What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-08-04 compared with 2023-05-05 · 319 added, 230 removed, 1526 unchanged (26% of the section changed)

2 unchanged sentences

Consolidated Balance Sheets

(In thousands, except share data) March 31, 2023 December 31, 2022

(In thousands, except share data) June 30, 2023 December 31, 2022

Cash and due from banks $ 275,656 $ 263,893

1 unchanged sentence

Cash and cash equivalents 611,191 724,790

Investment securities — available-for-sale, at estimated fair value (amortized cost of $ 4,111,197 and $ 4,445,620 at March 31, 2023 and December 31, 2022, respectively)

Fed funds sold 1,550 —

Investment securities — available-for-sale, net of allowance for credit losses of $ 2,524 and $ 842 at June 30, 2023 and December 31, 2023, respectively (amortized cost of $ 4,033,776 and $ 4,445,620 at June 30, 2023 and December 31, 2022, respectively)

3,645,013 4,041,590

Investment securities — held-to-maturity, net of allowance for credit losses of $ 2,005 at both March 31, 2023 and December 31, 2022

Investment securities — held-to-maturity, net of allowance for credit losses of $ 2,005 at both June 30, 2023 and December 31, 2022

1,285,150 1,287,705

25 unchanged sentences

shares authorized 300,000,000 in 2023 and 2022;

shares issued and outstanding 203,168,141 in 2023 and 203,433,690 in 2022

shares issued and

outstanding 202,572,867 in 2023 and 203,433,690 in 2022

Capital surplus 2,366,560 2,386,699

7 unchanged sentences

Three Months Ended

June 30, Six Months Ended

(In thousands, except per share data) 2023 2022 2023 2022

9 unchanged sentences

Interest on deposits 70,147 10,729 129,309 15,623

Federal funds purchased 2 2 2 2

FHLB and other borrowed funds 6,596 1,896 12,786 3,771

4 unchanged sentences

Provision for credit losses on loans 2,300 45,170 3,500 45,170

Provision for credit losses on unfunded commitments — 11,410 — 11,410

Provision for credit losses on investment securities 1,683 2,005 1,683 2,005

Total credit loss expense 3,983 58,585 5,183 58,585

30 unchanged sentences

Three Months Ended

June 30, Six Months Ended

(In thousands) 2023 2022 2023 2022

Net income $ 105,271 $ 15,978 $ 208,233 $ 80,870

Net unrealized gain (loss) on available-for-sale securities 64,968 ( 155,715 )

Other comprehensive gain (loss) before tax effect 64,968 ( 155,715 )

Tax effect on other comprehensive income (loss) ( 15,811 ) 40,696

Other comprehensive income (loss) 49,157 ( 115,019 )

Net unrealized (loss) gain on available-for-sale securities ( 48,042 ) ( 146,888 ) 16,926 ( 302,603 )

Other comprehensive (loss) gain before tax effect ( 48,042 ) ( 146,888 ) 16,926 ( 302,603 )

Tax effect on other comprehensive (loss) income 11,665 35,540 ( 4,146 ) 76,236

Other comprehensive (loss) income ( 36,377 ) ( 111,348 ) 12,780 ( 226,367 )

Comprehensive income (loss) $ 68,894 $ ( 95,370 ) $ 221,013 $ ( 145,497 )

2 unchanged sentences

Consolidated Statements of Stockholders’ Equity

Three months ended March 31, 2023

Three and Six Months Ended June 30, 2023

(In thousands, except share data) Common

Comprehensive Income (Loss)

Comprehensive (Loss) Income

Balances at January 1, 2023 $ 2,034 $ 2,386,699 $ 1,443,087 $ ( 305,458 ) $ 3,526,362

10 unchanged sentences

Balances at March 31, 2023 (unaudited) $ 2,032 $ 2,375,754 $ 1,509,400 $ ( 256,301 ) $ 3,630,885

Comprehensive income:

Net income — — 105,271 — 105,271

Other comprehensive loss — — — ( 36,377 ) ( 36,377 )

Net issuance of 15,575 shares of common stock from exercise of stock options

— 275 — — 275

Repurchase of 560,849 shares of common stock

( 5 ) ( 11,804 ) — — ( 11,809 )

Share-based compensation net forfeiture of 50,000 shares of restricted common stock

( 1 ) 2,335 — — 2,334

Cash dividends – Common Stock, $ 0.18 per share

— — ( 36,495 ) — ( 36,495 )

Balances at June 30, 2023 (unaudited) $ 2,026 $ 2,366,560 $ 1,578,176 $ ( 292,678 ) $ 3,654,084

See Condensed Notes to Consolidated Financial Statements.

1 unchanged sentence

Consolidated Statements of Stockholders’ Equity

For the Three Months Ended March 31, 2022

For the Three and Six Months Ended June 30, 2022

(In thousands, except share data) Common

14 unchanged sentences

Balances at March 31, 2022 (unaudited) $ 1,638 $ 1,485,524 $ 1,304,098 $ ( 104,557 ) $ 2,686,703

Comprehensive income:

Net Income — — 15,978 — 15,978

Other comprehensive loss — — — ( 111,348 ) ( 111,348 )

Net issuance of 1,500 shares of common stock from exercise of stock options

Issuance of 42,425,352 shares of common stock including approximately $ 2.5 million in certain stock award settlements and stock issuance costs - Happy Bancshares Acquisition

424 960,866 — — 961,290

Repurchase of 1,032,732 shares of common stock

( 10 ) ( 22,482 ) — — ( 22,492 )

Share-based compensation net issuance of 138,499 shares of restricted common stock

1 2,337 — — 2,338

Cash dividends – Common Stock, $ 0.165 per share

— — ( 33,930 ) — ( 33,930 )

Balances at June 30, 2022 (unaudited) $ 2,053 $ 2,426,271 $ 1,286,146 $ ( 215,905 ) $ 3,498,565

See Condensed Notes to Consolidated Financial Statements.

1 unchanged sentence

Consolidated Statements of Cash Flows

Three Months Ended March 31,

Six Months Ended June 30,

(In thousands) 2023 2022

9 unchanged sentences

Provision for credit losses - loans 3,500 45,170

Provision for credit losses - unfunded commitments — 11,410

Provision for credit losses - investment securities 1,683 2,005

Deferred income tax effect ( 1,255 ) ( 18,645 )

8 unchanged sentences

Investing Activities

Net decrease in loans, excluding purchased loans 43,894 25,579

Net increase in federal funds sold ( 1,550 ) —

Net decrease (increase) in loans, excluding purchased loans 270,329 ( 126,794 )

Purchases of investment securities – available-for-sale ( 3,933 ) ( 655,393 )

4 unchanged sentences

Proceeds from sales of equity securities 1,522 13,778

Purchase (redemption) of other investments 5,239 ( 11,940 )

Purchase of other investments ( 134 ) ( 27,867 )

Proceeds from foreclosed assets held for sale 477 1,874

1 unchanged sentence

Purchases of premises and equipment, net ( 1,430 ) ( 6,596 )

Return of investment on cash value of life insurance 2,909 —

Purchase of marine loan portfolio — ( 242,617 )

Net cash received - market acquisition — 858,898

Net cash provided by (used in) investing activities 680,616 ( 130,380 )

Financing Activities

Net (decrease) increase in deposits ( 493,317 ) 320,364

Net decrease in securities sold under agreements to repurchase 7,596 10,265

Net decrease in deposits ( 941,892 ) ( 535,708 )

Net increase (decrease) in securities sold under agreements to repurchase 29,203 ( 22,313 )

Net increase (decrease) in FHLB and other borrowed funds 51,550 ( 78,330 )

Retirement of subordinated debentures — ( 300,000 )

Proceeds from issuance of subordinated debentures — 296,444

Redemption of trust preferred securities — ( 78,869 )

Proceeds from exercise of stock options 361 156

1 unchanged sentence

Dividends paid on common stock ( 73,144 ) ( 60,973 )

Net cash (used in) provided by financing activities ( 535,824 ) 596,071

Net cash used in financing activities ( 959,271 ) ( 806,174 )

Net change in cash and cash equivalents ( 113,599 ) ( 833,939 )

32 unchanged sentences

Interim financial information

The accompanying unaudited consolidated financial statements as of March 31, 2023 and 2022 have been prepared in condensed format, and therefore do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements.

The accompanying unaudited consolidated financial statements have been prepared in condensed format, and therefore do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements.

The information furnished in these interim statements reflects all adjustments which are, in the opinion of management, necessary for a fair statement of the results for each respective period presented.

28 unchanged sentences

The allowance for credit losses may be zero if the fair value of the collateral at the measurement date exceeds the amortized cost basis of the loan, net of estimated costs to sell.

For loans individually analyzed for credit losses for which a specific reserve has been recorded, non-accrual loans, loans past due 90 days or more and restructured loans made to borrowers experiencing financial difficulty (which we define as "impaired" loans), an allowance is established when the discounted cash flows, collateral value or observable market price of the impaired loan is lower than the carrying value of that loan.

For loans that are not considered to be collateral dependent, an allowance is recorded based on the loss rate for the respective pool within the collective evaluation if a specific reserve is not recorded.

1 unchanged sentence

The contractual term excludes expected extensions, renewals, and modifications unless either of the following applies:

• Management has a reasonable expectation at the reporting date that troubled debt restructuring will be executed with an individual borrower.

• Management has a reasonable expectation at the reporting date that restructured loans made to borrowers experiencing financial difficulty will be executed with an individual borrower.

