Home BancShares has received $80.7 million from the sale of part of the collateral backing a troubled $92.1 million lending relationship in Texas. The payment completes the first phase of the credit’s resolution and substantially reduces the outstanding loan balance, though about $11.4 million remains classified as nonaccrual.
The company expects the borrower to sell the remaining collateral in the fourth quarter of 2026 and use the proceeds to repay the balance. That second phase is not complete, and repayment is not assured.
Key details
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First payment reduces the loan balance to about $11.4 million. Home BancShares applied the $80.7 million payment to principal. The proceeds were about 95% of the appraised value of the collateral sold.
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The remaining balance stays nonaccrual. The loans will retain that classification until the second phase of the resolution is completed.
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The credit had been a large share of problem assets. At September 30, 2026, the relationship represented 45.9% of Home BancShares’ non-performing loans and 37.5% of its non-performing assets.
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The payment improves reported credit-quality ratios. Based on September 30 balances, the company estimates its non-performing loans-to-total-loans ratio will fall by about 48 basis points and its non-performing assets-to-total-assets ratio by about 34 basis points. Its allowance for credit losses-to-non-performing loans ratio will rise by about 109 percentage points.
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A further collateral sale is expected in the fourth quarter. Home BancShares expects the borrower to use those proceeds to repay the remaining $11.4 million carrying balance. If that occurs, the company may also recover some of the amount it charged off in the fourth quarter of 2024.
Implications
The first payment materially reduces the balance of a credit that made up a substantial portion of the bank’s problem loans and assets, improving the stated asset-quality ratios. The resolution is not yet complete: the remaining balance is still nonaccrual, and repayment depends on the borrower’s sale of the rest of the collateral.