family.

Look forward to working with him. Donna, I just want to make a quick recap to the quarter.

You will allow me to do that. And I want to leave this with the investment community.

Record adjusted income record revenue, loan growth from a negative $600 million and a $626 million swing stepped up repurchases from 500 thousand to 1.5 million, PPNR, a record $171 million. And adjusted efficiency ratio of 40.46, stable margin of 4.51, and Mountain Commerce already being a contributor sooner than expected.

That has gone well. Continued confidence in home's credit culture.

So when you look at the adjusted earnings, the profitability metrics, the efficiency ratio, stable margin, elevated share repurchase, and strong balance sheet growth, I believe Home's second quarter once again produced 1 of the strongest banking performances in America. You know, your honor, I rest my case.

Back to you, miss Donna.

Okay. Well, thank you, John.

It was another amazing quarter. And our next report will come from Steven Tipton.

Thanks, Donna. As John mentioned, the second quarter of 26 was a strong showing with the inclusion of Mountain Commerce Bank in Tennessee and a little organic loan growth from Legacy Centennial Bank.

Adjusted earnings particularly excluding merger expenses, were $128.1 million producing a 2.09% return on assets, the same as last quarter, and a 16.82% return on tangible common equity which is on a TCE ratio of 13.22%. The reported net interest margin was 4.51% in line with Q1, all while adding $1.5 billion in loans and deposits from Tennessee.

The core margin, excluding event income, was 4.47% and in line with where we guided to on the call in April. The overall loan yield excluding event income, averaged 6.96% and exited the quarter at 6.99%.

While interest bearing deposit costs averaged 2.38% and exited the quarter the same at 2.38. Total deposit costs were 1.85% in Q2 and exited the quarter at 1.84%.

Strong noninterest income was a highlight for the quarter at over $53 million Higher loan recovery income fee income at CCFG and increases from our SBIC investments were the primary drivers and got us back to levels we saw in quarters 2, 3, and 4 of 2025. Switching to the balance sheet.

Legacy deposit balances declined in Q2 by $179 million as a result of tax payments and seasonal outflow in April. Worth noting, deposit balances increased by $86 million in May and over $200 million in June to end the quarter at $19.1 billion Loan production rebounded in the second quarter to just over $1.4 billion with nearly $1 billion of that production coming from the Community Bank footprint.

Switching to capital, we repurchased 1.5 million shares of stock during the quarter for a total of $40.4 million As of June 30, we have over 15 million shares remaining available for repurchase under our current authorization. And nearly $450 million in cash at the parent company.

Tangible book value per share grew 45¢ to $15.32 or an annualized increase of 12.1%. Capital levels remain extremely strong, common equity Tier 1 capital ending at 16.4% and total risk based capital at 19%.

And reserve to total loans of 1.92%. We are proud of the second quarter results here at Home particularly with the inclusion of our partners at Mountain Commerce and look forward to the second half of 26.

With that said, I will turn it back over to you, John.

Thank you, Steven. And to close out our prepared remarks, Kevin D.

Hester has a lending report.

Thanks, Donna. As John noted, we found a way to post marginal organic growth in loans in the second quarter.

Which looked very difficult when we talked 90 days ago. This included flipping what was an anticipated large payoff early in the quarter into a hold with even a slight increase, which put us on a good path for the rest of the quarter.

In last quarter's remarks, I mentioned that Q3 payoffs appeared high as well, and that is still the case. In fact, the gap is higher now than it was 90 days ago.

John joked about us not being very good at forecasting and we discussed on the last call some of the reasons why early projections can be skewed toward declines. That said, we have work to do in order to post loan growth in this quarter.

Regarding John's comments about loan growth in general, we are seeing loan rates from the competitors creep lower and lower while probabilities for the next Fed interest rate move are up rather than down. Will continue to maximize loan opportunities while trying to protect our strong NIM so that we can continue to post best in class profitability.

Asset quality remains solid, with an 8-basis-point drop in nonperforming loans and a 4-basis-point drop in nonperforming assets. Early stage past dues remained under 50 basis points.