• The extension or renewal options are included in the original or modified contract at the reporting date and are not unconditionally cancellable by the Company.

53 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

(In thousands)

5 unchanged sentences

Diluted earnings per share $ 0.52 $ 0.08 $ 1.02 $ 0.44

The impact of anti-dilutive shares to the diluted earnings per share calculation was considered immaterial for the periods ended March 31, 2023 and 2022.

The impact of anti-dilutive shares to the diluted earnings per share calculation was considered immaterial for the periods ended June 30, 2023 and 2022.

Business Combinations

5 unchanged sentences

The acquisition added new markets for expansion and brought complementary businesses together to drive synergies and growth.

Including the effects of the known purchase accounting adjustments, as of the acquisition date, Happy had approximately $ 6.69 billion in total assets, $ 3.65 billion in loans and $ 5.86 billion in customer deposits.

Including the effects of purchase accounting adjustments, as of the acquisition date, Happy had approximately $ 6.69 billion in total assets, $ 3.65 billion in loans and $ 5.86 billion in customer deposits.

Happy formerly operated its banking business from 62 locations in Texas.

60 unchanged sentences

The unaudited pro-forma combined consolidated financial information presents how the combined financial information of HBI and Happy might have appeared had the businesses actually been combined.

The following schedule represents the unaudited pro forma combined financial information as of the three month period ended March 31, 2022, assuming the acquisition was completed as of January 1, 2021:

Three Months Ended March 31, 2022

The following schedule represents the unaudited pro-forma combined financial information as of the three and six month periods ended June 30, 2022, assuming the acquisition was completed as of January 1, 2021:

Three Months Ended June 30, 2022 Six Months Ended June 30, 2022

(In thousands, except per share data)

17 unchanged sentences

Investment Securities

The following table summarizes the amortized cost and fair value of securities that are classified as available-for-sale and held-to-maturity are as follows:

March 31, 2023

The following table summarizes the amortized cost and fair value of securities that are classified as available-for-sale and held-to-maturity:

June 30, 2023

Available-for-Sale

2 unchanged sentences

government-sponsored enterprises $ 395,789 $ — $ 395,789 $ 2,631 $ ( 21,434 ) $ 376,986

Residential mortgage-backed securities 1,723,065 — 1,723,065 782 ( 175,923 ) 1,547,924

Commercial mortgage-backed securities 321,806 — 321,806 — ( 17,860 ) 303,946

government-sponsored mortgage-backed securities 1,803,021 — 1,803,021 321 ( 208,793 ) 1,594,549

Private mortgage-backed securities 194,955 — 194,955 — ( 18,600 ) 176,355

Non-government-sponsored asset backed securities 427,068 — 427,068 299 ( 11,575 ) 415,792

State and political subdivisions 1,003,162 — 1,003,162 974 ( 97,615 ) 906,521

1 unchanged sentence

Total $ 4,033,776 $ ( 2,524 ) $ 4,031,252 $ 4,320 $ ( 390,559 ) $ 3,645,013

March 31, 2023

June 30, 2023

Held-to-Maturity

2 unchanged sentences

government-sponsored enterprises $ 43,149 $ — $ 43,149 $ — $ ( 3,207 ) $ 39,942

Residential mortgage-backed securities 48,024 — 48,024 344 ( 435 ) 47,933

Commercial mortgage-backed securities 85,857 — 85,857 473 ( 1,000 ) 85,330

government-sponsored mortgage-backed securities 132,787 — 132,787 139 ( 4,052 ) 128,874

State and political subdivisions 1,111,219 ( 2,005 ) 1,109,214 155 ( 122,417 ) 986,952

5 unchanged sentences

government-sponsored enterprises $ 682,316 $ — $ 682,316 $ 2,713 $ ( 23,209 ) $ 661,820

Residential mortgage-backed securities 1,759,025 — 1,759,025 71 ( 211,453 ) 1,547,643

Commercial mortgage-backed securities 339,206 — 339,206 — ( 22,254 ) 316,952

government-sponsored mortgage-backed securities 1,900,796 — 1,900,796 71 ( 215,405 ) 1,685,462

Private mortgage-backed securities 197,435 — 197,435 — ( 18,302 ) 179,133

Non-government-sponsored asset backed securities 428,933 428,933 95 ( 14,654 ) 414,374

State and political subdivisions 1,021,188 ( 842 ) 1,020,346 1,649 ( 115,698 ) 906,297

7 unchanged sentences

government-sponsored enterprises $ 43,017 $ — $ 43,017 $ — $ ( 3,349 ) $ 39,668

Residential mortgage-backed securities 49,088 — 49,088 24 ( 1,205 ) 47,907

Commercial mortgage-backed securities 85,912 — 85,912 107 ( 2,551 ) 83,468

government-sponsored mortgage-backed securities 135,000 — 135,000 131 ( 3,756 ) 131,375

State and political subdivisions 1,111,693 ( 2,005 ) 1,109,688 65 ( 154,650 ) 955,103

Total $ 1,289,710 $ ( 2,005 ) $ 1,287,705 $ 196 $ ( 161,755 ) $ 1,126,146

The Company's available-for-sale portfolio includes investments in Pacific Western Bank with a par value of $ 7.5 million and Western Alliance Bancorporation with a par value of $ 12.0 million, as of March 31, 2023.

These investments are included within the other securities classification.

Assets, principally investment securities, having a carrying value of approximately $ 2.79 billion and $ 2.35 billion at March 31, 2023 and December 31, 2022, respectively, were pledged to secure public deposits, as collateral for repurchase agreements, and for other purposes required or permitted by law.

Investment securities pledged as collateral for repurchase agreements totaled approximately $ 138.7 million and $ 131.1 million at March 31, 2023 and December 31, 2022, respectively.

The amortized cost and estimated fair value of securities classified as available-for-sale and held-to-maturity at March 31, 2023, by contractual maturity, are shown below.

Assets, principally investment securities, having a carrying value of approximately $ 3.62 billion and $ 2.35 billion at June 30, 2023 and December 31, 2022, respectively, were pledged to secure public deposits, as collateral for repurchase agreements, and for other purposes required or permitted by law.

Investment securities pledged as collateral for repurchase agreements totaled approximately $ 160.3 million and $ 131.1 million at June 30, 2023 and December 31, 2022, respectively.

The amortized cost and estimated fair value of securities classified as available-for-sale and held-to-maturity at June 30, 2023, by contractual maturity, are shown below.

Expected maturities could differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

6 unchanged sentences

Due after ten years 961,676 878,791 871,103 772,152

Mortgage - backed securities:

Residential 1,723,065 1,547,924 48,024 47,933

Mortgage - backed securities:

Commercial 321,806 303,946 85,857 85,330

Other 1,500 1,501 — —

government-sponsored mortgage-backed securities 1,803,021 1,594,549 132,787 128,874

Private mortgage-backed securities 194,955 176,355 — —

Non-government-sponsored asset backed securities 427,068 415,792 — —

Total $ 4,033,776 $ 3,645,013 $ 1,287,155 $ 1,155,768

During the three months ended March 31, 2023 and 2022, no available-for-sale securities were sold.

The following table shows gross unrealized losses and estimated fair value of investment securities classified as available-for-sale and held-to-maturity, aggregated by investment category and length of time that individual investment securities have been in a continuous loss position as of March 31, 2023 and December 31, 2022.

March 31, 2023

During the three and six months ended June 30, 2023 and 2022, no available-for-sale securities were sold.

June 30, 2023

Less Than 12 Months 12 Months or More Total

2 unchanged sentences

government-sponsored enterprises $ 18,910 $ ( 591 ) $ 167,498 $ ( 20,843 ) $ 186,408 $ ( 21,434 )

Residential mortgage-backed securities 286,471 ( 11,069 ) 1,165,292 ( 164,854 ) 1,451,763 ( 175,923 )

Commercial mortgage-backed securities 89,739 ( 2,104 ) 214,207 ( 15,756 ) 303,946 ( 17,860 )

government-sponsored mortgage-backed securities 189,162 ( 6,196 ) 1,372,134 ( 202,597 ) 1,561,296 ( 208,793 )

Private mortgage-backed securities 42,459 ( 3,238 ) 133,896 ( 15,362 ) 176,355 ( 18,600 )

Non-government-sponsored asset backed securities 83,047 ( 1,941 ) 168,290 ( 9,634 ) 251,337 ( 11,575 )

State and political subdivisions 69,436 ( 1,604 ) 750,524 ( 96,011 ) 819,960 ( 97,615 )

3 unchanged sentences

government-sponsored enterprises $ 14,304 $ ( 696 ) $ 25,638 $ ( 2,511 ) $ 39,942 $ ( 3,207 )

Residential mortgage-backed securities 17,136 ( 435 ) — — 17,136 ( 435 )

Commercial mortgage-backed securities 51,579 ( 1,000 ) — — 51,579 ( 1,000 )

government-sponsored mortgage-backed securities 116,703 ( 4,052 ) — — 116,703 ( 4,052 )

State and political subdivisions 24,335 ( 718 ) 951,807 ( 121,699 ) 976,142 ( 122,417 )

5 unchanged sentences

government-sponsored enterprises $ 315,531 $ ( 3,056 ) $ 128,527 $ ( 20,153 ) $ 444,058 $ ( 23,209 )

Residential mortgage-backed securities 817,351 ( 54,025 ) 717,587 ( 157,428 ) 1,534,938 ( 211,453 )

