Home BancShares Raises Dividend After Record Third-Quarter Profit
Net income hit a company record $129.5 million, or $0.65 a share, as the cash dividend rose to $0.23 a share.
Home BancShares, Inc. (HOMB), parent of Centennial Bank, reported record third-quarter net income of $129.5 million, or $0.65 a share, up from $119.3 million and $0.59 a share in the second quarter.
The Conway, Arkansas-based holding company’s increase from both the linked quarter and the year-earlier period was driven by stronger net interest income and a reduction in credit loss expense. Adjusted net income, which excludes non-fundamental items, was a record $129.1 million. Return on average assets was 2.12%.
Net interest income after credit loss expense totaled $242.0 million. On a fully taxable equivalent basis, net interest income was $244.5 million, as a $2.3 million decline in interest expense — $1.2 million on deposits and $1.1 million on FHLB and other borrowed funds — more than offset a $2.1 million drop in interest income. Interest expense decreased from both the prior quarter and the prior-year period, reflecting continued improvement in funding costs.
The net interest margin expanded 2 basis points to 4.53% from 4.51% in the second quarter. The rate on interest-bearing deposits fell to 2.37% from 2.39%, and average interest-bearing deposits declined to $14.43 billion from $14.69 billion. The loan yield slipped to 6.95% from 7.00% as average loans edged down to $17.06 billion from $17.08 billion. Purchase accounting accretion on acquired loans was $2.9 million, down from $3.6 million, and the decrease was dilutive to the margin by one basis point.
Non-interest income was $46.4 million, reflecting normal variability in fee-based categories. The largest components were $12.0 million of other service charges and fees, $11.6 million of other income, $10.4 million of deposit service charges, $4.0 million of trust fees and $3.8 million of mortgage lending income, partly offset by a $916,000 fair-value loss on marketable securities. Total revenue (net) was $288.4 million.
Non-interest expense fell to $121.5 million from $135.5 million, primarily due to the absence of acquisition-related expenses incurred in the second quarter, when the company completed the Mountain Commerce Bancorp acquisition and recognized $12.7 million of merger-related costs. The reported efficiency ratio improved to 40.78% from 44.54%; the adjusted efficiency ratio was 40.84%.
The balance sheet contracted. Total loans receivable were $16.91 billion at September 30, 2026, a $216.6 million quarterly decline, as the community-banking footprint posted $255.7 million of organic loan decline that was only partly offset by $39.1 million of organic growth at Centennial CFG, leaving CFG loans at $2.08 billion. Total deposits were $18.76 billion and total assets were $24.15 billion.
Credit quality deteriorated on a stock basis even as charge-offs eased. Non-performing loans rose to $200.8 million from $185.3 million, and non-performing assets rose to $245.3 million from $228.6 million. Non-performing loans to total loans increased to 1.19% from 1.08%, and non-performing assets to total assets increased to 1.02% from 0.93%. Texas non-accrual loans were $126.2 million; Centennial CFG non-accrual loans were $14.8 million. Net charge-offs fell to $2.1 million from $5.8 million. The allowance for credit losses on loans was $326.2 million, or 1.93% of loans, and coverage of non-performing loans declined to 162.45% from 177.19%.
The company raised the cash dividend to $0.23 a share, a 9.5% increase from $0.21 in the second quarter. It repurchased 1.3 million shares for a 0.69% buyback yield. Common equity tier 1 capital was 16.7%. Book value per share was $22.74 and tangible book value was $15.35, both company records. Shareholders’ equity was $4.53 billion.
Chairman John Allison said the team delivered a very solid and safe third quarter.