And loan loss reserve coverage of nonperforming loans improved to a 177%. As others have said, we began the quarter with the mountain Commerce Bank acquisition.

From a lending perspective, the combination has gone very smoothly. The similarity of their markets and their lending philosophy to ours will result in a shorter learning curve and earlier meaningful contribution.

On that note, Donna, I will send it back to you.

Thank you, Kevin. John, unless you have additional comments, I think we are ready for Q&A.

Well, I do wanna talk about loans a little bit. On Wednesday's loan committee, we approved about $350 million worth of loans.

So you know, that is our primarily, the hits coming from our South Florida group that really have a lot of things going on. Our JC and David and their teams are doing an outstanding job in Florida.

So there is $350 million worth of-- just you think you I knew those were coming. I did not know they were coming this quarter.

1 of them we have been working on for several years, and it is gonna be the best and most fabulous project ever built in Miami, Florida. So we are excited about being in that loop with that team of people, and it is fantastic facility that is being constructed, and it is 1 of our customers.

So we just have more they have lots. Probably in the second, as I said, the second half, they are going to bring even more.

So that is pretty exciting from that aspect. Some of this is construction.

So they put their money in first, but it is loan growth that is coming down the pike for us before long. So, anyway, you never know from 1 day or the other, you know, as I said, our FBO guy bought another FBO thing.

We did not know it was on that transaction. Kevin just visited with another 1 And so, anyway, we are we are working on it.

it is hard to as I said, it is like catching a greased pig in a ditch. You know?

You think you got him and he gets away from you. So maybe we will catch you.

Maybe we will catch him this quarter. So that is all I got to say, Donna.

I am ready for Q&A if the rest are. Okay.

Operator, we will turn it back over to you.

Your line is now open. Please go ahead.

Hey. Thanks.

Good afternoon.

Good afternoon, John.

I know you guys just gave us a bunch of information on loan growth or not loan growth, so I am a little bit confused on it. But what does your gut tell you today on it?

Kevin, you talked about you know, maybe more pay downs expected in Q3 than you expected in Q2. So maybe the indication is down, but then John, you are talking about a bigger pipeline.

So I know you said it is hard to predict, but what does your gut tell you for loan balances in the near term?

Well, we have probably more going on in the Florida market right now than we have ever had going on in that market. It is, quite explosive.

We have been working on some of the projects We had basically billions of dollars worth opportunities that are gonna come our way. It may be it may be the next 60 days.

It may be 6 months, but they are coming. Those projects are coming from our long term customers in that market.

So it is just hard to tell when they when they pull the trigger. But overall, I am pretty optimistic You know, we were going to be down $600 million.

We ended up moving up $26 million. And that happened just all of a sudden.

It just it came in, and it had it is kinda surprising. So, you know, we are not very good at projecting, future loan growth.

Seems like when I say we are gonna have it, we do not. When we are not gonna have it, we do.

So I am pretty much I think it is gonna be to keep it at where it is. I think we gotta work hard, but I do not think it is a problem with it.

We had a at our lenders conference in Florida recently, and I told the group after we are down, projected to be down h number of dollars. I need y'all to step up.

So I do not know if they just reached in their pocket and brought some stuff that they were gonna bring next quarter in, but the it all came in pretty fast, pretty quick, including the $100 million piece of credit, another $40 million piece of credit, some really good customer credit. We did not sacrifice.

We do not sacrifice, quality and margin. For loan growth.

So we are we are not gonna do that, and we did not in this in this cycle. Kevin, you gotta call me.

No. it is all fair.

I mean, we hey, also, where they are. And we outran them this quarter, and we will continue to try to do that.

Will that happen every quarter? it is we do not know till it happens.

Yep. So the answer is you could see.

Yeah. You could look at these.

Still confused. Right?

So let's-- we did our job. Yeah.

Yep. Yep.

I will probably hold it flat in the model. that is my guess.

Christopher Poulton, I think, last quarter, he also talked about maybe some pay downs in Q2 and Q3. Those balances are a little bit lower, but any help on what you are seeing in the pipeline there and kind of expectations for activity in your business?