Commercial mortgage-backed securities 212,050 ( 10,782 ) 89,979 ( 11,472 ) 302,029 ( 22,254 )

government-sponsored mortgage-backed securities 850,268 ( 46,505 ) 807,566 ( 168,900 ) 1,657,834 ( 215,405 )

Private mortgage-backed securities 179,133 ( 18,302 ) — — 179,133 ( 18,302 )

Non-government-sponsored asset backed securities 285,724 ( 9,726 ) 39,133 ( 4,928 ) 324,857 ( 14,654 )

State and political subdivisions 485,817 ( 50,484 ) 338,638 ( 65,214 ) 824,455 ( 115,698 )

3 unchanged sentences

government-sponsored enterprises $ 39,668 $ ( 3,349 ) $ — $ — $ 39,668 $ ( 3,349 )

Residential mortgage-backed securities 40,892 ( 1,205 ) — — 40,892 ( 1,205 )

Commercial mortgage-backed securities 65,948 ( 2,551 ) — — 65,948 ( 2,551 )

government-sponsored mortgage-backed securities 106,840 ( 3,756 ) — — 106,840 ( 3,756 )

State and political subdivisions 955,563 ( 154,650 ) — — 955,563 ( 154,650 )

Total $ 1,102,071 $ ( 161,755 ) $ — $ — $ 1,102,071 $ ( 161,755 )

Debt securities available-for-sale are reported at fair value with unrealized holding gains and losses reported as a separate component of stockholders’ equity and other comprehensive income (loss), net of taxes.

Debt securities available-for-sale ("AFS") are reported at fair value with unrealized holding gains and losses reported as a separate component of stockholders’ equity and other comprehensive income (loss), net of taxes.

Securities that are held as available-for-sale are used as a part of our asset/liability management strategy.

Securities that may be sold in response to interest rate changes, changes in prepayment risk, the need to increase regulatory capital, and other similar factors are classified as available-for-sale.

The Company evaluates all securities quarterly to determine if any securities in a loss position require a provision for credit losses in accordance with ASC 326, Measurement of Credit Losses on Financial Instruments .

The Company first assesses whether it intends to sell or is more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis.

10 unchanged sentences

Premiums and discounts are amortized/accreted to the call date to interest income using the constant effective yield method over the estimated life of the security.

The Company evaluates all securities quarterly to determine if any securities in a loss position require a provision for credit losses in accordance with ASC 326.

The Company measures expected credit losses on HTM securities on a collective basis by major security type, with each type sharing similar risk characteristics.

3 unchanged sentences

Losses are charged against the allowance when management believes the uncollectability of a security is confirmed.

At March 31, 2023, the Company determined that the allowance for credit losses of $ 842,000 was adequate for the available-for-sale investment portfolio, and the $ 2.0 million allowance for credit losses for the held-to-maturity portfolio was also considered adequate.

No additional provision for credit losses was considered necessary for the portfolio.

During the period ended June 30, 2023, one of the Company’s AFS subordinated debt investment securities was downgraded below investment grade.

As result, the Company wrote down the value of the investment to its unrealized loss position, which required a $ 1.7 million provision.

In addition, the Company reallocated the existing $ 842,000 allowance for credit losses on AFS investments to certain securities in the subordinated debt portfolio due to credit concerns across the banking sector.

These investments are classified within the other securities category of the AFS portfolio.

The $ 2.0 million allowance for credit losses for the held-to-maturity portfolio was considered adequate.

No additional provision for credit losses was considered necessary for the HTM portfolio.

Available-for-Sale Investment Securities

March 31, 2023 December 31, 2022

(In thousands)

June 30, 2023 December 31, 2022

Allowance for credit losses:

(In thousands)

Beginning balance $ 842 $ 842

Provision for credit loss 1,682 —

Balance, March 31

Balance, June 30

$ 2,524 $ 842

Provision for credit loss —

1 unchanged sentence

Held-to-Maturity Investment Securities

March 31, 2023 December 31, 2022

State and Political Subdivisions Other Securities State and Political Subdivisions Other Securities

June 30, 2023 December 31, 2022

Allowance for credit losses:

1 unchanged sentence

Beginning balance $ 2,005 $ —

Provision for credit loss - acquired securities — — — —

Securities charged-off — — — —

Recoveries — — — —

Ending balance, March 31 $ ( 2,005 ) $ — $ — $ —

Provision for credit loss — 2,005

Balance, December 31, 2022

Balance, June 30

$ 2,005 $ 2,005

For the three months ended March 31, 2023, the Company had available-for-sale investment securities with approximately $ 316.9 million in unrealized losses, which have been in continuous loss positions for more than twelve months.

The Company’s assessments indicated that the cause of the market depreciation was primarily due to the change in interest rates and not the issuer’s financial condition or downgrades by rating agencies.

Provision for credit loss —

Balance, December 31, 2022

For the six months ended June 30, 2023, the Company had available-for-sale investment securities with approximately $ 390.6 million in unrealized losses, of which $ 373.9 million had been in continuous loss positions for more than twelve months.

With the exception of the subordinated debt investment securities for which one security was downgraded during the quarter resulting in the Company recording a provision for credit losses and credit concerns requiring reallocating the existing allowance for credit losses to certain securities within the other securities category of the portfolio, the Company’s assessments indicated that the cause of the market depreciation was primarily due to the change in interest rates and not the issuer’s financial condition or downgrades by rating agencies.

In addition, approximately 30.8 % of the principal balance from the Company’s investment portfolio will mature or are expected to pay down within five years or less .

As a result, the Company has the ability and intent to hold such securities until maturity.

As of March 31, 2023, the Company's available-for-sale securities portfolio consisted of 1,621 investment securities, 1,353 of which were in an unrealized loss position.

As of June 30, 2023, the Company's available-for-sale securities portfolio consisted of 1,606 investment securities, 1,366 of which were in an unrealized loss position.

As noted in the table above, the total amount of the unrealized loss was $ 390.6 million.

government-sponsored enterprises portfolio contained unrealized losses of $ 21.4 million on 62 securities.

The residential mortgage-backed securities portfolio contained $ 175.9 million of unrealized losses on 569 securities, and the commercial mortgage-backed securities portfolio contained $ 17.9 million of unrealized losses on 141 securities.

government-sponsored mortgage-backed securities portfolio contained $ 208.8 million of unrealized losses on 688 securities, and the private mortgage-backed securities portfolio contained $ 18.6 million of unrealized losses on 32 securities.

The non-government-sponsored asset backed securities portfolio contained $ 11.6 million of unrealized losses on 35 securities.

The state and political subdivisions portfolio contained $ 97.6 million of unrealized losses on 487 securities.

In addition, the other securities portfolio contained $ 32.5 million of unrealized losses on 62 securities.

The unrealized losses on the Company's investments were a result of interest rate changes.

The Company expects to recover the amortized cost basis over the term of the securities.

Because the decline in market value was attributable to changes in interest rates and not credit quality, and because the Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost basis, which may be maturity, the Company has determined that an additional provision for credit losses is not necessary as of March 31, 2023.

As of March 31, 2023, the Company's held-to-maturity securities portfolio consisted of 506 investment securities, 490 of which were in an unrealized loss position.

With the exception of the investments for which an allowance for credit losses has been established, the unrealized losses on the Company's investments were primarily a result of interest rate changes, and the Company expects to recover the amortized cost basis over the term of the securities.

As of June 30, 2023, the Company's held-to-maturity securities portfolio consisted of 506 investment securities, 497 of which were in an unrealized loss position.

As noted in the table above, the total amount of the unrealized loss was $ 129.7 million.

government-sponsored enterprises portfolio contained unrealized losses of $ 3.2 million on 5 securities.

government-sponsored mortgage-backed securities portfolio contained unrealized losses of $ 4.1 million on 18 securities.

The state and political subdivisions portfolio contained $ 122.4 million of unrealized losses on 474 securities.

The residential mortgage-backed securities portfolio contained 435,000 of unrealized losses on 4 securities, and the commercial mortgage-backed securities portfolio contained $ 1.0 million of unrealized losses on 7 securities.

The unrealized losses on the Company's investments were a result of interest rate changes.

The Company expects to recover the amortized cost basis over the term of the securities.

Because the decline in market value was attributable to changes in interest rates and not credit quality, the Company has determined that an additional provision for credit losses is not necessary as of March 31, 2023.

The following table summarizes bond ratings for the Company’s held-to-maturity portfolio, based upon amortized cost, issued by state and political subdivisions and other securities as of March 31, 2023:

State and Political Subdivisions Other Securities Total

State and political subdivisions U.S.

government-sponsored enterprises U.S.

government-sponsored mortgage-backed securities Total

(In thousands)

5 unchanged sentences

Total $ 1,111,219 $ 43,149 $ 132,787 $ 1,287,155

Income earned on securities for the three months ended March 31, 2023 and 2022, is as follows:

Income earned on securities for the three and six months ended June 30, 2023 and 2022, is as follows:

Three Months Ended

June 30, For the Six Months Ended

2023 2022 2023 2022

(In thousands)

6 unchanged sentences

The various categories of loans receivable are summarized as follows:

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

(In thousands)

14 unchanged sentences

Loans receivable, net $ 13,895,289 $ 14,119,811

During the three months ended March 31, 2023, the Company sold $ 2.2 million of the guaranteed portions of certain SBA loans, which resulted in a gain of approximately $ 139,000 .

During the three months ended March 31, 2022, the Company sold $ 2.8 million guaranteed portions of certain SBA loans, which resulted in a gain of $ 95,000 .

