KBRA Affirms Ratings for Home BancShares, Inc. and Revises Outlook to Positive

KBRA affirms the senior unsecured debt rating of BBB+, the subordinated debt rating of BBB, and the short-term debt rating of K2 for Conway, Arkansas-based Home BancShares, Inc. (NYSE: HOMB or "the company"). In addition KBRA affirms the deposit and senior unsecured debt ratings of A-, the subordinated debt rating of BBB+, and the short-term deposit and debt ratings of K2 for its subsidiary, Centennial Bank. The Outlook for all long-term ratings is revised to Positive from Stable.

Key Credit Considerations

HOMB’s Positive Outlook is partly reflective of its consistent earnings outperformance relative to the broader sector. Entering 2026, profitability remains well above peers, supported by a strong NIM (4.50% in FY25), which reflects the company’s ability to effectively price risk, as well as its lean cost structure. Management has also demonstrated a willingness to temper loan growth if they do not believe they are receiving appropriate risk-adjusted yields, which we view as prudent. Since 1Q23, HOMB’s NIM has further benefited from better-than-peer deposit beta performance amid the recent rising rate cycle.

The ratings and Positive Outlook are also supported by HOMB’s robust loss absorbing capacity, which we view as among the strongest in our rated universe. On-balance sheet reserves (4Q25 LLR of 1.90%) and core capital (16.3% CET1 ratio) provide a substantial buffer against potential losses associated with the company’s relatively chunky national lending portfolio. Management continues to communicate its intention to maintain a strong capital profile, including during periods of M&A activity.

Credit quality remains good despite a loan book that includes a large amount of acquired loans and a sizable (albeit immaterial) amount of perceived riskier lending verticals, including C&D, large-dollar CRE, and to a lesser extent syndications. The risks associated with this strategy were evident in 4Q24, when HOMB reported an elevated NCO ratio of 1.44%. This increase was largely driven by an idiosyncratic "clean-up" of certain sizable West Texas credits acquired in the 2022 Happy Bancshares, Inc. transaction, which had been well telegraphed in advance by management.

HOMB is primarily core deposit funded and benefits from longstanding banking relationships across its markets. The core deposit base has remained relatively stable since the March 2023 bank failures and the Fed’s restrictive policy stance. Combined with measured loan growth, this has resulted in an above-peer level of core deposits to total funding (88% as of 4Q25).

Finally, the ratings are supported by a long-tenured management team that has successfully executed the company’s long-term growth strategy, including frequent M&A. Since 2010, HOMB has acquired and successfully integrated 18 banks across Arkansas, Florida, Alabama, and Texas.

Rating Sensitivities

Given the Positive Outlook, there is potential for an upgrade over the medium term. An upgrade could occur if the company successfully executes future M&A while maintaining a peer-leading capital and loss-absorbing profile, stable credit quality, appropriate liquidity, and continued earnings outperformance. Conversely, the ratings could come under pressure from large unexpected credit losses in the national lending portfolio, poorly executed M&A, a material deterioration in the liquidity profile, or a more aggressive approach to capital management.

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Methodologies