Sure, John. it is Christopher.

I we did get the pay down. This quarter that we had anticipated, and yet we were still kind of flat.

Which means we had good production. I think we have originated $8.9 billion so far this year.

I think that still looks pretty good for us as we continue. it is a pretty good number.

Run rate for us. So I think like John said, you know, things work on some things, they go away.

Sometimes we let them go away, and sometimes they come back. We are seeing a number of things come back our way.

We say if you love somebody, set them free. You know, we let them go and test out the market and come back, and sometimes we can work a transaction out.

I will be making a West Coast swing, I think, next week, and have a whole bunch of things lined up that were things we probably worked on several months ago that now they wanna sit down and talk. So I feel good about there being opportunities out there.

You know, like John said, will they come in the next couple weeks or the next couple of months? I think we will see.

I do not see anything different now than I did before about our opportunity to be able to get you know, get transactions that are on our terms. Know, if we are patient.

I just think it is always about being patient here. it is hard to predict loan growth when your goal is not loan growth.

Yep. Okay.

Alright. I will step back.

Thanks, guys.

Your line is now open. Please go ahead.

Hey, guys. Good afternoon.

Hi, Brett.

Wanted to start hey, wanted to start on the margin and just it sounds like you are being able to, you know, everyone's concerned about competition and funding costs moving higher, but it sounds like you are being able to grow core deposits. So wanted to see if all those were sticky.

And then just if you can hold the loan yields and not see too much matriculation on the deposit side. It seems like the margin at least on a core basis, could hold up pretty well.

But wanted to get some additional color on how you guys see things playing out. And then, you know, obviously, you have typically been a little bit asset sensitive.

You know, if you get a rate hike, you know, what does that mean for you?

Hey, Brett. This is Steven.

I just take the last first. Yeah.

We guess our ALCO model shows almost a 6% increase in an up 100 basis point environment. So you know, the Fed did move, that is a net positive for us.

I think it is a net positive for us. You know, on the deposit side, our folks have done a great job in negotiating rates on money markets and CDs.

We are seeing competition in the 4%-plus range. And you know, I think most recently, you know, half of our CD maturities automatically renewed at our lower rates, and the other half, they have negotiated in about the 3.5% range.

So they have done a good job there working relationships with the people we have and then you know, through loan committees and our presidents have that you know, folks out pushing opportunities for deposit growth on loan side. I mean, 51 million reported 4.47% without event income, I think we keep it in that range, we would be pleased.

Okay. that is helpful.

And then just around, like, you had really strong growth in fees, particularly service fees, trust and mortgage. Any of those do you think impacted by any seasonal factors or can those levels be sustained?

And, you know, any thoughts on just if the outlook there is for growth or if maybe those numbers were a little bit high for 2Q?

Hey, Brett. This is Steven again.

Yeah. You know, as I mentioned in my comments, there were a handful of items that were, you know, up in Q2 from Q1.

I think in on the call last quarter, we talked about noninterest income was about as low as it. As it could be at, you know, $44 million adjusted for the marketable securities.

We were, you know, about 52 and a half, 53 adjusted for that this quarter. Some of that is wealth management.

Like you said, trust, financial services, are alignment with the Veritex. They are kinda hitting their stride.

And both of those areas are doing well. So some of that should continue The loan recoveries some of Christopher' fee income and CCFG that comes, you know, when payoffs are a little higher.

Some of that is gonna bounce around. I think our view is if you look at if you look at the last 5 quarters, it averages about $50 million over the past 5 quarters.

And yeah, that is kind of where we would expect things to be over the long term.

Yeah. Well, last quarter was kind of-- first quarter was kind of an anomaly.

We, you know, we normally have much more income there. We just we did not get it.

We did not get the we did not get the kick that we normally get. That happens maybe 1 quarter out of out of 4 annually.

So or and sometimes not, but, that would just revenue was down as a result of that did not-- we did not get-- we got no kick. It was just nothing.

So but 50 is a good number. Somewhere in that number.

That give or take 50.