Mortgage loans held for sale of approximately $ 103.7 million and $ 79.9 million at March 31, 2023 and December 31, 2022, respectively, are included in residential 1-4 family loans.

During the three months ended June 30, 2023, the Company did no t sell any guaranteed portions of certain SBA loans.

During the six months ended June 30, 2023, the Company sold $ 2.2 million of the guaranteed portions of certain SBA loans, which resulted in a gain of approximately $ 139,000 .

During the three months ended June 30, 2022, the Company did no t sell any guaranteed portions of certain SBA loans.

During the six months ended June 30, 2022, the Company sold $ 2.8 million guaranteed portions of certain SBA loans, which resulted in a gain of $ 95,000 .

Mortgage loans held for sale of approximately $ 125.9 million and $ 79.9 million at June 30, 2023 and December 31, 2022, respectively, are included in residential 1-4 family loans.

Mortgage loans held for sale are carried at the lower of cost or fair value, determined using an aggregate basis.

4 unchanged sentences

Because these commitments are structured on a mandatory basis, the Company is required to substitute another loan or to buy back the commitment if the original loan does not fund.

These commitments are derivative instruments and their fair values at March 31, 2023 and December 31, 2022 were not material.

Purchased loans that have experienced more than insignificant credit deterioration since origination are purchase credit deteriorated (“PCD”) loans.

These commitments are derivative instruments and their fair values at June 30, 2023 and December 31, 2022 were not material.

Purchased loans that have experienced more than insignificant credit deterioration since origination are PCD loans.

An allowance for credit losses is determined using the same methodology as other loans.

4 unchanged sentences

Subsequent changes to the allowance for credit losses are recorded through the provision for credit losses.

The Company held approximately $ 136.2 million and $ 142.5 million in PCD loans, as of March 31, 2023 and December 31, 2022, respectively.

This balance, as of March 31, 2023, consisted of $ 135.8 million resulting from the acquisition of Happy and $ 404,000 from the acquisition of LH-Finance.

A description of our accounting policies for loans, impaired loans and non-accrual loans are set forth in our 2022 Form 10-K filed with the SEC on February 24, 2023.

The Company held approximately $ 132.6 million and $ 142.5 million in PCD loans, as of June 30, 2023 and December 31, 2022, respectively.

This balance, as of June 30, 2023, consisted of $ 132.2 million resulting from the acquisition of Happy and $ 396,000 from the acquisition of LH-Finance.

A description of our accounting policies for loans and impaired loans (which includes loans individually analyzed for credit losses for which a specific reserve has been recorded, non-accrual loans, loans past due 90 days or more and restructured loans made to borrowers experiencing financial difficulty) are set forth in our 2022 Form 10-K filed with the SEC on February 24, 2023.

Allowance for Credit Losses, Credit Quality and Other

The Company uses the discounted cash flow (“DCF”) method to estimate expected losses for all of the Company’s loan pools.

The Company uses the discounted cash flow method to estimate expected losses for all of the Company’s loan pools.

These pools are as follows:

24 unchanged sentences

The Company continues to use regression analysis to determine suitable loss drivers to utilize when modeling lifetime probability of default and loss given default for the changes in the economic factors for the loss driver segments.

The identified loss drivers by segment are included below as of both March 31, 2023 and December 31, 2022.

The identified loss drivers by segment are included below as of both June 30, 2023 and December 31, 2022.

Loss Driver Segment Call Report Segment(s) Modeled Economic Factors

44 unchanged sentences

The off-balance sheet credit exposures exhibit similar risk characteristics as loans currently in the Company’s loan portfolio.

During the period ended March 31, 2023, the Company recorded a $ 1.2 million provision for credit losses on loans.

For the three and six months ended June 30, 2023, the Company recorded $ 2.3 million and $ 3.5 million in provision for credit losses on loans, respectively.

However, the Company determined that no additional provision was necessary for unfunded commitments as the current level of the reserve was considered adequate.

4 unchanged sentences

However, the Company determined that no additional provision was necessary for unfunded commitments as the current level of the reserve was considered adequate.

The following table presents the activity in the allowance for credit losses for the three months ended March 31, 2023:

Three Months Ended March 31, 2023

The following table presents the activity in the allowance for credit losses for the three and six months ended June 30, 2023:

Three Months Ended June 30, 2023

Construction/

8 unchanged sentences

Loans charged off — — ( 30 ) ( 3,826 ) ( 870 ) ( 4,726 )

Recoveries of loans previously charged

Recoveries of loans previously charged off

63 473 13 147 244 940

2 unchanged sentences

Provision for credit losses 1,040 ( 2,293 ) 316 1,757 1,480 2,300

Balance, March 31

Balance, June 30

$ 32,275 $ 85,158 $ 51,732 $ 90,474 $ 26,044 $ 285,683

The following table presents the activity in the allowance for credit losses for the three months ended March 31, 2022 and the year ended December 31, 2022:

Three Months Ended March 31, 2022 and Year Ended December 31, 2022

Six Months Ended June 30, 2023

Construction/

(In thousands)

Allowance for credit losses:

Beginning balance $ 32,243 $ 93,848 $ 50,963 $ 89,354 $ 23,261 $ 289,669

Loans charged off ( 25 ) ( 73 ) ( 89 ) ( 6,832 ) ( 1,995 ) ( 9,014 )

Recoveries of loans previously charged off

70 492 139 256 571 1,528

Net loans recovered (charged off)

45 419 50 ( 6,576 ) ( 1,424 ) ( 7,486 )

Provision for credit losses ( 13 ) ( 9,109 ) 719 7,696 4,207 3,500

Balance, June 30 $ 32,275 $ 85,158 $ 51,732 $ 90,474 $ 26,044 $ 285,683

The following table presents the activity in the allowance for credit losses for the three and six months ended June 30, 2022 and the year ended December 31, 2022:

Three Months Ended June 30, 2022

Construction/

(In thousands)

Allowance for credit losses:

Beginning balance $ 26,349 $ 95,876 $ 37,111 $ 52,492 $ 22,940 $ 234,768

Allowance for credit losses on PCD loans 950 9,283 980 5,596 7 16,816

Loans charged off — — ( 39 ) — ( 3,226 ) ( 3,265 )

Recoveries of loans previously charged off

302 52 23 221 180 778

Net loans recovered (charged off)

302 52 ( 16 ) 221 ( 3,046 ) ( 2,487 )

Provision for credit losses - acquired loans 7,205 18,711 7,380 11,303 571 45,170

Provision for credit losses 1,883 ( 8,727 ) 5,691 ( 1,303 ) 2,456 —

Balance, June 30, $ 36,689 $ 115,195 $ 51,146 $ 68,309 $ 22,928 $ 294,267

Six Months Ended June 30, 2022 and Year Ended December 31, 2022

Construction/

Development Other

5 unchanged sentences

Beginning balance $ 28,415 $ 87,218 $ 48,458 $ 53,062 $ 19,561 $ 236,714

Allowance for credit losses on PCD loans 950 9,283 980 5,596 7 16,816

Loans charged off — — ( 289 ) ( 1,416 ) ( 3,870 ) ( 5,575 )

Recoveries of loans previously charged

Recoveries of loans previously charged off

317 78 49 330 368 1,142

1 unchanged sentence

317 78 ( 240 ) ( 1,086 ) ( 3,502 ) ( 4,433 )

Provision for credit loss - acquired loans 7,205 18,711 7,380 11,303 571 45,170

Provision for credit loss - loans ( 198 ) ( 95 ) ( 5,432 ) ( 566 ) 6,291 —

Balance, March 31

Balance, June 30

36,689 — 115,195 — 51,146 — 68,309 — 22,928 294,267

Allowance for credit losses on PCD loans 950 9,283 980 5,596 7 16,816

Loans charged off ( 1 ) — ( 157 ) ( 8,357 ) ( 3,177 ) ( 11,692 )

3 unchanged sentences

87 889 ( 87 ) ( 7,907 ) ( 2,580 ) ( 9,598 )

Provision for credit loss - acquired loans 7,205 18,711 7,380 11,303 571 45,170

Provision for credit loss - loans ( 4,533 ) ( 22,236 ) ( 96 ) 28,952 2,913 5,000

1 unchanged sentence

$ 32,243 $ 93,848 $ 50,963 $ 89,354 $ 23,261 $ 289,669

The following table presents the amortized cost basis of loans on nonaccrual status and loans past due over 90 days still accruing as of March 31, 2023 and December 31, 2022:

March 31, 2023

The following table presents the amortized cost basis of loans on nonaccrual status and loans past due over 90 days still accruing as of June 30, 2023 and December 31, 2022:

June 30, 2023

Nonaccrual Nonaccrual

8 unchanged sentences

Residential 1-4 family 17,827 — 1,164

Multifamily residential — — —

Total real estate 34,652 8,383 4,576

20 unchanged sentences

Total $ 51,011 $ 8,383 $ 9,845

The Company had $ 65.4 million and $ 51.0 million in nonaccrual loans for the periods ended March 31, 2023 and December 31, 2022, respectively.

In addition, the Company had $ 8.6 million and $ 9.8 million in loans past due 90 days or more and still accruing for the periods ended March 31, 2023 and December 31, 2022, respectively.

The Company had $ 8.4 million in nonaccrual loans with a specific reserve as of both March 31, 2023 and December 31, 2022.

The Company did not recognize any interest income on nonaccrual loans during the period ended March 31, 2023 or March 31, 2022.

