Greetings, ladies and gentlemen. Welcome to the Home Bank Shares Incorporated First Quarter 2025 Earnings Call. The purpose of this call is to discuss the information and data provided in the quarterly earnings release issued after the market closed yesterday. The company presenters will begin with prepared remarks and then entertain questions. 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 withdraw your question please press star then two to remove yourself from the list. The company has asked me to remind everyone to refer to their cautionary note regarding forward-looking statements. You will find this note on page 3 of their form, M-K, filed with the SEC in February 2025. At this time, all participants are in a listen-only mode and this conference is being recorded. If you need operator assistance during the conference, please press star then zero.

It is now my pleasure to turn the call over to Donna Townsend, Director of Investor Relations. please go ahead thank you good afternoon and welcome to our first quarter conference call with me for today's discussion is our chairman john allison stephen tipton chief executive officer of centennial bank kevin hester president and chief lending officer brian davis our chief financial officer chris polton president of ccfg and john marshall president of shore premiere finance. Opening remarks today will be from our chairman, John Allison.

Good afternoon. First today I want to pay tribute to a special friend of home bank shares family and a director of our company. We've lost a good friend and a strong leader with the loss of Pat Hittman. Hittman was a wonderful asset to the home board of directors and from a personal perspective he was a man who walked in in the same shoes that I walked in while he was building happy as I've been building home bank shoes. He was a confidant. Pat lit up a room with his outgoing personality and was a good man of God and always wanted to pray for all of us on the board and we probably needed it. Someone recently said, I bet Pat, if he goes through the pearly gates, is telling God about his bank's new CD special. That's Pat Hickman that I remember. We will miss you, my friend, And may God be with your wife, Nancy, and your wonderful family. Good day, everyone, and thank you for joining the start of 2025 with us. First quarter earnings are in, and as I said in the headline, home strength is no accident. Couple our strength with peer-leading performance methods, and you get the results you get. It may be the best first quarter in the entire bank space. Our continued conservative philosophy of maintaining strong capital, excessive loan loss 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 near perfect quarter, six new performance records. The bad news is it was delivered during uncertain economic times. Hopefully this top-tier quarter does not get lost in the shuffle. We continue to maintain the passion, the drive, and the discipline that allows our performance to separate us from the pack by being one of the most profitable institutions in the world. It is our goal to reward our owners and make them proud to be shareholders of home bank shares. It's really nice to have the large Texas cleanup behind us, or basically in the rearview mirror, pretty much done. Plus, it appears we've reached a 10th resolution to the Texas lawsuit we filed a couple years ago. So that may go away along with millions of dollars of expenses that are incurred on a quarterly basis that could disappear in the second quarter. Couple that with strong loan growth, stable margins, and it feels like home may have finally broken out on the earnings side. Management has to ride herd every day during these volatile times. That requires constant watching with a laser focus, both internally and externally, and be prepared to shift, either, to direct the company in an offensively or defensively direction. The bottom line is, as my wife said, regardless, protect the chuck wagon. That's certainly the most conservative approach, and as I said last quarter, these banks don't run themselves. I'll talk 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 CCFG. Let's go to the numbers. Earnings was a beat. Earnings showed 115.2 million, a record 58 cents per share. That represents a significant breakout in quarterly earnings that has been fixed around 100 over the past several. Quartered core earnings of that was 111.9. That's 56 cents a share. I want to bring to your attention that the expense of the Texas lawsuit was in this quarter, and that was $2 million after tax. And hopefully that will be non-reoccurring in the second quarter. Without the expense, the core would have been $114 million and 57 cents a share. Our gain from our equity investment was backed out of the income for core purposes because it's not guaranteed reoccurring. However, management believes our 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 in me always reaching for a little extra. Revenue, home was a beat on revenue. We were 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. With rates down, we were pleased to continue our plan to top our billion dollar run rate that we did in 24. Margin, strong improvement on the late quarter, up 444 from 439 in the fourth quarter and 413 in the first quarter. Netting for spread improved 11 basis points from December 24 at 358 to 369 for the first quarter of 25. Nice improvement while yielding loans expectedly dropped on the linked quarter basis to 7.38 from 7.49. Loans community footprint increasing $291.5 million dollars while ccfg declined 103 for net loan growth for the quarter of 187.6 at march 31 we were at a record level on loans at 14 billion 950 million and we're 14 billion 960 million at december 31st 24 and if i'm not mistaken we've gone over tipped over i don't know that it'll hold we've ticked over $15 billion so far this month. Deposit strong deposits with 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 loan-to-deposit ratio to 85.24, and that's in spite of the strong loan growth. The rate on interest-bearing 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 flight to safety in uncertain times. Home is enjoying the deserving reputation of being able to pay out all deposits in the flight to safety. There is no place like home. Pre-tax net income for the quarter was 56.58. I don't know how you fuss with those numbers when you bring 56.58% of your revenue to the pre-tax bottom line. Asset quality non-performing loans improved to 0.60 from 6.7, while non-performing assets improved to 0.56 and 0.63. Reserve coverage grew to 312% from, 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 December 31, where non-performing was $98.9, and non-performing assets was $140. Capital ratios continue to build, CET1 at 15.4, leverage at 13.3, and total risk space at 19.1. Tangible book value increased to $13.15 from $11.79 a year ago, up $1.86. Book value hit a new record, surpassing the $4 billion mark for the first time in our company history. Return on tangible common equity for the quarter was a strong 18.39. We continue to buy back stock. We have a 10B5 filed during our quiet period, but have no idea of the opportunity to buy back stock at these prices, and the purchases have been limited by our filing. We purchased over a million shares, or right at a million shares, I think in the nose for the quarter, 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. in conclusion home's powerful balance sheet coupled with repetitive strong arms that's now showing possible breakout because of strong margins conservative growth good loan quality massive capital hands-on management expense control and don't forget our discipline drive and determination that has led us to pure leading performances it feels good to be one of the best and we love to win. We picked this up on the, somebody wrote something about us and said that home strength is not an accident. We've kind of picked that up and we're going to use that in some ad campaigns. It was quite a quarter, and I want to thank all the team at HomeBiteShares for a great effort and what I consider a perfect quarter. I know you're proud yourself of the numbers as well, and I'm going to turn it back to you and let you have it.

Thank you, Johnny.

Congratulations on a fantastic quarter our next report today will come from stephen tipton thanks donna we realized when we talked last quarter we mentioned that we would be pleased if the margin could remain fairly stable i'm very proud to report that the core margin continued to expand in q1 for the quarter excluding event income the net interest margin was 4.42 percent versus three 4.36 percent in q4 or an increase of six basis points. March ended slightly lower than the quarterly average, primarily due to the continued build of liquidity from the increase in deposits. This liquidity will allow us to continue to work on negotiated deposit pricing in an effort to bring those costs down. We are 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-interest-bearing balances. Congrats to 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.

Thanks, Donna. As Johnny mentioned, all asset quality metrics improved in the first quarter with no new material concerns noted. Anticipated recoveries from the fourth quarter cleanup are in process with nearly $7 million recovered from the fourth quarter charges. 90 days ago, I indicated that I expected total recoveries 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. All of that and solid loan growth driven by the community bank markets. As Johnny said, an almost perfect quarter. Donna, back to you.

Thank you, Kevin. And now Chris Polson will provide an update on CCFG.

Thank you, Donna. This quarter we celebrate our 10th anniversary at Home Bank shares. For those that may be looking to mark the anniversary, I'll tell you that the traditional gift is aluminum or 10. I'll be honest with you, I was a little disappointed when I discovered that. Over the past 10 years, CCFG has funded over $15 billion of loans and has grown the portfolio at over $1.7 billion. dollars representing cumulative average growth rate of over 10 percent we think of that as a pretty good start i'll talk today specifically about our commercial and industrial loan book it was noted earlier that the ccfg portfolio declined approximately 100 million dollars in the first quarter this decline as well as last quarter's decline occurred exclusively in the cni portfolio historically had two types of credits in our commercial portfolio the first single credit broadly syndicated and middle market loans and the second structured facilities secured by portfolios of middle market corporate loans as of this quarter we've effectively exited the single credit broadly syndicated and middle market loans at its peak this portfolio was over 200 million dollars and today it stands at less than 10 million dollars with just four credits remaining in addition over the past year we exited at maturity or refinance several structured facilities as we rotated out of prior facilities and chose to take a pause on new commitments pending the election and potential rate volatility and tariff impacts going forward as we search for an equilibrium point with cni book we expect to add back to the structured portfolio historically cni has represented approximately 20 percent of the total portfolio today it stands at less than 10 percent over this prior year we've created capacity to selectively add back to this book meanwhile our commercial real estate book which represents the core of our loan book was stable to up over the quarter and up about five percent 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. these past 10 years have been the most rewarding in my career and i wanted just to take a moment to thank everyone that has supported the growth of this business over the years i'm pleased we've been able to build a foundation for

continued growth and success hopefully in the years ahead donna i'll hand the call back to you thank you chris and congratulations on your 10-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 and i think we're going to do some send chris a roll of tinfoil or something now don't don't spoil the surprise we'll get a big roll of chris that's your wife appreciate so yeah i appreciate that i i didn't realize it was 10. so anyway thank you uh i don't have anything else the numbers speak

for themselves uh we're going to go straight to q and i let everybody ask what they want to ask and great quarter though great job for everyone so bye everyone thanks thank you if you would like to ask a question you can do so by pressing star followed by one on your touchscreen keypad if you change your mind and would like to remove yourself from the list you can do so by pressing star then two we will pause it briefly whilst questions are registered the first question we have comes from

michael rose with raymond james please go ahead hey good afternoon guys thanks for uh thanks for taking my questions um really solid quarter you know kind of all around but i wanted to get a sense from from you guys um you know obviously this quarter's growth was was strong but just in general what you're hearing you know from your customers you know i think an increasing number of banks are just citing you know some some uh you know tepidness from from borrowers and Yeah, I specifically wanted to ask 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 given some of the uncertainty out there. Thanks.

Hey, Michael, this is Kevin. Michael, this is John. Go ahead, John. Talk about insurance, and I'll talk in general.

Yeah, no, just because Michael had mentioned the boat loan specifically, Michael, what we have seen, I guess, in the first quarter is elevated volume compared to 1Q of 24. But a large part of that, because one of our European manufacturers, a significant relationship of ours has been offering to subsidize the pricing. And so that has tended to elevate the production volume. And that has largely masked, I guess, some of the uncertainty around the tariffs. But Kevin, do you want to speak in general?

Yeah, Michael, from a community bank footprint i think what you what you stated is what we're hearing from a lot of people too i mean there's there's some uncertainty obviously over what's happened in the last month and that that may that may keep some projects that maybe are you know kind of in the development stage and then the planning stage it may slow some of those down um i mean still a lot of good things happening in in our core markets. So I'm hopeful that that will be short term, but still a lot of activity and a lot of good things happening.

Very helpful. And then maybe if I could just get to the kind of the puts and takes on the margin for Stephen, how much pull forward or repricing opportunity is there on the deposit or liability side?

And it's good to see you know loan yields still you know holding in there above you know well above seven percent obviously down q on q but can you just give us an update on kind of where new production yields are and then maybe how we should 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 sure hi michael yeah so several questions there i guess uh production in q1 was a little over 800 million uh weighted average coupon was 775 uh so so still hanging in there fine you know north of prime um on the on the deposit side just here recently over the last couple weeks have have kind of tried to reignite a little effort on on negotiated checking savings those kinds of things you know a lot of that's going to obviously depend on competition um you know had a call earlier this week with our presidents, and you're still hearing banks offering four and a half percent. So we have to compete there 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 Fed. And then on the CD portfolio, we've got we've got 600 million maturing this quarter we've got about 400 million next quarter out of a billion eight that we have I think 85 percent or more matures within 12 months so we're pretty short on the CD portfolio and and we should see 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 as we have for quite some time now, would be pleased to see it kind of hold in the range that it's in. Cash in March was up with the deposit build, 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.

Very helpful. Maybe just finally, last one for me. Johnny, I think you mentioned this in the outset, the credit cleanup around Happy being just about done. 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 verticals that you're putting a little bit more eyes on at this point, just given the tariff uncertainty? Thanks.

Hey, Michael, this is Kevin again. Not from a general sense. I mean, we ask that question in every presentation we're asking our lenders about that individually because it you know it affects even within an industry people differently so i mean we're just dealing with that from a one-off individual perspective but certainly talk about that in every every size okay great and uh really early yet to know i mean you know you haven't really seen where they're going to land and and what's going to get hit and what's not so it's it's a little early we're having the discussions but there's no definitive answers that's pretty well put thank you michael yes it's difficult yeah thanks guys and uh chris congrats on 10 years i

got a slurpee coupon coming your way thanks guys i appreciate that thank you we have the next question from catherine miller with kbw please go ahead when you're ready uh thanks good afternoon Good afternoon, Kathryn.

Johnny, you mentioned about expenses that there were still about $2 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 excluding now we actually see expenses come down from this level or that just kind of pays for natural growth over the next couple of quarters?

111 is our number and you pull the two million out of of expenses this quarter and you'll be at 110 nine so you're right at 111 so our management team is working hard to keep that and and I'm not I didn't fuss at them this quarter because we had the elevated legal expenses we were in the middle of depositions on that lawsuit that went on all month long anyway that maybe that it appears that there's a resolution that's come to that and and maybe everybody will continue we haven't everybody haven't signed off but we're working up towards that so uh you know the 111 is a good number i think you know that i think you i think that's the number we had last year and we're still operating with it this year so i'm pretty pleased with the with steven's management of the expense side don't count it coming down any further than that yeah no it's been really it's been really good expense control.

And then maybe my follow-up on the margin was just on loan yields. Can you just kind of give us a sense as to where new wind production is coming on? We talked a lot this kind of quarter about competition being a little bit more intense this quarter. Just kind of curious how we should think about the pace of loan yields over the next couple of quarters.

Hey, Catherine, this is Stephen. I'll make the comment there and I'll let Kevin add anything he wants to just, you know, in general, I think, uh, mentioned earlier, coupon in Q1 production was at 775. Um, that's 760 or so kind of from the community bank group. Uh, so, you know, a little north of prime and then, you know, mid eights for, for Chris's portfolio.

Um, you know, we're hearing, 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 you all know we're disciplined in our approach and um you know think we can kind of hold the line where we're at kevin that's good no that's i would agree with that okay great and then and maybe just want to just call 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 them 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 and on the sensitivity to the margin and how you think in the direction of your margin will go um with this cut yeah so you know from an alco standpoint i think we we show about six percent uh decline in a in a down 100 scenario i think johnny and tracy have said for long time our view just on the alco model and it being a snapshot in time um you know we have three i think we have three rate cuts built into our 2025 budget um and you know actually showed a little expansion um throughout the year uh you know in what our budget produced so um you know again i think a lot of that factors on competition and you know what we have to do uh to protect the the franchise but overall i think in this you know 440 ish range you know where we're at today would be would be pleased great thank you great quarter thank you thanks captain thank you we have joan austrum with rbc now thanks good afternoon hi john hear me all right hey there um johnny what are you what are you thinking on the buyback and capital preferences from here you

would still 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 deal we'd do one. We've got we have a payoff coming up looks like. Brian you want to talk about what we're coming at?

Sure we probably will pay off some sub debt. It's sub debt that we acquired from HAPI. 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 that'll lower our risk-based capital ratios about 76 basic points once we do that yeah it it adjusted about nine and a half so we're not going to pay that so we'll pay it off we got the cash paid off we'll just pay it off Yeah, and we've got almost $582 million in cash at the holding company, so we're good there, and we're very strong on capital, so I'm good with paying it down. Paying it down.

It is getting, the capital count isn't getting large. You know, I think Jamie Diamond said it best. There's nothing wrong with having good liquidity and lots of capital in these kind of uncertain times, so I like our position. I like the fact we can pay out all the insured compositors. I like having a war chest of capital. We don't know what's going to happen. You know, 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. I just want to be in good shape when we come out the other side and ready to play.

Fair enough. So pay down debt and maybe pick away at the buyback is the near-term message. is that fair?

Yeah, we'll continue to buy. I wish we had. We've always filed 10B5. We've picked up about 480,000 shares in this 10B5. About a million last quarter on this quarter so we picked up about 450,000, 480,000 shares. And I assume we'll probably buy another, if they stay down here, we'll continue to buy. We'll just continue to sack it up.

I didn't think we 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 um chris um polton on your comments are you are you essentially calling the bottom are you saying that that in a couple of runoff categories that it feels like you've exhausted that are you are you essentially saying your portfolio could be at a bottom in terms of size i think that's pretty fair i i'd like it to be um you know we as i said a hundred percent of the decline in our portfolio has been on the cni side we control that

right we can come in and we can come out of that wanted to leave a little dry powder coming into this year on commercial because we kind of felt like weren't great opportunities in the second half of last year on the commercial side we thought there'd probably be more we just made a our first commitment um this month this year so uh we waited until now we made a new commitment at a facility so um yeah i'd like to believe that we'll have some payoffs in the you know in the cre book but i think the pipeline's strong enough to um to fill that back up so i'd like to be a little bigger than we are right now we're down about one one seven or so i 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 and then um kevin just on core growth uh core loan growth in the community bank footprint is there anything you'd call out that's particularly strong at this point um well certainly our our southeast florida group our metro groups there's you know There's just a lot of good stuff happening in Florida, and even in the Dallas metros, I think I'd probably call those out. 2Q payoffs look pretty high, so that's going to be a little bit of a headwind as we go through the quarter. I'm not saying we can't overcome it. It is early in the quarter, and the pipeline doesn't show some stuff that I'm sure will come through, but payoffs definitely are a little bit higher.

Okay, fair enough. just one comment on 10 and aluminum I I see John Marshall does not have any foreclosed assets but it's about 5 million and non-performers so Johnny maybe there's an alumicraft in there for uh for polton thanks John that's helpful all right that's that's all I had I've just been waiting I've been waiting thank you thank you we now have brett roberton with hovich creek okay hey good afternoon

everyone um wanted to start um back back on the recoveries and i think johnny you mentioned you still expect the cleanup to have uh 30 million 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 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 hey Brett this Kevin I'll take the the first part of that question I'll let him talk about provision but 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 um as of right now that's a million and 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 uh that's the large part of the 30. most of the other stuff maybe one other piece there's maybe one other piece that hasn't occurred yet that i'm hoping will happen second quarter i think it probably can other than that i mean all of it has happened

other than than the monthly payments okay um and any thoughts johnny i know it's you've had a two percent reserve in the past and your reserve is still way above almost everyone else do you want to grow that in this uncertain time or do you think that that's kind of as high as you can get it just given the dynamics I'm not in a hurry but I'll you know I like two percent and reiterate but I'm going to it has always worked good times bad times recession financial crisis

interest rates two percent always work and it's just something you know we would have I didn't expect loan growth to be this powerful the first quarter and it was really good or you would have seen it go back up you know the recoveries would have taken it back up so but it just matched out pretty even with the loans and so I think we're at 186 we're still at 186. so I'm not in a hurry to do that but if I get a chance to go back to two percent at some point in time I like the reserve I think it's a smart thing to do, and a conservative way to run this company is to err with too much reserves and too much capital. So you know how we do it, and if we get a chance to do it, if we don't, we'll leave Probably not going to let it drop. I'm not going to let it drop any from where it is, so hopefully we continue to, we know we're continuing to get some recovery on a monthly basis, so we'll build it.

But there's always, you know, there's always a little charge off here and a little charge off there. i think we recovered seven million last month we charged off a couple million and ended up with four and a half or five so which was the 190 million loan growth is what it was about what it took yeah okay um and then just back on the the m a topic you know i i assume 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 what you're hearing from folks and what do you think

your outlook might be for M&A you know I know it's hard to hard to gauge with the uncertainty well we just saw cadence get that deal done in 60 days how long has it been since we saw a deal get done in 60 days. It's been the last Trump administration. So, you know, it is a positive for banks. It certainly is a positive for banks. And French Hill, head of the Financial Services Committee, first banker in 100 years to head that, that's a plus for the banking industry. You've got a real banker running financial services. So I think that's a plus. I think Trump is going to deregulate as much as he can. I think it's our opportunity. It's a window. I don't know if it's perfect timing with all of the tariff stuff going on, but 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 mean, I'm excited. Thinking close a deal in 60 days, that really gets pretty exciting. So from that perspective, I'm more inclined to do something. We're not really on something right now we're only one last quarter and due to the Texas cleanup having to get all that crap out of the out of the bank we we didn't want to go forward with that so anyway that that one could come back at some point in time and may or may not come back at some point in time but we'll uh we're open I just spoke at Commerce Capital they had a big event in in Texas and we spoke there in front of about 120 bankers so 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 we're not excluding the M&A deal when you run a two percent ROA as we did for the quarter we can't get much better than that can we we just can't you 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 buy it worth the money you know I told the guys in Texas recently this nice conference I said think about it we all work about the same number of hours I don't think they work as many as we do but anyway I said and you're doing a one percent or a point nine and I said we're doing a two so think about that and you want to sell your bank what should I pay you for it you know I pay for what it's worth right think about think through that you know you you can't come beat in your chest I want two times book because next year we're going to do we're going we're going to do 1.8 that's well then wait until next year to sell it 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 does that make you understand where i'm coming from okay yeah yeah i think that makes great sense uh appreciate the color congrats on the quarter thank you thank you we have the next question from matt only with stephen please go ahead when you're ready matt

yeah thanks guys um congrats on the quarter uh johnny wanna just yeah just want to continue that last discussion you had on the M&A front, and I'm curious if we are seeing faster approvals on deals, and you mentioned up to 60 days on some of these deals, does that allow you to do anything interesting on the M&A side? And some of your peers have talked about it's really more comfortable doing multiple deals in the same year. If that's the case, it could 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 so just curious how the change of faster approvals how that would change your m&a strategy if if at all well it it excites me to look at m&a 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. But I wouldn't mind doing a smaller deal. We're not adverse to doing a smaller deal at all. You know the last one we did was the happy deal and you know the train wreck we ran into there with that deal but that's in the rear view mirror today as you can see the earnings has recovered. So I mean I'd prefer to do maybe I'd prefer to maybe do a smaller deal or a multiple smaller deals so it's just 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 so and you'd have all your focus on one trade but I wouldn't be adverse to doing a couple of smaller deals at all and I'm looking I'm ready to find something i'm absolutely ready to find the trade it makes sense i said a while ago run a 2.05 or six for the month you can't i can't ask for any more than that this team needs some new assets they need some assets of somebody that's running a one percent our way that that wants to be a partner and come in and let us help them get it to a two percent our way i mean that's our game right? That's what we've done over the years is buy 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. But just because I sell it two times tangible book, I'm going to pay somebody two times tangible book. There's not but a handful of us that trade it two times tangible book and We trade there because of the continued quarter after quarter after quarter performance of the companies. So that's why we trade there. And people that are not there, they trade there for a reason. So no disrespect, this is what it is. And, Johnny, on the topic of just smaller banks, can you put any numbers behind that in terms of how small would you go versus you know how small it's just too small I guess to consider below 300 probably is too small you know however if it was sitting next door to Palm Beach or sitting next door to to Miami and it was the end market merger you know we might we might look at something smaller than that it just it depends on where it is if it's out there by itself then we probably would be we wouldn't be as aggressive on it if it's if it's in some place where we operate today then we could be we could be a little more aggressive on it i mean if the ce you've heard my story the ceo wants to say we'd love to have the ceo if he doesn't particularly in florida we can just pour it in 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 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 accreted, if it could be somewhat accreted to us. I mean, you can do a billion-dollar deal and it adds two cents a share, or you can do a $150 million deal next door and it may add two cents a share, so it depends on how much it adds to the EPS. We're in the business of making money for our shareholders, and we're going to make money for our shareholders. Most of these people sitting around this table right now are big shareholders in this company, so they're as aggressive as I am about looking for the next deal. all right guys thanks for the commentary congrats on the quarter hey thanks man appreciate it thank you we have steven scooton with papa santa please go ahead 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 um if he's not there he's missed he's sitting at the other table one in his mouth

right now there you go see you guys all should have one just to honor him on his on his what i think is maybe his last name as well so it's been a great run um i guess maybe one last question on the m a front um what do you think we need to kind of get the ball rolling on on a deal flow perspective i mean do we still need lower lower rates is it you know marks on on our interest rate marks that are keeping deals from getting done do we just need higher stock prices i mean 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 we need to see to to kind of get the ball rolling a little

bit more you know i i saw kevin showing his head we need when you said lower that'll improve some people that'll make them want to come out you know it's about as broad as it is long when you think about it we're just a tick below two times tangible book we're right at two times tangible book and we were at two five you know so or two six it's all relative you know somebody said well i'm gonna wait like to get one six or one seven well when they get one six i'm probably back to two five or two six so it kind of floats back and forth just educating the sellers to me more than anything else is what we need to do as you heard me say these people have got themselves in trouble with their securities book it's hard to make a deal with those people because the mark is so deep into their book 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 and maybe they don't heal up 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 when trump went in we got the trump bump and and huge raise of all by raised the level of all back stocks well the tariffs come in and they're going back down so you know it's we're back where we were prior to the the trump bump so i think it's just a matter of educating the seller because if the seller just is willing to make a deal at a point nine then he benefits from that and it's accreted to the company and he gets to ride our stock you know I used to ride a really good quality stock it pays a dividend every quarter it's just an education process to me yeah yeah that math you just talked about on the exchange ratio seems to be lost a lot of the times there seems to be some maybe some pride and just the absolute number at announcement which to your point doesn't doesn't really make any sense But that's helpful, Johnny.

I guess, you know, you said something interesting, obviously, even in your press release, right? Banking boils down to revenue and expenses, right? And y'all's expenses are about as low as it seems like you can get them. 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, peak 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?

I wish I could tell you the answer to that was yes. But 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. So actually the run rate as of today was a million three higher through the same day last quarter. We're a million 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 had a sale. Happy had an investment that they sold and I didn't even know we had it and it made millions of dollars so you'll see that coming in we had one other deal was pretty good oh we looks like we may have settled the Texas lawsuit it looks like that is settled I'm not sure when those proceeds will come in but they possibly could come in next quarter and as bad as I hate to say it we have a I wish we didn't have it was a life insurance policy for Mr. Hickman Pat I don't much rather had him than the money so got that coming in so we got a good start on next quarter and the run rate's up a million three through today so that tells you kind of what I'm thinking and I'm pretty happy we just need to find somebody that wants to partner and stay with us if they want to or go to the house if they want to we're ready yeah no that makes a lot of sense I appreciate the color everything else kind of i had has already been asked so fantastic quarter yet again appreciate the time hi stephen thank you we appreciate you a lot you're you you're you have a great reputation as an analyst you did a good job thank you we have another question on the line from brian martin with johnny montgomery please go ahead when you are ready hey guys hi brian

Yeah, maybe just one for Kevin. Just Kevin, in terms of the NPA resolution, I think last quarter you kind of talked about directionally where you thought the NPAs could trend to here as you kind of work through the credits.

Can you just kind of remind us where that, where you think the NPAs will kind of shake out here over the next couple quarters as you kind of work through some of these credits? yeah there's still probably another uh 12 another 12 or so that i'm hopeful to move this quarter um from there it takes the the credits the the mpas that we have on the florida memory care credits it takes those to move and those are improving one of the three actually is cash flowing it's now cash flowed for two months on p on what would be p and i payments and the other one of the other two is is really close but that's a you're probably six months you gotta have six months of that that sort of activity before you move it out so i think in best case you know one of those is probably a third quarter uh third to fourth quarter activity and those you know from there from the the 12 million i said early it takes that to get any anything else out of any size because everything else from their own is pretty small okay and that the memory care one that could go later in the year third or fourth quarter how

How big is that one?

The one of the three is about six. The second one that's close is eight or nine-ish, somewhere in there.

Okay, so you can still see a good chunk. Both of those could go in the second half of the year or later in the year, if that's possible?

Possible, yes. Possible if the current trends continue.

Okay, gotcha.

And then I don't know if you mentioned it, Kevin, if i miss it in your opening remarks just kind of your the loan pipeline your community bank pipeline today um can you did you give some color on that if how you're feeling about that is you're giving the uncertainty that's out there and just how you're looking to throw that i think i know you mentioned some payoffs yeah i think the pipeline itself the production pipeline is is pretty good i don't i wouldn't say that it is as strong as it was the last half of this quarter that just ended I think the challenge is going to be the payoffs the elevation of payoffs second quarter if those do come through that's yeah that's a headwind not saying we can't get there

but it's going to take some some things happening that aren't on the pipeline yet and you know we're talking about some stuff that could hit there but it'll just we'll just have to see how that plays out gotcha i think this brian i think his chair deals kind of shook everybody up a little bit we'll see how that goes and i think i think it's got everybody's attention a little bit yeah i think you get another quarter down the road with maybe a little bit more clarity you'll uh you'll feel better about um how things are how the pipeline is feeling or shaping up um and maybe just the last one 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 quarter. I think there's some liquidity that came in. And can you just remind us where you exited the month and just kind of what your starting point is for the margin as we go into second quarter?

And then just as you relate to that, Stephen, just the pressure point as far as, you know, it sounds like maybe I'm understanding right you know the risk to the margin moving lower is the competition at this point is that what you couch is kind of the greatest risk to maintaining the margin yeah hey brian yes i would agree with that last statement um you know we'll see how how rational everybody is you know over the over the next quarter and and the second half of the year but um it's it sounds like it's still pretty aggressive on both sides of the balance sheet um so as mentioned the uh the margin excluding event income for the quarter was 442 uh same number there for march was 438 uh that had two or 300 million more in average uh cash balances in march than we had in in February. So, that's driving that number down some. But like I said, you know, in that four-four range, you know, plus or minus a couple is, you know, where I feel like we can operate.

Gotcha. Okay. I think that's all for me. So, congrats on a great start to 25, and we'll look forward to seeing a similar quarter in 2Q.

Yeah, thank you. I think kind of wrapping up now, Donna that's all right it uh it was a great quarter I expect uh this quarter to be as good or better than than last quarter I don't see any reason y'all have asked we've done I've run in y'all at many conferences you said what do you want to happen I said nothing we just want to leave it like it is we're we got the home bank shares is what we call humming right now and it's coming about as good as it's ever hummed so I'm we're pretty pleased on this end and 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 thank you all for joining the home bank shares inc conference call today's

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