Okay. Brett.

Appreciate all the color. Congrats on the quarter.

Thank you.

Your line is now open. Please go ahead.

Hey, good afternoon, guys. Thanks for taking my questions.

John, just as it relates to Mountain Commerce, you said that, I think, in the press release, too, that it is contributing earlier and stronger than what you expected. Can you just give some greater color there on what you mean, maybe just in terms of expense savings, revenue synergies or just any other color?

Broadly, you have on what would qualify that statement from your view?

As we are going through the quarter, first month, second month, and third month together, I could see that I could feel I could feel the income by looking at the income statement. They were getting extra income from somewhere, and it had to be coming from there by some of it was improvement at home, but a lot of it was coming from them.

I really did not expect that. I guess I was shocked by the fact I did not expect that kick, that quick.

We will convert in November, and that is about a $5.5 million to $6 million savings to the company that will pick up at that point in time. So I just wanted I think I was not prepared for it that quick, and I saw the numbers and the revenue numbers and all of it coming together.

And just was extremely pleased with what I was seeing on the daily reports. I mean, if you remember, we run a we get a daily P&L statement here.

You begin to see it, and you think, where would that come from? How would that happen?

And it was just all positive. that is basically it.

Michael. Just so I felt it over the quarter day by day as we operate.

No. Certainly, appreciate that color.

it is obviously a good deal for you guys. Maybe just going back to loan growth, I know we have already kind of talked about it a fair amount, but you do have pretty good momentum here.

As you mentioned, $350 million recently approved loans. I guess, you think with Mountain Commerce in the fold and maybe some bridging into some higher growth economies, you know, now that Dallas is back, in a bigger way.

And what is going on in Texas. I mean, could we think about structurally better loan growth from home than we have seen in recent years?

Or is this the competitive environment particularly given that some of those markets are more competition just going to be harder?

I can agree with the that we could have better loan growth? I do not wanna cut talk about other what other people are doing because it would sound like I am throwing stones.

But we are seeing some ridiculous stuff being done by some people in the marketplace. And it is just really frustrating.

We are not gonna do that. You know?

We got all the capital. We got tons of capital.

We got it is a it is a powerful earnings machine. We are gonna continue to do what is right.

And we are not gonna get off into chasing rainbows. So we have never done that.

We are not gonna start doing it now, but I mean, we are seeing structure in terms that I mean, they are just ridiculous. We are seeing So we are not gonna do that.

We are gonna continue to, as I said, keep the quality, the margin, and stability. We are going to price that over loan growth.

So could we get loan? We might get loan growth.

Hell, it is nothing to get loan growth. You can get all you want.

Give it away, change the terms of the structure, and you can load the wagon. You can just absolutely load the wagon.

And, you know, that does not mean that it is gonna long term be good. You can look at the asset quality of home over the past since we have been public, basically, and look at the quality of what we produce.

And we will continue to do that. We are not gonna change.

We are not we are not gonna run off into the sun to I got people pushing me to lower our standards and go do that and they can do that after I am gone. After I retire, I go to the house so they could do that.

it is not gonna do it when I am So, and I do not want to-- you know, I. what was it we had?

What was the director we had here before with Michael that Well, she's just 30. slurping.

So the quarter was so good. I told them before.

I should have had Slurpees this quarter with Michael. He said about the Slurpee.

I will I will do that for you next quarter. How about that?

That would be great. But just what Go ahead.

Just 1 follow-up on that. Just in the absence of loan growth, just assuming that the competition does remain intense here in the near term, how should we think about the pace of buybacks is kind of what you did this quarter?

What we should kind of contemplate? Or is there room to maybe even move that higher just given what is out there and how profitable you guys are?

We do what we said we are going to do. We said we are going to buy back the number of shares that we issued in, Mountain Commerce.

So you probably you know, we will look for opportunities. It gave us a great opportunity last quarter.

that is when we stepped up. And bought a bunch because they took us down and gave us an I think I averaged $25 or something, Steven.

Yep. 25.