The following table presents the amortized cost basis of impaired loans (which includes loans individually analyzed for credit losses for which a specific reserve has been recorded, non-accrual loans, loans past due 90 days or more and restructured loans made to borrowers experiencing financial difficulty) by class of loans as of March 31, 2023 and December 31, 2022:

March 31, 2023

The Company had $ 49.6 million and $ 51.0 million in nonaccrual loans for the periods ended June 30, 2023 and December 31, 2022, respectively.

In addition, the Company had $ 10.9 million and $ 9.8 million in loans past due 90 days or more and still accruing for the periods ended June 30, 2023 and December 31, 2022, respectively.

The Company had $ 8.4 million in nonaccrual loans with a specific reserve as of both June 30, 2023 and December 31, 2022.

The Company did not recognize any interest income on nonaccrual loans during the period ended June 30, 2023 or June 30, 2022.

June 30, 2023

Real Estate Residential

29 unchanged sentences

Total $ 164,554 $ 21,801 $ 34,749

The Company had $ 195.6 million and $ 221.1 million in impaired loans for the periods ended March 31, 2023 and December 31, 2022, respectively.

The Company had $ 170.1 million and $ 221.1 million in impaired loans for the periods ended June 30, 2023 and December 31, 2022, respectively.

Loans that do not share risk characteristics are evaluated on an individual basis.

2 unchanged sentences

The allowance for credit losses may be zero if the fair value of the collateral at the measurement date exceeds the amortized cost basis of the loan, net of estimated costs to sell.

The following is an aging analysis for loans receivable as of March 31, 2023 and December 31, 2022:

March 31, 2023

The following is an aging analysis for loans receivable as of June 30, 2023 and December 31, 2022:

June 30, 2023

30-59 Days Loans

35 unchanged sentences

Total $ 21,490 $ 6,478 $ 60,856 $ 88,824 $ 14,320,656 $ 14,409,480 $ 9,845

Non-accruing loans at March 31, 2023 and December 31, 2022 were $ 65.4 million and $ 51.0 million, respectively.

Interest recognized on impaired loans during the three months ended March 31, 2023 was approximately $ 1.8 million.

Interest recognized on impaired loans during the three months ended March 31, 2022 was approximately $ 3.5 million.

Non-accruing loans at June 30, 2023 and December 31, 2022 were $ 49.6 million and $ 51.0 million, respectively.

Interest recognized on impaired loans during the three and six months ended June 30, 2023 was approximately $ 1.5 million and $ 3.0 million, respectively.

Interest recognized on impaired loans during the three and six months ended June 30, 2022 was approximately $ 4.8 million and $ 9.5 million, respectively.

The amount of interest recognized on impaired loans on the cash basis is not materially different than the accrual basis.

46 unchanged sentences

(2) of the loans that are above the threshold amount and tested for credit losses after testing, some are considered to not be collateral dependent and are not included in collateral dependent loans.

Based on the most recent analysis performed, the risk category of loans by class of loans as of March 31, 2023 and December 31, 2022 is as follows:

March 31, 2023

Based on the most recent analysis performed, the risk category of loans by class of loans as of June 30, 2023 and December 31, 2022 is as follows:

June 30, 2023

Term Loans Amortized Cost Basis by Origination Year

43 unchanged sentences

Total residential 1-4 family 161,697 387,099 283,772 188,321 118,164 456,441 194,724 1,790,218

March 31, 2023

June 30, 2023

Term Loans Amortized Cost Basis by Origination Year

133 unchanged sentences

Total $ 3,262,317 $ 2,757,885 $ 1,525,752 $ 1,139,754 $ 1,172,612 $ 2,565,074 $ 1,986,086 $ 14,409,480

The following table presents gross write-offs by origination date as of March 31, 2023.

March 31, 2023

The following table presents gross write-offs by origination date as of June 30, 2023.

June 30, 2023

Gross Loan Write-Offs by Origination Year

7 unchanged sentences

Residential 1-4 family — 4 28 6 12 34 5 89

Multifamily residential — — — — — — — —

Total real estate — 6 47 11 27 91 5 187

6 unchanged sentences

The Company also evaluates credit quality based on the aging status of the loan, which was previously presented and by payment activity.

The following tables present the amortized cost of performing and nonperforming loans as of March 31, 2023 and December 31, 2022.

March 31, 2023

The following tables present the amortized cost of performing and nonperforming loans as of June 30, 2023 and December 31, 2022.

June 30, 2023

Term Loans Amortized Cost Basis by Origination Year

85 unchanged sentences

Total $ 3,262,317 $ 2,757,885 $ 1,525,752 $ 1,139,754 $ 1,172,612 $ 2,565,074 $ 1,986,086 $ 14,409,480

The Company had approximately $ 6.2 million or 64 total revolving loans convert to term loans for the three months ended March 31, 2023 compared to $ 7.2 million or 39 total revolving loans convert to term loans for the three months ended March 31, 2022.

The Company had approximately $ 21.8 million or 120 total revolving loans convert to term loans for the six months ended June 30, 2023 compared to $ 13.8 million or 83 total revolving loans convert to term loans for the six months ended June 30, 2022.

These loans were considered immaterial for vintage disclosure inclusion.

The following table presents the amortized cost basis of modified loans by class and modification type at March 31, 2023.

The following table presents the amortized cost basis of modified loans by class and modification type at June 30, 2023.

The percentage of modifications of loans that were modified to borrowers experiencing financial difficulty relative to the total period-end amortized cost basis of loans in each class of financing receivable is also presented below.

Term Extension Interest Rate Reduction Principal Reduction Interest Only Combination Interest Rate Reduction and Term Extension Combination Principal Reduction and Interest Rate Reduction Post-

June 30, 2023

Combination of Modifications

Term Extension Interest Rate Reduction Principal Reduction Interest Only Interest Rate Reduction and Term Extension Principal Reduction and Interest Rate Reduction Term Extension and Interest Only Term Extension and Principal Reduction Post-

Balance Total Class of Loans Receivable

(In thousands)

Commercial real estate loans

10 unchanged sentences

Total $ 1,098 $ 565 $ 160 $ 4,454 $ 652 $ 9 $ 16,023 $ 146 $ 23,107 0.16 %

During the three-months ended March 31, 2023, the Company restructured approximately $ 52,000 in loans to three borrowers.

The ending balance of these loans as of March 31, 2023, was $ 48,000 .

The Company considered the financial effect of these loan modifications to borrowers experiencing financial difficulty during the three-months ended March 31, 2023 immaterial for tabular disclosure inclusion.

The following table presents the amortized cost basis of loans that had a payment default during the three-months ended March 31, 2023 and were modified in the twelve months prior to that default to borrowers experiencing financial difficulty.

March 31, 2023

Term Extension Interest Rate Reduction Principal Reduction Interest Only Combination Interest Rate Reduction and Term Extension Combination Principal Reduction and Interest Rate Reduction

During the six-months ended June 30, 2023, the Company restructured approximately $ 18.4 million in loans to 13 borrowers.

The ending balance of these loans as of June 30, 2023, was $ 18.1 million.

The Company considered the financial effect of these loan modifications to borrowers experiencing financial difficulty during the three-months ended June 30, 2023 immaterial for tabular disclosure inclusion.

Three of the modified loans accounted for $ 17.2 million of the total post-modification outstanding balance.

These three loans involved the loans being placed on interest only payments for 12 to 36 months while the interest rate was increased by 25 to 50 basis points.

The following table presents the amortized cost basis of loans that had a payment default during the three-months ended June 30, 2023 and were modified in the twelve months prior to that default to borrowers experiencing financial difficulty.

June 30, 2023

Term Extension Principal Reduction Interest Only Combination Interest Rate Reduction and Principal Reduction Combination Term Extension and Principal Reduction

(Dollars in thousands)

12 unchanged sentences

The Company has modified 21 loans over the past 12 months to borrowers experiencing financial difficulty.

The pre-modification balance of the loans was $ 1.3 million, and the ending balance as of March 31, 2023 was $ 854,000 .

The $ 854,000 balance consists of $ 810,000 of current loans, $ 7,000 of loans 30-89 days past due and $ 37,000 of loans past due 90 days or more.

The pre-modification balance of the loans was $ 20.0 million, and the ending balance as of June 30, 2023 was $ 19.2 million.

The $ 19.2 million balance consists of $ 1.1 million of non-accrual loans and $ 18.1 million of current loans, none of which were past due as of June 30, 2023.

Upon the Company's determination that a modified loan (or portion of a loan) has subsequently been deemed uncollectible, the loan (or a portion of the loan) is written off.

2 unchanged sentences

For loans for which a specific reserve is not recorded, an allowance is recorded based on the loss rate for the respective pool within the collective evaluation if a specific reserve is not recorded.