26. So that was a great opportunity for us.

So if in fact we get an opportunity, we will be extremely aggressive. But it is our intention to buy that back because it is our intention to do another M&A deal on the heels of Mountain Commerce.

Alright. Makes sense.

I will step back. Thanks, guys.

Alright. Thank you.

Appreciate it.

Your line is now open. Please go ahead.

it is really good, man. Oh, can you guys hear me?

Sorry about that. Yeah.

Sir, Appreciate it, guys. I am I am curious.

Just following up on those M and A comments, John, and kind of what you guys are-- what you are seeing in the market right now, kind of you know, with bank stocks up kind of across the board, if that is making it the conversations more palatable or if, you know, sellers expectations just continue to go higher because you know, the group trades up. So just kinda wondering how those dynamics are playing out in conversations you are having.

Well, you know, it is a rising tide raises all ships or whatever they say. Rising tide raises all ships.

Well, we are seeing that in the marketplace right now. With it is pretty good space.

Bank space is a pretty good place to be. Know?

Does if we the last deal when our stock was down and we bid on and I understand they wanted a better trade, had they taken that, they would be up 25% today. You know?

So it is it is it is almost basically the same. it is how many of their shares for our shares and what that trade means.

And we are not seeing a lot of M&A out there right now. People are being, they are looking at their balance sheet, and they are thinking about, is this a diluted, diluted, diluted transaction?

So we are not seeing a lot of that, and we are not certainly not going to do that. I am having people say, what, John, with your currency right now, you could go buy this and that and this and that if you just take a little dilution.

Well, we do not dilute. that is what the world would like for us to do.

And then they could say, well, hell, they diluted that last bill. So, anyway, we do not do that.

We will continue to do what we are doing. I think there is opportunities out there in the marketplace.

But the deals either work or they do not work, as I have said in the past. They are either accretive, accretive, accretive, or they are not.

You know, our stocks back up close to 2 times tangible book now. So that gives us the ability to move up and make somebody happy if they want a better price.

You know, it could be know, you trade with somebody last month, and it they get the stock, and it is up, I do not know, 30% since then. So, you know, it just depends.

Timing means so much. You know.

Timing is the key to where their stock is, where our stock is, and if it works or it does not work. We will just hold tight.

You know, we hold tight on it is it is worked for this company for the last 25 years to hold title and underwriting and hold tight on acquisitions to do the right thing. So, I think we could see a stock market turnaround here for too long.

We got-- things are not as strong as they have been, but I do not think it will be bank stocks. I do not think it will be home.

I kinda went around the horn there, but I do not know if I answered anything that you asked or not.

So Yeah. No.

Yeah. No.

that is, yeah, that is helpful context for sure. I appreciate that.

And kinda maybe thinking about expenses for a minute, I feel like you know, last year and into the beginning of this year, you were kind of pinging around a $113 million to $114 million a quarter kinda range that you were you were hoping to hold everyone to. what is kind of the number in your mind today, John?

Where you would like expenses to stabilize and what you guys think you can achieve there?

Well, I think, yeah, somewhere in that range is fair. We got what do we have?

$12 million? What do we come out of here?

$12.07.

If you take the $12.07 out it is about $1.22. 7, which I think is kind of last quarter where we said you know, with Mountain Commerce there, current expense run rate where we would land, and then you know, once we get converted in November, we will begin to-- or we will get, you know, a good portion of those cost savings out at that time.

So we will see a little benefit from that in Q4 and then, obviously, all of it next year.

I mean, you we think about how efficient home operated and then you add Mountain Commerce, how efficient Bill operated, his group. Then we are gonna get some additional savings.

Get some income, and we should get some additional savings coming up here pretty quick. So I am optimistic we can hang in that range in $1.20.

Yes, sir. Got it.

that is great. And then maybe just 1 last clarifying question back on the previous conversation around loan growth.

And payoffs and whatnot. I think on last quarter's call, you guys had talked about thinking there could be maybe $1 billion in payoffs.

Kind of curious where you actually ended up seeing that number come in if it was sounds like maybe it was slightly better than what you are projecting there. And then just as you think about third quarter and beyond, if it is north of that $1 billion a quarter number or just kind of framing that you know, payoff dynamic conversation up a little bit?

Hey. This is Kevin.

Last quarter's number was a billion dollars. A little bit over a billion dollars.

This quarter, could be there. it is a little early, but it is they are it can be scheduled for that.

Okay. So that magnitude is kinda the same.

And then if you are doing a billion for production, just kind of depends on how it all funds up and the timing of everything of when and if you can see loan growth. Is that the right way to think about it?

I guess that is exactly why.

This is the toughest time in the buying space as rates are going down or going up. it is better for us to go up.

But, you know, when they start down when the rates start down, then people try to jump ahead of a loan rate and go in and cut the rate point and a half or so and cut a deal with somebody and tie it up. And that is this is the toughest Going up is a lot easier than going down.

So, this is a battle. It takes 1 customer at a time, and you fight the battle.

And this is a in our history, third or fourth time we have fought that battle. And we will continue to fight the battle this time.

But you got to-- it is not necessarily all right. I mean, the structure, some of these deals and the loan to cost and loan-to-value ratios have kind of gone out of whack.

It reminds me of around late 2004-2005, you know, 04/00/2005, when people were doing stupid stuff. So we are seeing some of that in the marketplace, and that will come home to haunt people, I believe.

We are just not gonna play the game.

We do not have to. We got a good machine that is generating really good solid income.

And the difference between a record month and not a record month is what how much risk we wanna take, and we are not we are we are not big risk takers. Yep.

Yep. Makes sense.

that is really helpful color, and congrats on another great quarter. Appreciate it.

Thank you very much.

We appreciate it.

Your line is now open. Please go ahead.

Hey. Thanks, guys.

I guess going back to the discussion around the competition for loans, Kevin, I think you mentioned pricing is getting tighter. Any more numbers you can put behind this in the market and then for HomeBank, any color on just the production yields you guys have seen more recently?

I will I will let Steven cover the yields. He had those in his we are we are talking about those for the meeting.

I think he is got those written down. I will let I will let him cover those But I mean, we are seeing some things in the 5s, the high 5s, the mid 5s.

And as John said, it is not just rate. It is rate and structure in the same deals.

You know, we you can kinda get by with given rate or you can give a little structure. You get your rate, get your risk covered.

Seeing it both ways, and that is the challenge is that you give rate and structure away, Like I said, it is easy to grow if you are willing to do that. that is that is simple.

Anybody can do that. that is the thing.

We were we were at about 6.75%, 6.76% in on production in the second quarter.

Okay. Great.

And then I guess, maybe similar question, Christopher Poulton, I know your borrowing base is very unique and differs a lot from what Kevin was talking about. But curious what you are seeing on the competitive side as far as pricing and structure as well.

We do not see much on structure because I think the deals tend to be a little bit more bespoke. And so you know, we do see you know, we see price over the last couple years, we have seen price probably come down, you know, 50 basis points or so overall.

I think in the market, sometimes it comes down a little more. We see price, I would say, a lot more in 2 areas.

1, construction. Every once in a while, you get folks step in and just get really aggressive on construction.

Construction. Again, not necessarily on a lot higher leverage and on recourse side, but you do see, you know, every once in a while, somebody will step up and get pretty aggressive on price for a few months and generally do that, and then they fill up and they go away.

For a little while. And then on the facilities side as well, I think that is where we probably see most of the structure piece where I think, folks that are getting into that facility space might underestimate how much structure they are going to need.

But otherwise, I think it is just the it is just the normal kind of thing where every once in a while somebody's got to put some money out and burn a hole in their pocket and they get aggressive.

Yeah. Okay.

Alright, guys. that is all for me.

Thank you for the color.

Thanks, Matthew.

Your line is now open. Please go ahead.

Good afternoon, everyone.

And, Brian, over to you.

Hey. Good.

Thanks, John. The maybe just 1 last 1 on the expenses, Steven.

I think you talked about, you know, the conversion in November and kind of the pace kinda holding where it is at. Today.