The following is a presentation of total foreclosed assets as of March 31, 2023 and December 31, 2022:

March 31, 2023 December 31, 2022

The following is a presentation of total foreclosed assets as of June 30, 2023 and December 31, 2022:

June 30, 2023 December 31, 2022

(In thousands)

7 unchanged sentences

Goodwill and Core Deposits and Other Intangibles

Changes in the carrying amount and accumulated amortization of the Company’s goodwill and core deposits and other intangibles at March 31, 2023 and December 31, 2022, were as follows:

March 31, 2023 December 31, 2022

Changes in the carrying amount and accumulated amortization of the Company’s goodwill and core deposits and other intangibles at June 30, 2023 and December 31, 2022, were as follows:

June 30, 2023 December 31, 2022

(In thousands)

2 unchanged sentences

Balance, end of period $ 1,398,253 $ 1,398,253

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

(In thousands)

1 unchanged sentence

Balance, beginning of period $ 58,455 $ 25,045

Amortization expense ( 2,477 ) ( 1,421 )

Balance, March 31 $ 55,978 23,624

Acquisition of Happy Bancshares — 42,263

Amortization expense ( 4,955 ) ( 3,898 )

Balance, June 30 $ 53,500 63,410

Amortization expense ( 4,955 )

Balance, end of year $ 58,455

The carrying basis and accumulated amortization of core deposit intangibles at March 31, 2023 and December 31, 2022 were :

March 31, 2023 December 31, 2022

The carrying basis and accumulated amortization of core deposit intangibles at June 30, 2023 and December 31, 2022 were :

June 30, 2023 December 31, 2022

(In thousands)

2 unchanged sentences

Net carrying amount $ 53,500 $ 58,455

Core deposit intangible amortization expense was approximately $ 2.5 million and $ 1.4 million for the three months ended March 31, 2023 and 2022, respectively.

Core deposit intangible amortization expense was approximately $ 2.5 million for both the three months ended June 30, 2023 and 2022.

Core deposit intangible amortization expense was approximately $ 5.0 million and $ 3.9 million for the six months ended June 30, 2023 and 2022, respectively.

The Company’s estimated amortization expense of core deposits intangibles for each of the years 2023 through 2027 is approximately:

4 unchanged sentences

2027 – $ 6.6 million.

The carrying amount of the Company’s goodwill was $ 1.40 billion at both March 31, 2023 and December 31, 2022.

The carrying amount of the Company’s goodwill was $ 1.40 billion at both June 30, 2023 and December 31, 2022.

Goodwill is tested annually for impairment during the fourth quarter or more often if events and circumstances indicate there may be an impairment.

3 unchanged sentences

Other assets consist primarily of equity securities without a readily determinable fair value and other miscellaneous assets.

As of March 31, 2023 and December 31, 2022, other assets were $ 304.6 million and $ 321.2 million, respectively.

As of June 30, 2023 and December 31, 2022, other assets were $ 317.9 million and $ 321.2 million, respectively.

The Company has equity securities without readily determinable fair values such as stock holdings in the Federal Home Loan Bank (“FHLB”) and the Federal Reserve Bank (“Federal Reserve”) which are outside the scope of ASC Topic 321, Investments – Equity Securities (“ASC Topic 321”).

These equity securities without a readily determinable fair value were $ 135.8 million and $ 135.3 million at March 31, 2023 and December 31, 2022, and are accounted for at cost.

These equity securities without a readily determinable fair value were $ 136.3 million and $ 135.3 million at June 30, 2023 and December 31, 2022, and are accounted for at cost.

The Company has equity securities such as stock holdings in First National Bankers’ Bank and other miscellaneous holdings which are accounted for under ASC Topic 321.

These equity securities without a readily determinable fair value were $ 74.9 million and $ 80.6 million at March 31, 2023 and December 31, 2022, respectively.

These equity securities without a readily determinable fair value were $ 91.1 million and $ 80.6 million at June 30, 2023 and December 31, 2022, respectively.

There were no transactions during the period that would indicate a material change in fair value.

Included in other assets are marketable equity securities held at the holding company which are accounted for under ASC Topic 321.

These marketable equity securities were $ 40.6 million and $ 52.0 million at March 31, 2023 and December 31, 2022, respectively.

The March 31, 2023 balance consisted primarily of investments in Pacific Western Bank and PNC Financial Services Group, Inc.

The fair value of these investments were $ 15.5 million and $ 18.9 million, respectively, at March 31, 2023.

The Company recorded $ 11.4 million in expense for the fair value adjustment for these marketable securities during the three months ended March 31, 2023.

The aggregate amount of time deposits with a minimum denomination of $250,000 was $ 366.2 million and $ 333.2 million at March 31, 2023 and December 31, 2022, respectively.

The aggregate amount of time deposits with a minimum denomination of $100,000 was $ 680.4 million and $ 639.3 million at March 31, 2023 and December 31, 2022, respectively.

Interest expense applicable to certificates in excess of $100,000 totaled $ 2.9 million and $ 764,000 for the three months ended March 31, 2023 and 2022, respectively.

As of March 31, 2023 and December 31, 2022, brokered deposits were $ 484.5 million and $ 476.6 million, respectively.

Deposits totaling approximately $ 2.87 billion and $ 2.65 billion at March 31, 2023 and December 31, 2022, respectively, were public funds obtained primarily from state and political subdivisions in the United States.

These marketable equity securities were $ 39.9 million and $ 52.0 million at June 30, 2023 and December 31, 2022, respectively.

The June 30, 2023 balance consisted primarily of investments in Pacific Western Bank and PNC Financial Services Group, Inc.

The fair value of these investments were $ 15.8 million and $ 18.7 million, respectively, at June 30, 2023.

The Company recorded $ 10.6 million in expense for the fair value adjustment for these marketable securities during the six months ended June 30, 2023.

The aggregate amount of time deposits with a minimum denomination of $250,000 was $ 456.4 million and $ 333.2 million at June 30, 2023 and December 31, 2022, respectively.

The aggregate amount of time deposits with a minimum denomination of $100,000 was $ 790.4 million and $ 639.3 million at June 30, 2023 and December 31, 2022, respectively.

Interest expense applicable to certificates in excess of $100,000 totaled $ 5.2 million and $ 661,000 for the three months ended June 30, 2023 and 2022, respectively.

Interest expense applicable to certificates in excess of $100,000 totaled $ 8.2 million and $ 1.4 million for the six months ended June 30, 2023 and 2022, respectively.

As of June 30, 2023 and December 31, 2022, brokered deposits were $ 466.4 million and $ 476.6 million, respectively.

Deposits totaling approximately $ 2.77 billion and $ 2.65 billion at June 30, 2023 and December 31, 2022, respectively, were public funds obtained primarily from state and political subdivisions in the United States.

Securities Sold Under Agreements to Repurchase

At March 31, 2023 and December 31, 2022, securities sold under agreements to repurchase totaled $ 138.7 million and $ 131.1 million, respectively.

For the three-month periods ended March 31, 2023 and 2022, securities sold under agreements to repurchase daily weighted-average totaled $ 134.9 million and $ 137.6 million, respectively.

The remaining contractual maturity of securities sold under agreements to repurchase in the consolidated balance sheets as of March 31, 2023 and December 31, 2022 is presented in the following table:

March 31, 2023 December 31, 2022

At June 30, 2023 and December 31, 2022, securities sold under agreements to repurchase totaled $ 160.3 million and $ 131.1 million, respectively.

For the three-month periods ended June 30, 2023 and 2022, securities sold under agreements to repurchase daily weighted-average totaled $ 144.0 million and $ 123.1 million, respectively.

For the six-month periods ended June 30, 2023 and 2022, securities sold under agreements to repurchase daily weighted-average totaled $ 139.5 million and $ 130.2 million, respectively.

The remaining contractual maturity of securities sold under agreements to repurchase in the consolidated balance sheets as of June 30, 2023 and December 31, 2022 is presented in the following table:

June 30, 2023 December 31, 2022

Overnight and

8 unchanged sentences

FHLB and Other Borrowed Funds

The Company’s FHLB borrowed funds, which are secured by our loan portfolio, were $ 650.0 million at both March 31, 2023 and December 31, 2022.

The Company had no other borrowed funds as of March 31, 2023 or December 31, 2022.

At March 31, 2023, $ 50.0 million and $ 600.0 million of the outstanding balances were classified as short-term and long-term advances, respectively.

At December 31, 2022, $ 50.0 million and $ 600.0 million of the outstanding balances were classified as short-term and long-term advances, respectively.

The Company’s FHLB borrowed funds, which are secured by our loan portfolio, were $ 650.0 million at June 30, 2023 and $ 650.0 million at December 31, 2022.

Other borrowed funds were $ 51.6 million as of June 30, 2023 and were classified as short-term advances.

The Company had no other borrowed funds as of December 31, 2022.

At both June 30, 2023 and December 31, 2022, $ 50.0 million and $ 600.0 million of the outstanding FHLB balances were classified as short-term and long-term advances.

The FHLB advances mature from 2023 to 2037 with fixed interest rates ranging from 2.26 % to 4.84 %.

As noted above, expected maturities could differ from contractual maturities because FHLB may have the right to call, or the Company may have the right to prepay certain obligations.

Additionally, the Company had $ 1.15 billion and $ 1.14 billion at March 31, 2023 and December 31, 2022, in letters of credit under a FHLB blanket borrowing line of credit, which are used to collateralize public deposits at March 31, 2023 and December 31, 2022, respectively.

Expected maturities could differ from contractual maturities because FHLB may have the right to call, or the Company may have the right to prepay certain obligations.

Additionally, the Company had $ 1.18 billion and $ 1.14 billion at June 30, 2023 and December 31, 2022, in letters of credit under a FHLB blanket borrowing line of credit, which are used to collateralize public deposits at June 30, 2023 and December 31, 2022, respectively.

The Company had access to approximately $ 1.43 billion in liquidity with the Federal Reserve Bank as of June 30, 2023.

This consisted of $ 77.4 million available from the Discount Window and $ 1.35 billion available through the Bank Term Funding Program ("BTFP").

As of June 30, 2023, the primary and secondary credit rates available through the Discount Window were 5.25 % and 5.75 %, respectively, and the BTFP rate was 5.50 %.