I mean, if we think about 27, and you get the savings post conversion, mean, is it best to look at you know, that run rate where you are ending the year as similar to what we look like going into 2027? Or given that you have got inflation, obviously, but you are gonna get the savings coming out in the fourth quarter.

So maybe not much change in the run rate. From 4 q heading into 1 q.

Is that a fair way to think about it, or is that-- is that not the right way? I think that is fine.

You know, again, we are we benefit, you know, call it half a million dollars a month, give or take. Know, post conversion with MCB.

And Bill has done a great job with Bill and Kevin both and you know, have seen some cost savings opportunities along the way already.

But the bulk of that comes out November, December, and then we will have our typical you know, kinda beginning of the year.

You know, merit raises and those kinds of things. That will that will help offset.

Got you. Okay.

Just remind me, the savings you expect from the transaction in terms of I guess, what dollars or, I guess, how do you frame up the savings you are anticipating?

Coming from the from the Mountain Commerce standpoint? We have modeled 20%, which is about $5.5 million.

Annual.

Okay. And that is and the bulk of that comes in the fourth quarter?

Or post fourth quarter.

Correct. Correct.

Okay. Gotcha.

Thanks, Steven. And then maybe, John, just on the M&A.

I mean, it sounded like there was a trade you guys were on, now you are off it, maybe come back to it. Just in terms of in the kind of your comments about the conversations maybe being a little bit less today.

I mean, sounds like not putting words in your mouth, maybe there is nothing imminent, but your discussions are ongoing. And if that is accurate, you can confirm that and then just if in terms of sizing or geography, kind of where you are any change in terms of where the interest I am not gonna do that.

I am not gonna do sizing or geography. But I like the people, and I like the company, and I like their geography.

So I am gonna go back and revisit that. I have sent them the information for the call, and I actually I called them afterwards.

I said I could not get there because I was losing my myself. They had my stock down by, what, $1.70 or something, Steven, some number.

So I think it would not work for me. So it said that did not work for us.

I said, I understand. But we are gonna go back and revisit that if they are interested and see if we can put something together that makes some sense.

So it is it is another nice trade, appears to me. You know?

Good little bank, and similar to Mountain Commerce to me in lots of respects. Not the same geographic area, but Yeah.

I gotcha. A bit.

Yeah. Well, they are for the business.

So this is good operators. You know?

This run a good number. Yeah.

Okay. that is helpful.

And then maybe just 1 on nonperformings or just credit quality. I know you mentioned some improvement there, all the hard work, the that Kevin and team had done.

So can you just frame up, you know, kind of the outlook or how you are thinking about the pace of NPAs charge offs as you look in the coming maybe just the pace of NPAs or just how you see the some of the improvement unfolding here in the next you know, 12 months or 6 to 12 months, however you wanna frame it up.

To see a path of improvement. I do not see any difference.

We stand by what we said before. there is no longer-- no more on the larger 1.

there is no loss coming. Not gonna take any loss.

So we stand by that. And outside of that, you know, we cleaned up a little stuff this quarter.

And we just tend to pack at it a little bit. there is 1 or 2 that sticks their head up, but we are mostly through that.

I am not I am not looking for anything any different. On the charge offs Maybe better maybe better from here on than what it has been, but where it is or a little better.

that is what I guess nothing there is nothing coming that is-- that is that anybody's concerned about. We had that large spot?

it is good. it is actually good.

it is actually good, brother.

Okay. And just in terms of how much improvement in nonperformance given kind of what you the lifting you have already done, I mean, could we see over the next 6 to 12 months?

I mean, could we see a significant decline in nonperformings or is it is it more of a slow grind? I guess, however you would frame it up.

that is really that 1 or that is really up to the other side of the fence. Sometimes.

You know? it is not we can see that, but we are not we are not walking away.

So, you know, we expect to collect everything that we have out there. So we are and we are not gonna accept anything different.

Okay. So just in reminder, I do not really I really do not see any changes.

It might get better from here, quite honestly, though. The charge offs, we had it, I do not know, 5 million this quarter.

Yeah. it is closer to 6, but we had almost 3 million of that was specific reserves of loans that we charged off.

We had matched up to specific So if you take that out, then it was really a just a normal quarter. We are we are actually it is really marked improvement in asset quality here.

there is no-- you should have no concerns about asset quality. Okay.

Yeah. And remind me the size of the largest credit that you talked about last quarter.

Where does that stand today, or what level is that at?

it is at it is where it was. it is a little less than 100 million.

it is still where it was. But that is the 1 that we are we have seen some movement on, and if reasonable heads stay together, we will wrap that up.

And if they do not, then we will fight the battle. So there you go.

Got you. Okay.

And last 1 for me, sorry, was the just on the margin, Steven. Can you just frame up like, I know you said that you your hope is to see the margin, you know, stay, maintain its, you know, kinda current core level, if you will.

But just the puts and takes, what could take that better or worse? And then just maybe the opportunities you have on the Mountain Commerce book in terms of loans and deposit, where there is opportunity to pick up there.

Yeah. there is certainly opportunity on the deposit side with Tennessee.

They have got about $300 million in CDs that mature in the second half of the year that you know, we should get some marked improvement on yield there or potential at, you know, some roll off. Yeah.

I would you know, as we have always said, I would say competition probably is the biggest threat to you know, particularly on the deposit side. We have got a billion and a quarter in CDs that mature the second half of this year.

that is in the mid threes. You know, like I said earlier, that is we have we have done a good job and we have kind of ended below that.

Range on where we were due. But, you know, competition forces that higher, that is, you know, that is probably a risk.

But our folks have done a great job, and expect that to continue.

Okay. So not a whole I mean not much pressure on the asset side.

I guess, I know you talked about the loan yields and kind of what you are seeing in the market. So maybe it is just you are not gonna push forward with some of those loans at those rates, it sounds like?

that is right. Yeah.

Okay. Alright.

I think that is it for me, guys. Thanks, and congrats on a great quarter.

Thank you very much.

Your line is now open. Please go ahead.

Thanks, everyone. Good afternoon.

Afternoon, Catherine.

2 last questions. Just nitpicky model questions.

Maybe first on fees. If you if fees were a big beat relative to our expectations, and I think you mentioned there was a BOLI gain, and higher SBIC investment income.

Can you quantify maybe how much that increase was in SBIC and how we should think about a normalized run rate going into next quarter?

Yeah. That increase was about $2.4 million for those equity investments that we have.

Okay. Great.

And then anything else in the C Line that you felt like was artificially elevated?

Well, we did have our purchase accounting accretion go up $2.5 million. and $1.5 million of that was just related to Mountain Commerce.

Rest of it would have been from older stuff paying off.

Got it. Okay.

So do you think that PAA comes down from the $3.6 million Well, the payoff stopped.

You know? Know, it is a bit I do not my Commerce would be the same next quarter, I guess, as it was this quarter.

The other, if we get the payoffs, you know, that is that is the key about $900 thousand that was payoffs early payoffs on loans that we generate the income. So It does happen periodically.

That might happen next quarter too. Yeah.

You can you never know. We will meet Usually, there is always something paying off.

So Yeah.

No. But that is that is helpful just to about 900 thousand of it was for early payoff, not just your scheduled PAA accretion.

Correct.

Okay.

that is great. that is helpful.

Okay. Great.

that is all I got. Everything else was asked and answered.

Thanks. Great quarter.

Thank you very much. Appreciate it.

It was a great quarter for us. Thank you.

Thanks everyone for your participation today. Thanks for supporting Home Bancshares.

We work. If we work at it, we are a little-- even though we had a 2% ROA and 1 of the top 10 in the nation in the first quarter, we felt we did not do a very good job.

So we worked hard at it. And we will continue to work hard at it, as you know.

And, hopefully, hopefully, things will settle down in the marketplace, and we will have more loans and generate more income. And that is our game is to continue to grow the company over a period of time through both growth organic growth and M&A.

And we hope to hope to be able to tell you about another deal before long. So thanks, everyone.

We look forward to visit with you in the future.