As of June 30, 2023, the Company had drawn $50.0 million from the BTFP in the ordinary course of business.

This advance is included within other borrowed funds.

The parent company took out a $ 20.0 million line of credit for general corporate purposes during 2015.

The balance on this line of credit at March 31, 2023 and December 31, 2022 was zero .

The Company had access to approximately $ 677.7 million in liquidity with the Federal Reserve Bank as of March 31, 2023.

This consisted of $ 71.8 million available from the Discount Window and $ 605.9 million available through the Bank Term Funding Program ("BTFP").

As of March 31, 2023, the primary and secondary credit rates available through the Discount Window were 5.00 % and 5.50 %, respectively, and the BTFP rate was 4.85 %.

As of March 31, 2023, the balance on these available sources was zero.

The balance on this line of credit at June 30, 2023 and December 31, 2022 was zero .

Subordinated Debentures

Subordinated debentures at March 31, 2023 and December 31, 2022 consisted of the following components:

As of March 31, 2023

Subordinated debentures at June 30, 2023 and December 31, 2022 consisted of the following components:

As of June 30, 2023

December 31, 2022

23 unchanged sentences

In each case, the redemption would be at a redemption price equal to 100% of the principal amount of the 2032 Notes plus any accrued and unpaid interest to, but excluding, the redemption date.

The following is a summary of the components of the provision for income taxes for the three months ended March 31, 2023 and 2022:

For the Three Months Ended March 31,

The following is a summary of the components of the provision for income taxes for the three and six months ended June 30, 2023 and 2022:

For the Three Months Ended June 30, For the Six Months Ended June 30,

2023 2022 2023 2022

(In thousands)

3 unchanged sentences

Federal ( 1,190 ) ( 16,636 ) ( 1,043 ) ( 14,752 )

State ( 242 ) ( 4,389 ) ( 212 ) ( 3,893 )

Total deferred ( 1,432 ) ( 21,025 ) ( 1,255 ) ( 18,645 )

Income tax expense $ 31,616 $ 3,294 $ 61,569 $ 23,323

The reconciliation between the statutory federal income tax rate and effective income tax rate is as follows for the three months ended March 31, 2023 and 2022:

Three Months Ended March 31,

The reconciliation between the statutory federal income tax rate and effective income tax rate is as follows for the three and six months ended June 30, 2023 and 2022:

Three Months Ended June 30, Six Months Ended June 30,

2023 2022 2023 2022

Statutory federal income tax rate 21.00 % 21.00 % 21.00 % 21.00 %

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Stock Repurchases

During the first three months of 2023, the Company repurchased a total of 590,000 shares with a weighted-average stock price of $ 22.92 per share.

Shares repurchased under the program as of March 31, 2023 since its inception total 21,349,866 shares.

The remaining balance available for repurchase is 18,402,134 shares at March 31, 2023.

During the six months ended June 30, 2023, the Company repurchased a total of 1,150,849 shares with a weighted-average stock price of $ 22.00 per share.

Shares repurchased under the program as of June 30, 2023 since its inception total 21,910,715 shares.

The remaining balance available for repurchase is 17,841,285 shares at June 30, 2023.

Stock Compensation Plans

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The purpose of the Plans is to attract and retain highly qualified officers, directors, key employees, and other persons, and to motivate those persons to improve the Company’s business results.

As of March 31, 2023, the maximum total number of shares of the Company’s common stock available for issuance under the 2022 Plan was 14,788,000 shares (representing 13,288,000 shares approved for issuance under the 2006 Plan plus 1,500,000 shares added upon adoption of the 2022 Plan).

At March 31, 2023, the Company had 2,524,598 shares of common stock available for future grants and 5,408,114 shares of common stock reserved for issuance pursuant to the Plans.

The intrinsic value of the stock options outstanding and stock options vested at March 31, 2023 was $ 4.8 million and $ 4.6 million, respectively.

The intrinsic value of stock options exercised during the three months ended March 31, 2023 was approximately $ 1.4 million.

Total unrecognized compensation cost, net of income tax benefit, related to non-vested stock option awards, which are expected to be recognized over the vesting periods, was approximately $ 3.7 million as of March 31, 2023.

The table below summarizes the stock option transactions under the 2022 Plan at March 31, 2023 and December 31, 2022 and changes during the three-month period and year then ended :

For the Three Months Ended March 31, 2023 For the Year Ended

As of June 30, 2023, the maximum total number of shares of the Company’s common stock available for issuance under the 2022 Plan was 14,788,000 shares (representing 13,288,000 shares approved for issuance under the 2006 Plan plus 1,500,000 shares added upon adoption of the 2022 Plan).

At June 30, 2023, the Company had 2,575,023 shares of common stock available for future grants and 5,442,539 shares of common stock reserved for issuance pursuant to the Plans.

The intrinsic value of the stock options outstanding and stock options vested at June 30, 2023 was $ 6.3 million and $ 6.1 million, respectively.

The intrinsic value of stock options exercised during the six months ended June 30, 2023 was approximately $ 1.5 million.

The table below summarizes the stock option transactions under the 2022 Plan at June 30, 2023 and December 31, 2022 and changes during the three-month period and year then ended:

For the Six Months Ended June 30, 2023 For the Year Ended

December 31, 2022

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Accordingly, while management believes that the Black-Scholes option-pricing model provides a reasonable estimate of fair value, the model does not necessarily provide the best single measure of fair value for the Company's employee stock options.

The weighted-average fair value of options granted during the three months ended March 31, 2023 was $ 5.37 per share.

There were 25,000 options granted during the three months ended March 31, 2023.

The weighted-average fair value of options granted during the six months ended June 30, 2023 was $ 5.37 per share.

There were 25,000 options granted during the six months ended June 30, 2023.

The fair value of each option granted is estimated on the date of grant using the Black-Scholes option-pricing model based on the weighted-average assumptions for expected dividend yield, expected stock price volatility, risk-free interest rate, and expected life of options granted.

The assumptions used in determining the fair value of the 2023 and 2022 stock option grants were as follows:

For the Three Months Ended March 31, 2023

For the Six Months Ended June 30, 2023

For the Year Ended December 31, 2022

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Expected life of options 6.5 years 6.5 years

The following is a summary of currently outstanding and exercisable options at March 31, 2023:

The following is a summary of currently outstanding and exercisable options at June 30, 2023:

Options Outstanding Options Exercisable

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91 4.90 25.59 70 25.96

The table below summarized the activity for the Company’s restricted stock issued and outstanding at March 31, 2023 and December 31, 2022 and changes during the period and year then ended:

March 31, 2023

The table below summarized the activity for the Company’s restricted stock issued and outstanding at June 30, 2023 and December 31, 2022 and changes during the period and year then ended:

June 30, 2023

December 31, 2022

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End of period 1,437 1,381

Amount of expense for the three months and twelve months ended, respectively

Amount of expense for the six months and twelve months ended, respectively

$ 4,186 $ 7,646

Total unrecognized compensation cost, net of income tax benefit, related to non-vested restricted stock awards, which are expected to be recognized over the vesting periods, was approximately $ 18.2 million as of March 31, 2023.

Non-Interest Expense

The table below shows the components of non-interest expense for the three months ended March 31, 2023 and 2022:

Three Months Ended March 31,

The table below shows the components of non-interest expense for the three and six months ended June 30, 2023 and 2022:

Three Months Ended June 30, Six Months Ended June 30,

2023 2022 2023 2022

(In thousands)

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Certain leases provide for increases in future minimum annual rental payments as defined in the lease agreements.

The leases generally include real estate taxes and common area maintenance (“CAM”) charges in the rental payments.

The leases generally include real estate taxes and common area maintenance charges in the rental payments.

Short-term leases are leases having a term of twelve months or less.

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In addition, equipment leases were determined to be immaterial and a related ROU asset and liability for such leases is not recorded.

As of March 31, 2023, the balances of the right-of-use asset and lease liability were $ 43.2 million and $ 46.2 million, respectively.

As of December 31, 2022, the balances of the right-of-use asset and lease liability were $ 42.9 million and $ 46.0 million, respectively The right-of-use asset is included in bank premises and equipment, net , and the lease liability is included in accrued interest payable and other liabilities .

The minimum rental commitments under these noncancelable operating leases are as follows (in thousands) as of March 31, 2023 and December 31, 2022:

March 31, 2023 December 31, 2022

As of June 30, 2023, the balances of the right-of-use asset and lease liability were $ 41.9 million and $ 44.8 million, respectively.

As of December 31, 2022, the balances of the right-of-use asset and lease liability were $ 42.9 million and $ 46.0 million, respectively.

The right-of-use asset is included in bank premises and equipment, net , and the lease liability is included in accrued interest payable and other liabilities .

The minimum rental commitments under these noncancelable operating leases are as follows (in thousands) as of June 30, 2023 and December 31, 2022:

June 30, 2023 December 31, 2022

2023 $ 4,475 $ 8,332

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Additional information (dollar amounts in thousands):

For the Three Months Ended

For the Three Months Ended Six Months Ended

Lease expense:

March 31, 2023 March 31, 2022

June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022

Operating lease expense $ 1,923 $ 2,116 $ 3,878 $ 3,939

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Weighted-average remaining lease term (in years)

8.69 9.33 8.77 9.42

Weighted-average discount rate 3.39 % 3.38 % 3.44 % 3.39 %

The Company currently leases three properties from three related parties.

Total rent expense from the leases was $ 35,000 , or 1.56 %, of total lease expense and $ 35,000 , or 1.78 %, of total lease expense for the three months ended March 31, 2023 and 2022, respectively.

Total rent expense from the leases was $ 35,000 , or 1.59 % of total lease expense and $ 69,000 , or 1.57 % of total lease expense, for the three and six months ended June 30, 2023, respectively.

Significant Estimates and Concentrations of Credit Risks

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Although the Company has a loan portfolio that is diversified in both industry and geographic area, a substantial portion of its debtors’ ability to honor their contracts is dependent upon real estate values, tourism demand and the economic conditions prevailing in its market areas.

Although the Company has a diversified loan portfolio, at March 31, 2023 and December 31, 2022, commercial real estate loans represented 55.8 % and 56.3 % of total loans receivable, respectively, and 221.1 % and 230.1 % of total stockholders’ equity at March 31, 2023 and December 31, 2022, respectively.

Residential real estate loans represented 16.6 % and 16.1 % of total loans receivable and 65.7 % and 66.0 % of total stockholders’ equity at March 31, 2023 and December 31, 2022, respectively.

Approximately 79.9 % of the Company’s total loans and 85.1 % of the Company’s real estate loans as of March 31, 2023, are to borrowers whose collateral is located in Alabama, Arkansas, Florida, Texas and New York, the states in which the Company has its branch locations.

During the period ended March 31, 2023, the Company recorded a $ 1.2 million provision for credit losses on loans.

Although the Company has a diversified loan portfolio, at June 30, 2023 and December 31, 2022, commercial real estate loans represented 56.6 % and 56.3 % of total loans receivable, respectively, and 219.5 % and 230.1 % of total stockholders’ equity at June 30, 2023 and December 31, 2022, respectively.

Residential real estate loans represented 15.8 % and 16.1 % of total loans receivable and 61.5 % and 66.0 % of total stockholders’ equity at June 30, 2023 and December 31, 2022, respectively.

Approximately 80.7 % of the Company’s total loans and 86.1 % of the Company’s real estate loans as of June 30, 2023, are to borrowers whose collateral is located in Alabama, Arkansas, Florida, Texas and New York, the states in which the Company has its branch locations.

For the three and six months ended June 30, 2023, the Company recorded $ 2.3 million and $ 3.5 million in provision for credit losses on loans, respectively.

However, the Company determined that no additional provision was necessary for unfunded commitments as the current level of the reserve was considered adequate.

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The collateral obtained is based on the assessed creditworthiness of the borrower.

At March 31, 2023 and December 31, 2022, commitments to extend credit of $ 4.93 billion and $ 4.83 billion, respectively, were outstanding.

At June 30, 2023 and December 31, 2022, commitments to extend credit of $ 4.93 billion and $ 4.83 billion, respectively, were outstanding.

A percentage of these balances are participated out to other banks;

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Management uses the same credit policies in granting lines of credit as it does for on-balance-sheet instruments.

The maximum amount of future payments the Company could be required to make under these guarantees at March 31, 2023 and December 31, 2022, was $ 184.9 million and $ 184.6 million, respectively.

The maximum amount of future payments the Company could be required to make under these guarantees at June 30, 2023 and December 31, 2022, was $ 186.8 million and $ 184.6 million, respectively.

The Company and/or its bank subsidiary have various unrelated legal proceedings, most of which involve loan foreclosure activity pending, which, in the aggregate, are not expected to have a material adverse effect on the financial position or results of operations or cash flows of the Company and its subsidiary.

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Since the Bank is also under supervision of the Federal Reserve, it is further limited if the total of all dividends declared in any calendar year by the Bank exceeds the Bank’s net profits to date for that year combined with its retained net profits for the preceding two years.

During the first three months of 2023, the Company requested approximately $ 89.6 million in regular dividends from its banking subsidiary.

During the six months ended June 30, 2023, the Company requested approximately $ 175.8 million in regular dividends from its banking subsidiary.

The Company’s banking subsidiary is subject to various regulatory capital requirements administered by the federal banking agencies.

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Quantitative measures established by regulation to ensure capital adequacy require the Company to maintain minimum amounts and ratios of total, Tier 1 common equity Tier 1 ("CET1") and Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined) and of Tier 1 capital (as defined) to average assets (as defined).

Management believes that, as of March 31, 2023, the Company meets all capital adequacy requirements to which it is subject.

Management believes that, as of June 30, 2023, the Company meets all capital adequacy requirements to which it is subject.

On December 31, 2018, the federal banking agencies issued a joint final rule to revise their regulatory capital rules to permit bank holding companies and banks to phase-in, for regulatory capital purposes, the day-one impact of the new CECL accounting rule on retained earnings over a period of three years.

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a 6.5 % CET1 risk-based capital ratio, a 5 % Tier 1 leverage capital ratio, an 8 % Tier 1 risk-based capital ratio, and a 10 % total risk-based capital ratio.

As of March 31, 2023, the Bank met the capital standards for a well-capitalized institution.

The Company’s CET1 risk-based capital ratio, Tier 1 leverage capital ratio, Tier 1 risk-based capital ratio, and total risk-based capital ratio were 13.21 %, 11.37 %, 13.21 %, and 16.84 %, respectively, as of March 31, 2023.

As of June 30, 2023, the Bank met the capital standards for a well-capitalized institution.

The Company’s CET1 risk-based capital ratio, Tier 1 leverage capital ratio, Tier 1 risk-based capital ratio, and total risk-based capital ratio were 13.63 %, 11.92 %, 13.63 %, and 17.28 %, respectively, as of June 30, 2023.

Additional Cash Flow Information

The following is a summary of the Company’s additional cash flow information during the three-month periods ended:

The following is a summary of the Company’s additional cash flow information during the six-month periods ended:

(In thousands)

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Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the bond’s terms and conditions, among other things.

Impaired loans – Impaired loans are carried at the net realizable value of the collateral or observable market price if the loan is collateral dependent.

Collateral dependent individually evaluated loans - loans are carried at the net realizable value of the collateral or observable market price if the loan is collateral dependent.

A portion of the allowance for credit losses is allocated to collateral dependent loans if the value of such loans is deemed to be less than the unpaid balance.

If these allocations cause the allowance for credit losses to require an increase, such increase is reported as a component of the provision for credit losses.

The fair value of loans with specific allocated losses was $ 126.5 million and $ 168.6 million as of March 31, 2023 and December 31, 2022, respectively.

The fair value of loans with specific allocated losses was $ 96.7 million and $ 168.6 million as of June 30, 2023 and December 31, 2022, respectively.

This valuation is considered Level 3, consisting of appraisals of underlying collateral.

The Company reversed approximately $ 236,000 and $ 73,000 of accrued interest receivable when impaired loans were put on non-accrual status during the three months ended March 31, 2023 and 2022, respectively.

The Company reversed approximately $ 420,000 and $ 77,000 of accrued interest receivable when impaired loans were put on non-accrual status during the three months ended June 30, 2023 and 2022, respectively.

The Company reversed approximately $ 656,000 and $ 149,000 of accrued interest receivable when impaired loans were put on non-accrual status during the six months ended June 30, 2023 and 2022, respectively.

Foreclosed assets held for sale – Foreclosed assets held for sale are held by the Company at fair value, less estimated costs to sell.

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The fair value of foreclosed assets held for sale is estimated using Level 3 inputs based on appraisals of underlying collateral.

As of March 31, 2023 and December 31, 2022, the fair value of foreclosed assets held for sale, less estimated costs to sell, was $ 425,000 and $ 546,000 , respectively.

No foreclosed assets held for sale were remeasured during the three months ended March 31, 2023.

As of June 30, 2023 and December 31, 2022, the fair value of foreclosed assets held for sale, less estimated costs to sell, was $ 725,000 and $ 546,000 , respectively.

No foreclosed assets held for sale were remeasured during the six months ended June 30, 2023.

Regulatory guidelines require the Company to reevaluate the fair value of foreclosed assets held for sale on at least an annual basis.

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Fair value is the exchange price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date .

March 31, 2023

June 30, 2023

Amount Fair Value Level

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Cash and cash equivalents $ 611,191 $ 611,191 1

Federal funds sold 1,550 1,550 1

Investment securities - available for sale 3,645,013 3,645,013 2

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We have reviewed the condensed consolidated balance sheet of Home BancShares, Inc.

(“the Company”) and subsidiaries as of March 31, 2023, and the related condensed consolidated statements of income, comprehensive income (loss), stockholder’s equity, and cash flows for the three-month periods ended March 31, 2023 and 2022, and the related notes (collectively referred to as the “interim financial information or statements”).

(“the Company”) and subsidiaries as of June 30, 2023, and the related condensed consolidated statements of income, comprehensive income (loss), and stockholder’s equity for the three-month and six-month periods ended June 30, 2023 and 2022, and cash flows for the six-month periods ended June 30, 2023 and 2022, and the related notes (collectively referred to as the “interim financial information or statements”).

Based on our reviews, we are not aware of any material modifications that should be made to the condensed financial statements referred to above for them to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheet of the Company and subsidiaries as of December 31, 2022, and the related consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows for the year then ended (not presented herein), and in our report dated February 24, 2023, we expressed an unqualified opinion on those consolidated financial statements.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheet of the Company and subsidiaries as of December 31, 2022, and the related consolidated statements of income, comprehensive income (loss), stockholders’ equity, and cash flows for the year then ended (not presented herein), and in our report dated February 24, 2023, we expressed an unqualified opinion on those consolidated financial statements.

In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 2022 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

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Little Rock, Arkansas

August 4, 2023

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements