HOME BANCSHARES INC 10-Q

Item 1: Financial Statements Home BancShares, Inc. Consolidated Balance Sheets (In thousands, except share data) June 30, 2024 December 31, 2023 (Unaudited) Assets Cash and due from banks $ 229,209 $ 226,363 Interest-bearing deposits with other banks 829,507 773,850 Cash and cash equivalents 1,058,716 1,000,213 Fed funds sold — 5,100 Investment securities — available-for-sale, net of allowance for credit losses of $ 2,525 at both June 30, 2024 and December 31, 2023 (amortized cost of $ 3,691,868 and $ 3,840,927 at June 30, 2024 and December 31, 2023, respectively) 3,344,539 3,507,841 Investment securities — held-to-maturity, net of allowance for credit losses of $ 2,005 at both June 30, 2024 and December 31, 2023 1,278,853 1,281,982 Total investment securities 4,623,392 4,789,823 Loans receivable 14,781,457 14,424,728 Allowance for credit losses ( 295,856 ) ( 288,234 ) Loans receivable, net 14,485,601 14,136,494 Bank premises and equipment, net 383,691 393,300 Foreclosed assets held for sale 41,347 30,486 Cash value of life insurance 218,198 214,516 Accrued interest receivable 120,984 118,966 Deferred tax asset, net 195,041 197,164 Goodwill 1,398,253 1,398,253 Core deposit intangibles 44,490 48,770 Other assets 350,192 323,573 Total assets $ 22,919,905 $ 22,656,658 Liabilities and Stockholders’ Equity Deposits: Demand and non-interest-bearing $ 4,068,302 $ 4,085,501 Savings and interest-bearing transaction accounts 11,150,516 11,050,347 Time deposits 1,736,985 1,651,863 Total deposits 16,955,803 16,787,711 Securities sold under agreements to repurchase 137,996 142,085 FHLB and other borrowed funds 1,301,050 1,301,300 Accrued interest payable and other liabilities 230,011 194,653 Subordinated debentures 439,542 439,834 Total liabilities 19,064,402 18,865,583 Stockholders’ equity: Common stock, par value $ 0.01 ; shares authorized 300,000,000 in 2024 and 2023; shares issued and outstanding 199,746,265 in 2024 and 201,526,494 in 2023 1,997 2,015 Capital surplus 2,295,893 2,348,023 Retained earnings 1,819,412 1,690,112 Accumulated other comprehensive loss ( 261,799 ) ( 249,075 ) Total stockholders’ equity 3,855,503 3,791,075 Total liabilities and stockholders’ equity $ 22,919,905 $ 22,656,658 See Condensed Notes to Consolidated Financial Statements. 4 Table of Contents Home BancShares, Inc. Consolidated Statements of Income Three Months Ended June 30, Six Months Ended June 30, (In thousands, except per share data) 2024 2023 2024 2023 (Unaudited) Interest income: Loans $ 274,324 $ 243,152 $ 539,618 $ 480,149 Investment securities Taxable 32,587 34,751 65,816 70,039 Tax-exempt 7,769 7,932 15,572 15,895 Deposits – other banks 12,564 3,729 23,092 8,414 Federal funds sold 59 68 120 74 Total interest income 327,303 289,632 644,218 574,571 Interest expense: Interest on deposits 95,741 70,147 188,289 129,309 Federal funds purchased — 2 — 2 FHLB and other borrowed funds 14,255 6,596 28,531 12,786 Securities sold under agreements to repurchase 1,363 1,121 2,767 1,989 Subordinated debentures 4,122 4,123 8,219 8,247 Total interest expense 115,481 81,989 227,806 152,333 Net interest income 211,822 207,643 416,412 422,238 Provision for credit losses on loans 8,000 2,300 13,500 3,500 Recovery of credit losses on unfunded commitments — — ( 1,000 ) — Provision for credit losses on investment securities — 1,683 — 1,683 Total credit loss expense 8,000 3,983 12,500 5,183 Net interest income after credit loss expense 203,822 203,660 403,912 417,055 Non-interest income: Service charges on deposit accounts 9,714 9,231 19,400 19,073 Other service charges and fees 10,679 11,763 20,868 23,638 Trust fees 4,722 4,052 9,788 8,916 Mortgage lending income 4,276 2,650 7,834 5,221 Insurance commissions 565 518 1,073 1,044 Increase in cash value of life insurance 1,279 1,211 2,474 2,315 Dividends from FHLB, FRB, FNBB & other 2,998 2,922 6,005 5,716 Gain on sale of SBA loans 56 — 254 139 Gain on sale of branches, equipment and other assets, net 2,052 917 2,044 924 Gain on OREO, net 49 319 66 319 Fair value adjustment for marketable securities ( 274 ) 783 729 ( 10,625 ) Other income 6,658 15,143 14,038 26,993 Total non-interest income 42,774 49,509 84,573 83,673 Non-interest expense: Salaries and employee benefits 60,427 64,534 121,337 129,024 Occupancy and equipment 14,408 14,923 28,959 29,875 Data processing expense 8,935 9,151 18,082 18,119 Other operating expenses 29,415 27,674 56,303 53,908 Total non-interest expense 113,185 116,282 224,681 230,926 Income before income taxes 133,411 136,887 263,804 269,802 Income tax expense 31,881 31,616 62,165 61,569 Net income $ 101,530 $ 105,271 $ 201,639 $ 208,233 Basic earnings per share $ 0.51 $ 0.52 $ 1.00 $ 1.03 Diluted earnings per share $ 0.51 $ 0.52 $ 1.00 $ 1.02 See Condensed Notes to Consolidated Financial Statements. 5 Table of Contents Home BancShares, Inc. Consolidated Statements of Comprehensive Income (Loss) Three Months Ended June 30, Six Months Ended June 30, (In thousands) 2024 2023 2024 2023 (Unaudited) Net income $ 101,530 $ 105,271 $ 201,639 $ 208,233 Net unrealized gain (loss) on available-for-sale securities 15,394 ( 48,042 ) ( 14,241 ) 16,926 Other comprehensive income (loss) before tax effect 15,394 ( 48,042 ) ( 14,241 ) 16,926 Tax effect on other comprehensive income (loss) ( 5,768 ) 11,665 1,517 ( 4,146 ) Other comprehensive income (loss) 9,626 ( 36,377 ) ( 12,724 ) 12,780 Comprehensive income $ 111,156 $ 68,894 $ 188,915 $ 221,013 See Condensed Notes to Consolidated Financial Statements. 6 Table of Contents Home BancShares, Inc. Consolidated Statements of Stockholders’ Equity Three and Six Months Ended June 30, 2024 (In thousands, except share data) Common Stock Capital Surplus Retained Earnings Accumulated Other Comprehensive Loss Total Balances at January 1, 2024 $ 2,015 $ 2,348,023 $ 1,690,112 $ ( 249,075 ) $ 3,791,075 Comprehensive income: Net income — — 100,109 — 100,109 Other comprehensive loss — — — ( 22,350 ) ( 22,350 ) Net issuance of 76,542 shares of common stock from exercise of stock options 1 670 — — 671 Repurchase of 1,025,934 shares of common stock ( 10 ) ( 24,007 ) — — ( 24,017 ) Share-based compensation net issuance of 219,750 shares of restricted common stock 2 2,273 — — 2,275 Excise tax from repurchase of common stock — ( 135 ) — — ( 135 ) Cash dividends – Common Stock, $ 0.18 per share — — ( 36,227 ) — ( 36,227 ) Balances at March 31, 2024 (unaudited) $ 2,008 $ 2,326,824 $ 1,753,994 $ ( 271,425 ) $ 3,811,401 Comprehensive income: Net income — — 101,530 — 101,530 Other comprehensive income — — — 9,626 9,626 Net issuance of 149,507 shares of common stock from exercise of stock options 1 ( 2 ) — — ( 1 ) Repurchase of 1,400,094 shares of common stock ( 14 ) ( 32,590 ) — — ( 32,604 ) Share-based compensation net issuance of 200,000 shares of restricted common stock 2 1,946 — — 1,948 Excise tax from repurchase of common stock — ( 285 ) — — ( 285 ) Cash dividends – Common Stock, $ 0.18 per share — — ( 36,112 ) — ( 36,112 ) Balances at June 30, 2024 (unaudited) $ 1,997 $ 2,295,893 $ 1,819,412 $ ( 261,799 ) $ 3,855,503 See Condensed Notes to Consolidated Financial Statements. 7 Table of Contents Home BancShares, Inc. Consolidated Statements of Stockholders’ Equity For the Three and Six Months Ended June 30, 2023 (In thousands, except share data) Common Stock Capital Surplus Retained Earnings Accumulated Other Comprehensive Loss Total Balances at January 1, 2023 $ 2,034 $ 2,386,699 $ 1,443,087 $ ( 305,458 ) $ 3,526,362 Comprehensive income: Net income — — 102,962 — 102,962 Other comprehensive income — — — 49,157 49,157 Net issuance of 66,451 shares of common stock from exercise of stock options 1 85 — — 86 Repurchase of 590,000 shares of common stock ( 6 ) ( 13,534 ) — — ( 13,540 ) Share-based compensation net issuance of 258,000 shares of restricted common stock 3 2,504 — — 2,507 Cash dividends – Common Stock, $ 0.18 per share — — ( 36,649 ) — ( 36,649 ) 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 issuance of 50,000 shares of restricted common stock ( 1 ) 2,335 — — 2,334 Cash dividends – Common Stock, $ 0.180 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. 8 Table of Contents Home BancShares, Inc. Consolidated Statements of Cash Flows Six Months Ended June 30, (In thousands) 2024 2023 (Unaudited) Operating Activities Net income $ 201,639 $ 208,233 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation & amortization 14,714 14,776 (Increase) decrease in value of equity securities ( 729 ) 10,625 Amortization of securities, net 7,572 8,219 Accretion of purchased loans ( 4,645 ) ( 5,832 ) Share-based compensation 4,223 4,841 Gain on assets ( 2,364 ) ( 1,382 ) Provision for credit losses - loans 13,500 3,500 Recovery of credit losses - unfunded commitments ( 1,000 ) — Provision for credit losses - investment securities — 1,683 Deferred income tax effect 3,640 ( 1,255 ) Increase in cash value of life insurance ( 2,474 ) ( 2,315 ) Originations of mortgage loans held for sale ( 289,488 ) ( 212,931 ) Proceeds from sales of mortgage loans held for sale 302,018 166,921 Changes in assets and liabilities: Accrued interest receivable ( 2,018 ) 2,133 Other assets ( 24,022 ) ( 8,709 ) Accrued interest payable and other liabilities 36,358 ( 23,451 ) Net cash provided by operating activities 256,924 165,056 Investing Activities Net decrease (increase) in federal funds sold 5,100 ( 1,550 ) Net (increase) decrease in loans ( 385,557 ) 270,329 Purchases of investment securities – available-for-sale ( 5,100 ) ( 3,933 ) Proceeds from maturities of investment securities – available-for-sale 146,479 407,431 Proceeds from maturities of investment securities – held-to-maturity 3,239 2,658 Proceeds from sales of equity securities — 1,522 Purchase of other investments ( 1,858 ) ( 134 ) Proceeds from foreclosed assets held for sale 938 477 Proceeds from sale of SBA loans 3,586 2,337 Purchases of premises and equipment ( 11,902 ) ( 9,511 ) Proceeds from sales of premises and equipment 12,829 8,081 (Purchase of) return of investment on cash value of life insurance, net ( 1,218 ) 2,909 Net cash (used in) provided by investing activities ( 233,464 ) 680,616 Financing Activities Net increase (decrease) in deposits 168,092 ( 941,892 ) Net (decrease) increase in securities sold under agreements to repurchase ( 4,089 ) 29,203 Decrease in FHLB and other borrowed funds ( 1,400,250 ) — Increase in FHLB and other borrowed funds 1,400,000 51,550 Proceeds from exercise of stock options, net 670 361 Repurchase of common stock ( 57,041 ) ( 25,349 ) Dividends paid on common stock ( 72,339 ) ( 73,144 ) Net cash provided by (used in) financing activities 35,043 ( 959,271 ) Net change in cash and cash equivalents 58,503 ( 113,599 ) Cash and cash equivalents – beginning of year 1,000,213 724,790 Cash and cash equivalents – end of period $ 1,058,716 $ 611,191 See Condensed Notes to Consolidated Financial Statements. 9 Table of Contents Home BancShares, Inc. Condensed Notes to Consolidated Financial Statements (Unaudited) 1. Nature of Operations and Summary of Significant Accounting Policies Nature of Operations Home BancShares, Inc. (the “Company” or “HBI”) is a bank holding company headquartered in Conway, Arkansas. The Company is primarily engaged in providing a full range of banking services to individual and corporate customers through its wholly-owned community bank subsidiary – Centennial Bank (sometimes referred to as “Centennial” or the “Bank”). The Bank has branch locations in Arkansas, Florida, South Alabama, Texas and New York City. The Company is subject to competition from other financial institutions. The Company also is subject to the regulation of certain federal and state agencies and undergoes periodic examinations by those regulatory authorities. A summary of the significant accounting policies of the Company follows: Operating Segments Operating segments are components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Bank is the only significant subsidiary upon which management makes decisions regarding how to allocate resources and assess performance. Each of the branches of the Bank provides a group of similar banking services, including such products and services as commercial, real estate and consumer loans, time deposits, checking and savings accounts. The individual bank branches have similar operating and economic characteristics. While the chief decision maker monitors the revenue streams of the various products, services and branch locations, operations are managed, and financial performance is evaluated on a company-wide basis. Accordingly, all of the banking services and branch locations are considered by management to be aggregated into one reportable operating segment. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for credit losses, the valuation of investment securities, the valuation of foreclosed assets and the valuations of assets acquired, and liabilities assumed in business combinations. In connection with the determination of the allowance for credit losses and the valuation of foreclosed assets, management obtains independent appraisals for significant properties. Principles of Consolidation The consolidated financial statements include the accounts of HBI and its subsidiaries. Significant intercompany accounts and transactions have been eliminated in consolidation. Reclassifications Various items within the accompanying consolidated financial statements for previous years have been reclassified to provide more comparative information. These reclassifications had no effect on net earnings or stockholders’ equity. Interim financial information 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. Such adjustments are of a normal recurring nature. The results of operations in the interim statements are not necessarily indicative of the results that may be expected for any other quarter or for the full year. The interim financial information should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s 2023 Form 10-K, filed with the Securities and Exchange Commission on February 26, 2024. 10 Table of Contents Loans Receivable and Allowance for Credit Losses Loans receivable that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at their outstanding principal balance adjusted for any charge-offs, deferred fees or costs on originated loans. Interest income on loans is accrued over the term of the loans based on the principal balance outstanding. Loan origination fees and direct origination costs are capitalized and recognized as adjustments to yield on the related loans. The allowance for credit losses on loans receivable is a valuation account that is deducted from the loans’ amortized cost basis to present the net amount expected to be collected on the loans. Loans are charged off against the allowance when management believes the uncollectability of a loan balance is confirmed and expected recoveries do not exceed the aggregate of amounts previously charged-off and expected to be charged-off. Management estimates the allowance balance using relevant available information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. Historical credit loss experience provides the basis for the estimation of expected credit losses. Adjustments to historical loss information are made for differences in current loan-specific risk characteristics such as differences in underwriting standards, portfolio mix, delinquency level, or term as well as for changes in environmental conditions, such as changes in the national unemployment rate, gross domestic product, national retail sales index, FHFA housing price index and rental vacancy rate index. The allowance for credit losses is measured based on call report segment as these types of loans exhibit similar risk characteristics. The identified loan segments are as follows: • 1-4 family construction • All other construction • 1-4 family revolving home equity lines of credit (“HELOC”) & junior liens • 1-4 family senior liens • Multifamily • Owner occupied commercial real estate • Non-owner occupied commercial real estate • Commercial & industrial, agricultural, non-depository financial institutions, purchase/carry securities, other • Consumer auto • Other consumer • Other consumer - Shore Premier Finance ("SPF") The allowance for credit losses for each segment is measured through the use of the discounted cash flow method. Loans evaluated individually that are considered to be collateral dependent are not included in the collective evaluation. For these loans, where the Company has determined that foreclosure of the collateral is probable, or where the borrower is experiencing financial difficulty and the Company expects repayment of the loan to be provided substantially through the operation or sale of the collateral, the allowance for credit losses is measured based on the difference between the fair value of the collateral, net of estimated costs to sell, and the amortized cost basis of the loan as of the measurement date. When repayment is expected to be from the operation of the collateral, expected credit losses are calculated as the amount by which the amortized cost basis of the loan exceeds the present value of expected cash flows from the operation of the collateral. 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 individually analyzed loans which are not considered to be collateral dependent, an allowance is recorded based on the loss rate for the respective pool within the collective evaluation. Expected credit losses are estimated over the contractual term of the loans, adjusted for expected prepayments and curtailments when appropriate. 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 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. 11 Table of Contents Management qualitatively adjusts model results for risk factors that are not considered within our modeling processes but are nonetheless relevant in assessing the expected credit losses within our loan pools. These qualitative factors ("Q-Factors") and other qualitative adjustments may increase or decrease management's estimate of expected credit losses by a calculated percentage or amount based upon the estimated level of risk. The various risks that may be considered in making Q-Factor and other qualitative adjustments include, among other things, the impact of (i) changes in lending policies, procedures and strategies; (ii) changes in nature and volume of the portfolio; (iii) staff experience; (iv) changes in volume and trends in classified loans, delinquencies and nonaccruals; (v) concentration risk; (vi) trends in underlying collateral values; (vii) external factors such as competition, legal and regulatory environment; (viii) changes in the quality of the loan review system; and (ix) economic conditions. Loans are placed on non-accrual status when management believes that the borrower’s financial condition, after giving consideration to economic and business conditions and collection efforts, is such that collection of interest is doubtful, or generally when loans are 90 days or more past due. Loans are charged against the allowance for credit losses when management believes that the collectability of the principal is unlikely. Accrued interest related to non-accrual loans is generally charged against the allowance for credit losses when accrued in prior years and reversed from interest income if accrued in the current year. Interest income on non-accrual loans may be recognized to the extent cash payments are received, although the majority of payments received are usually applied to principal. Non-accrual loans are generally returned to accrual status when principal and interest payments are less than 90 days past due, the customer has made required payments for at least six months, and we reasonably expect to collect all principal and interest. Acquisition Accounting and Acquired Loans The Company accounts for its acquisitions under FASB Accounting Standards Codification ("ASC") Topic 805, Business Combinations , which requires the use of the purchase method of accounting. All identifiable assets acquired, including loans, are recorded at fair value. In accordance with FASB ASC 326, the Company records both a discount or premium and an allowance for credit losses on acquired loans. All purchased loans are recorded at fair value in accordance with the fair value methodology prescribed in FASB ASC Topic 820, Fair Value Measurements . The fair value estimates associated with the loans include estimates related to expected prepayments and the amount and timing of undiscounted expected principal, interest and other cash flows. Purchased loans that have experienced more than insignificant credit deterioration since origination are purchase credit deteriorated (“PCD”) loans. An allowance for credit losses is determined using the same methodology as other loans. The Company develops separate PCD models for each loan segment with PCD loans not individually analyzed for credit losses. These models utilize a peer group benchmark in order to determine the probability of default and loss given default to be used in the calculation. The sum of the loan’s purchase price and allowance for credit losses becomes its initial amortized cost basis. The difference between the initial amortized cost basis and the par value of the loan is a non-credit discount or premium, which is amortized into interest income over the life of the loan. Subsequent changes to the allowance for credit losses are recorded through the provision for credit losses. For further discussion of the Company’s acquisitions, see Note 2 to the Notes to Consolidated Financial Statements. Allowance for Credit Losses on Off-Balance Sheet Credit Exposures The Company estimates expected credit losses over the contractual period in which the Company is exposed to credit risk via a contractual obligation to extend credit unless that obligation is unconditionally cancellable by the Company. The allowance for credit losses on off-balance sheet credit exposures is adjusted as a provision for credit loss expense. The estimate includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded over its estimated life. 12 Table of Contents Earnings per Share Basic earnings per share is computed based on the weighted-average number of shares outstanding during each year. Diluted earnings per share is computed using the weighted-average shares and all potential dilutive shares outstanding during the period. The following table sets forth the computation of basic and diluted earnings per share (“EPS”) for the following periods: Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 (In thousands) Net income $ 101,530 $ 105,271 $ 201,639 $ 208,233 Average shares outstanding 200,319 202,793 200,765 203,122 Effect of common stock options 146 130 144 152 Average diluted shares outstanding 200,465 202,923 200,909 203,274 Basic earnings per share $ 0.51 $ 0.52 $ 1.00 $ 1.03 Diluted earnings per share $ 0.51 $ 0.52 $ 1.00 $ 1.02 The impact of anti-dilutive shares to the diluted earnings per share calculation was considered immaterial for the periods ended June 30, 2024 and 2023. 2. Business Combinations Acquisition of Happy Bancshares, Inc. The Company's most recent acquisition occurred on April 1, 2022, when the Company completed the acquisition of Happy Bancshares, Inc. (“Happy”), and merged Happy State Bank into Centennial Bank. For additional discussion regarding the acquisition of Happy, see "Management's Discussion and Analysis of Financial Condition and Results of Operations" and Note 2 "Business Combinations" in the Notes to Consolidated Financial Statements included in the Annual Report on Form 10-K for the year ended December 31, 2023. 3. 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: June 30, 2024 Available-for-Sale Amortized Cost Allowance for Credit Losses Net Carrying Amount Gross Unrealized Gains Gross Unrealized (Losses) Estimated Fair Value (In thousands) U.S. government-sponsored enterprises $ 334,736 $ — $ 334,736 $ 1,626 $ ( 16,869 ) $ 319,493 U.S. government-sponsored mortgage-backed securities 1,621,192 — 1,621,192 547 ( 201,264 ) 1,420,475 Private mortgage-backed securities 188,551 — 188,551 — ( 15,418 ) 173,133 Non-government-sponsored asset backed securities 358,968 — 358,968 700 ( 5,869 ) 353,799 State and political subdivisions 972,688 — 972,688 583 ( 83,006 ) 890,265 Other securities 215,733 ( 2,525 ) 213,208 466 ( 26,300 ) 187,374 Total $ 3,691,868 $ ( 2,525 ) $ 3,689,343 $ 3,922 $ ( 348,726 ) $ 3,344,539 13 Table of Contents June 30, 2024 Held-to-Maturity Amortized Cost Allowance for Credit Losses Net Carrying Amount Gross Unrealized Gains Gross Unrealized (Losses) Estimated Fair Value (In thousands) U.S. government-sponsored enterprises $ 43,421 $ — $ 43,421 $ — $ ( 3,146 ) $ 40,275 U.S. government-sponsored mortgage-backed securities 127,464 — 127,464 47 ( 6,084 ) 121,427 State and political subdivisions 1,109,973 ( 2,005 ) 1,107,968 80 ( 110,590 ) 997,458 Total $ 1,280,858 $ ( 2,005 ) $ 1,278,853 $ 127 $ ( 119,820 ) $ 1,159,160 December 31, 2023 Available-for-Sale Amortized Cost Allowance for Credit Losses Net Carrying Amount Gross Unrealized Gains Gross Unrealized (Losses) Estimated Fair Value (In thousands) U.S. government-sponsored enterprises $ 361,494 $ — $ 361,494 $ 2,247 $ ( 17,093 ) $ 346,648 U.S. government-sponsored mortgage-backed securities 1,711,668 — 1,711,668 310 ( 191,557 ) 1,520,421 Private mortgage-backed securities 191,522 — 191,522 — ( 16,117 ) 175,405 Non-government-sponsored asset backed securities 370,203 370,203 821 ( 7,551 ) 363,473 State and political subdivisions 990,318 — 990,318 1,938 ( 75,931 ) 916,325 Other securities 215,722 ( 2,525 ) 213,197 402 ( 28,030 ) 185,569 Total $ 3,840,927 $ ( 2,525 ) $ 3,838,402 $ 5,718 $ ( 336,279 ) $ 3,507,841 December 31, 2023 Held-to-Maturity Amortized Cost Allowance for Credit Losses Net Carrying Amount Gross Unrealized Gains Gross Unrealized (Losses) Estimated Fair Value (In thousands) U.S. government-sponsored enterprises $ 43,285 $ — $ 43,285 $ — $ ( 2,607 ) $ 40,678 U.S. government-sponsored mortgage-backed securities 130,278 — 130,278 106 ( 4,362 ) 126,022 State and political subdivisions 1,110,424 ( 2,005 ) 1,108,419 456 ( 105,094 ) 1,003,781 Total $ 1,283,987 $ ( 2,005 ) $ 1,281,982 $ 562 $ ( 112,063 ) $ 1,170,481 Assets, principally investment securities, having a carrying value of approximately $ 3.03 billion and $ 3.57 billion at June 30, 2024 and December 31, 2023, 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 $ 138.0 million and $ 142.1 million at June 30, 2024 and December 31, 2023, respectively. 14 Table of Contents The amortized cost and estimated fair value of securities classified as available-for-sale and held-to-maturity at June 30, 2024, 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. Securities not due at a single maturity date are shown separately. Available-for-Sale Held-to-Maturity Amortized Cost Estimated Fair Value Amortized Cost Estimated Fair Value (In thousands) Due in one year or less $ 21,983 $ 21,854 $ — $ — Due after one year through five years 242,321 226,640 32,900 30,933 Due after five years through ten years 406,876 364,876 319,351 289,436 Due after ten years 851,977 783,762 801,143 717,364 U.S. government-sponsored mortgage-backed securities 1,621,192 1,420,475 127,464 121,427 Private mortgage-backed securities 188,551 173,133 — — Non-government-sponsored asset backed securities 358,968 353,799 — — Total $ 3,691,868 $ 3,344,539 $ 1,280,858 $ 1,159,160 During the three and six months ended June 30, 2024 and 2023, 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 June 30, 2024 and December 31, 2023. June 30, 2024 Less Than 12 Months 12 Months or More Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses (In thousands) Available-for-sale: U.S. government-sponsored enterprises $ 15,810 $ ( 253 ) $ 173,941 $ ( 16,616 ) $ 189,751 $ ( 16,869 ) U.S. government-sponsored mortgage-backed securities 4,890 ( 159 ) 1,363,467 ( 201,105 ) 1,368,357 ( 201,264 ) Private mortgage-backed securities — — 173,133 ( 15,418 ) 173,133 ( 15,418 ) Non-government-sponsored asset backed securities — — 145,821 ( 5,869 ) 145,821 ( 5,869 ) State and political subdivisions 43,265 ( 1,163 ) 776,764 ( 81,843 ) 820,029 ( 83,006 ) Other securities 6,733 ( 1,309 ) 167,350 ( 24,991 ) 174,083 ( 26,300 ) Total $ 70,698 $ ( 2,884 ) $ 2,800,476 $ ( 345,842 ) $ 2,871,174 $ ( 348,726 ) Held-to-maturity: U.S. government-sponsored enterprises $ — $ — $ 40,275 $ ( 3,146 ) $ 40,275 $ ( 3,146 ) U.S. government-sponsored mortgage-backed securities 6,202 ( 188 ) 10,954 ( 5,896 ) 17,156 ( 6,084 ) State and political subdivisions 30,525 ( 799 ) 963,658 ( 109,791 ) 994,183 ( 110,590 ) Total $ 36,727 $ ( 987 ) $ 1,014,887 $ ( 118,833 ) $ 1,051,614 $ ( 119,820 ) 15 Table of Contents December 31, 2023 Less Than 12 Months 12 Months or More Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses (In thousands) Available-for-sale: U.S. government-sponsored enterprises $ 2,742 $ ( 2 ) $ 180,569 $ ( 17,091 ) $ 183,311 $ ( 17,093 ) U.S. government-sponsored mortgage-backed securities 102,831 ( 2,166 ) 1,392,318 ( 189,391 ) 1,495,149 ( 191,557 ) Private mortgage-backed securities 9,298 ( 226 ) 166,107 ( 15,891 ) 175,405 ( 16,117 ) Non-government-sponsored asset backed securities — — 213,838 ( 7,551 ) 213,838 ( 7,551 ) State and political subdivisions 28,596 ( 400 ) 769,860 ( 75,531 ) 798,456 ( 75,931 ) Other securities — — 164,430 ( 28,030 ) 164,430 ( 28,030 ) Total $ 143,467 $ ( 2,794 ) $ 2,887,122 $ ( 333,485 ) $ 3,030,589 $ ( 336,279 ) Held-to-maturity: U.S. government-sponsored enterprises $ — $ — $ 40,677 $ ( 2,607 ) $ 40,677 $ ( 2,607 ) U.S. government-sponsored mortgage-backed securities 48,498 ( 861 ) 65,573 ( 3,501 ) 114,071 ( 4,362 ) State and political subdivisions 21,493 ( 297 ) 956,578 ( 104,797 ) 978,071 ( 105,094 ) Total $ 69,991 $ ( 1,158 ) $ 1,062,828 $ ( 110,905 ) $ 1,132,819 $ ( 112,063 ) 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. 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. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through income. For securities that do not meet these criteria, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, the Company considers the extent to which fair value is less than amortized cost, and changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis. Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income. The Company has made the election to exclude accrued interest receivable on AFS securities from the estimate of credit losses and report accrued interest separately on the consolidated balance sheets. Changes in the allowance for credit losses are recorded as provision for (or reversal of) credit loss expense. Losses are charged against the allowance when management believes the uncollectability of a security is confirmed or when either of the criteria regarding intent or requirement to sell is met. Debt securities held-to-maturity ("HTM"), which include any security for which we have the positive intent and ability to hold until maturity, are reported at historical cost adjusted for amortization of premiums and accretion of discounts. 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. The Company measures expected credit losses on HTM securities on a collective basis by major security type, with each type sharing similar risk characteristics. The estimate of expected credit losses considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts. The Company has made the election to exclude accrued interest receivable on HTM securities from the estimate of credit losses and report accrued interest separately on the consolidated balance sheets. Changes in the allowance for credit losses are recorded as provision for (or reversal of) credit loss expense. Losses are charged against the allowance when management believes the uncollectability of a security is confirmed. 16 Table of Contents During the period ended June 30, 2024, the Company determined the $ 2.5 million allowance for credit losses on the available for sale portfolio and the $ 2.0 million allowance for credit losses on the held-to-maturity portfolio were adequate. Therefore, no additional provision was considered necessary. Available-for-Sale Investment Securities June 30, 2024 December 31, 2023 Allowance for credit losses: (In thousands) Beginning balance $ 2,525 $ 842 Provision for credit loss — 1,683 Balance, June 30 $ 2,525 $ 2,525 Provision for credit loss — Balance, December 31, 2023 $ 2,525 Held-to-Maturity Investment Securities June 30, 2024 December 31, 2023 Allowance for credit losses: (In thousands) Beginning balance $ 2,005 $ 2,005 Provision for credit loss — — Balance, June 30 $ 2,005 $ 2,005 Provision for credit loss — Balance, December 31, 2023 $ 2,005 For the six months ended June 30, 2024, the Company had available-for-sale investment securities with approximately $ 348.7 million in unrealized losses, of which $ 345.8 million had been in continuous loss positions for more than twelve months. With the exception of the subordinated debt investment securities which were downgraded during 2023 resulting in the allowance, the Company’s assessments indicated 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 29.6 % 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 June 30, 2024, the Company's available-for-sale securities portfolio consisted of 1,559 investment securities, 1,317 of which were in an unrealized loss position. As noted in the table above, the total amount of the unrealized loss was $ 348.7 million. The U.S. government-sponsored enterprises portfolio contained unrealized losses of $ 16.9 million on 56 securities. The U.S. government-sponsored mortgage-backed securities portfolio contained $ 201.3 million of unrealized losses on 656 securities, and the private mortgage-backed securities portfolio contained $ 15.4 million of unrealized losses on 32 securities. The non-government-sponsored asset backed securities portfolio contained $ 5.9 million of unrealized losses on 27 securities. The state and political subdivisions portfolio contained $ 83.0 million of unrealized losses on 483 securities. In addition, the other securities portfolio contained $ 26.3 million of unrealized losses on 63 securities. 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. The Company has determined that, as of June 30, 2024, an additional provision for credit losses is not necessary 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. As of June 30, 2024, the Company's held-to-maturity securities portfolio consisted of 508 investment securities, 501 of which were in an unrealized loss position. As noted in the table above, the total amount of the unrealized loss was $ 119.8 million. The U.S. government-sponsored enterprises portfolio contained unrealized losses of $ 3.1 million on 5 securities. The U.S. government-sponsored mortgage-backed securities portfolio contained unrealized losses of $ 6.1 million on 19 securities. The state and political subdivisions portfolio contained $ 110.6 million of unrealized losses on 477 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 was not necessary as of June 30, 2024. 17 Table of Contents 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 June 30, 2024: State and political subdivisions U.S. government-sponsored enterprises U.S. government-sponsored mortgage-backed securities Total (In thousands) Aaa/AAA $ 234,801 $ 43,421 $ — $ 278,222 Aa/AA 850,072 — — 850,072 A 23,191 — — 23,191 Not rated 1,909 — — 1,909 Agency Backed — — 127,464 127,464 Total $ 1,109,973 $ 43,421 $ 127,464 $ 1,280,858 Income earned on securities for the three months ended June 30, 2024 and 2023, is as follows: Three Months Ended June 30, For the Six Months Ended June 30, 2024 2023 2024 2023 (In thousands) Taxable Available-for-sale $ 25,127 $ 27,254 $ 50,889 $ 55,052 Held-to-maturity 7,460 7,497 14,927 14,987 Non-taxable Available-for-sale 4,664 4,798 9,359 9,623 Held-to-maturity 3,105 3,134 6,213 6,272 Total $ 40,356 $ 42,683 $ 81,388 $ 85,934 4. Loans Receivable The various categories of loans receivable are summarized as follows: June 30, 2024 December 31, 2023 (In thousands) Real estate: Commercial real estate loans Non-farm/non-residential $ 5,599,925 $ 5,549,954 Construction/land development 2,511,817 2,293,047 Agricultural 345,461 325,156 Residential real estate loans Residential 1-4 family 1,910,143 1,844,260 Multifamily residential 509,091 435,736 Total real estate 10,876,437 10,448,153 Consumer 1,189,386 1,153,690 Commercial and industrial 2,242,072 2,324,991 Agricultural 314,600 307,327 Other 158,962 190,567 Total loans receivable 14,781,457 14,424,728 Allowance for credit losses ( 295,856 ) ( 288,234 ) Loans receivable, net $ 14,485,601 $ 14,136,494 18 Table of Contents During the three months ended June 30, 2024, the Company sold $ 576,469 of the guaranteed portions of certain SBA loans, which resulted in a gain of approximately $ 56,000 . During the six months ended June 30, 2024, the Company sold $ 3.3 million of the guaranteed portions of certain SBA loans, which resulted in a gain of approximately $ 254,000 . During the three months ended June 30, 2023, the Company did not sell any guaranteed portions of certain SBA loans. During the six months ended June 30, 2023, the Company sold $ 2.2 million guaranteed portions of certain SBA loans, which resulted in a gain of approximately $ 139,000 . Mortgage loans held for sale of approximately $ 89.3 million and $ 123.4 million at June 30, 2024 and December 31, 2023, 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. Gains and losses resulting from sales of mortgage loans are recognized when the respective loans are sold to investors. Gains and losses are determined by the difference between the selling price and the carrying amount of the loans sold, net of discounts collected or paid. The Company obtains forward commitments to sell mortgage loans to reduce market risk on mortgage loans in the process of origination and mortgage loans held for sale. The forward commitments acquired by the Company for mortgage loans in process of origination are considered mandatory forward commitments. 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. The Company regularly sells mortgages into the capital markets to mitigate the effects of interest rate volatility during the period from the time an interest rate lock commitment (“IRLC”) is issued until the IRLC funds creating a mortgage loan held for sale and its subsequent sale into the secondary/capital markets. Loan sales are typically executed on a mandatory basis. Under a mandatory commitment, the Company agrees to deliver a specified dollar amount with predetermined terms by a certain date. Generally, the commitment is not loan specific, and any combination of loans can be delivered into the outstanding commitment provided the terms fall within the parameters of the commitment. Upon failure to deliver, the Company is subject to fees based on market movement. These commitments and IRLCs are derivative instruments and their fair values at June 30, 2024 and December 31, 2023 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. The Company develops separate PCD models for each loan segment with PCD loans not individually analyzed for credit losses. The initial allowance for credit losses determined on a collective basis is allocated to individual loans. The sum of the loan’s purchase price and allowance for credit losses becomes its initial amortized cost basis. The difference between the initial amortized cost basis and the par value of the loan is a non-credit discount or premium which is amortized into interest income over the life of the loan. Subsequent changes to the allowance for credit losses are recorded through the provision for credit losses. The Company held approximately $ 85.2 million and $ 130.7 million in PCD loans, as of June 30, 2024 and December 31, 2023, respectively. The balance, as of June 30, 2024, results entirely from the acquisition of Happy. 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 2023 Form 10-K filed with the SEC on February 26, 2024. 5. 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. These pools are as follows: construction & land development; other commercial real estate; residential real estate; commercial & industrial; and consumer & other. The loan portfolio pools were selected in order to generally align with the loan categories specified in the quarterly call reports required to be filed with the Federal Financial Institutions Examination Council. For each of these loan pools, the Company generates cash flow projections at the instrument level wherein payment expectations are adjusted for estimated prepayment speed, curtailments, time to recovery, probability of default, and loss given default. The modeling of expected prepayment speeds, curtailment rates, and time to recovery are based on historical internal data. The Company uses regression analysis of historical internal and peer data to determine suitable loss drivers to utilize when modeling lifetime probability of default and loss given default. This analysis also determines how expected probability of default and loss given default will react to forecasted levels of the loss drivers. Management qualitatively adjusts model results for risk factors ("Q-Factors") that are not considered within our modeling processes but are, nonetheless, relevant in assessing the expected credit losses within our loan pools. These Q-Factors and other qualitative adjustments may increase or decrease management's estimate of expected credit losses by a calculated percentage or amount based upon the estimated level of risk. The various risks that may be considered in making Q-Factor and other qualitative adjustments include, among other things, the impact of (i) changes in lending policies, procedures and strategies; (ii) changes in nature and volume of the portfolio; (iii) staff experience; (iv) changes in volume and trends in classified loans, delinquencies and nonaccruals; (v) concentration risk; (vi) trends in underlying collateral values; (vii) external factors such as competition, legal and regulatory environment; (viii) changes in the quality of the loan review system; and (ix) economic conditions. 19 Table of Contents Each year management evaluates the performance of the selected models used in the CECL calculation through backtesting. Based on the results of the testing, management determines if the various models produced accurate results compared to the actual losses incurred for the current economic environment. Management then determines if changes to the input assumptions and economic factors would produce a stronger overall calculation that is more responsive to changes in economic conditions. 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. Based on this analysis, management determined that changes to several of the economic factors for the loss driver segments, along with other model improvements and updates, were necessary, and updated models were implemented for the June 30, 2024 allowance for credit losses calculation. The identified loss drivers by segment are included below as of both June 30, 2024 and December 31, 2023. June 30, 2024 Loss Driver Segment Call Report Segment(s) Modeled Economic Factors 1-4 Family Construction 1a1 National Unemployment (%) & Housing Price Index (%) All Other Construction 1a2 National Unemployment (%) & Gross Domestic Product (%) Farmland & Agriculture 1b, 3 National Unemployment (%) Residential 1-4 Family 1c1, 1c2a, 1c2b National Unemployment (%) & Housing Price Index Multifamily 1d Rental Vacancy Rate (%) & Housing Price Index (%) Non-Farm/ Non-Residential CRE 1e1, 1e2 National Unemployment (%) & Gross Domestic Product (%) Commercial & Industrial, Non-Depository Financial Institutions, Purchase/Carry Securities, Leases, Other 4a, 9a, 9b1, 9b2, 10, Other National Unemployment (%) & National Retail Sales (%) Consumer Auto 6c National Unemployment (%) & National Retail Sales (%) Other Consumer 6b, 6d National Unemployment (%) & National Retail Sales (%) Other Consumer - SPF 6d National Unemployment (%) Obligations of States and Political Subdivisions 8 National Unemployment (%) & Gross Domestic Product (%) December 31, 2023 Loss Driver Segment Call Report Segment(s) Modeled Economic Factors 1-4 Family Construction 1a1 National Unemployment (%) & Housing Price Index (%) All Other Construction 1a2 National Unemployment (%) & Gross Domestic Product (%) 1-4 Family Revolving HELOC & Junior Liens 1c1 National Unemployment (%) & Housing Price Index – CoreLogic (%) 1-4 Family Revolving HELOC & Junior Liens 1c2b National Unemployment (%) & Gross Domestic Product (%) 1-4 Family Senior Liens 1c2a National Unemployment (%) & Gross Domestic Product (%) Multifamily 1d Rental Vacancy Rate (%) & Housing Price Index – Case-Schiller (%) Owner Occupied CRE 1e1 National Unemployment (%) & Gross Domestic Product (%) Non-Owner Occupied CRE 1e2,1b,8 National Unemployment (%) & Gross Domestic Product (%) Commercial & Industrial, Agricultural, Non-Depository Financial Institutions, Purchase/Carry Securities, Other 4a, 3, 9a, 9b1, 9b2, 10, Other National Unemployment (%) & National Retail Sales (%) Consumer Auto 6c National Unemployment (%) & National Retail Sales (%) Other Consumer 6b, 6d National Unemployment (%) & National Retail Sales (%) Other Consumer - SPF 6d National Unemployment (%) For all DCF models, management has determined that four quarters represents a reasonable and supportable forecast period and reverts to a historical loss rate over four quarters on a straight-line basis. Management leverages economic projections from a reputable and independent third party to inform its loss driver forecasts over the four-quarter forecast period. Other internal and external indicators of economic forecasts are also considered by management when developing the forecast metrics. The combination of adjustments for credit expectations (default and loss) and time expectations (prepayment, curtailment, and time to recovery) produces an expected cash flow stream at the instrument level. Instrument effective yield is calculated, net of the impacts of prepayment assumptions, and the instrument expected cash flows are then discounted at that effective yield to produce an instrument-level net present value of expected cash flows (“NPV”). An allowance for credit loss is established for the difference between the instrument’s NPV and amortized cost basis. 20 Table of Contents Construction/Land Development and Other Commercial Real Estate Loans. We originate non-farm and non-residential loans (primarily secured by commercial real estate), construction/land development loans, and agricultural loans, which are generally secured by real estate located in our market areas. Our commercial mortgage loans are generally collateralized by first liens on real estate and amortized (where defined) over a 15 to 30 year period with balloon payments due at the end of one to five years . These loans are generally underwritten by assessing cash flow (debt service coverage), primary and secondary source of repayment, the financial strength of any guarantor, the strength of the tenant (if any), the borrower’s liquidity and leverage, management experience, ownership structure, economic conditions and industry specific trends and collateral. Generally, we will loan up to 85 % of the value of improved property, 65 % of the value of raw land and 75 % of the value of land to be acquired and developed. A first lien on the property and assignment of lease is required if the collateral is rental property, with second lien positions considered on a case-by-case basis. Residential Real Estate Loans. We originate one to four family, residential mortgage loans generally secured by property located in our primary market areas. Residential real estate loans generally have a loan-to-value ratio of up to 90 %. These loans are underwritten by giving consideration to many factors including the borrower’s ability to pay, stability of employment or source of income, debt-to-income ratio, credit history and loan-to-value ratio. Commercial and Industrial Loans. Commercial and industrial loans are made for a variety of business purposes, including working capital, inventory, equipment and capital expansion. The terms for commercial loans are generally one to seven years Commercial loan applications must be supported by current financial information on the borrower and, where appropriate, by adequate collateral. Commercial loans are generally underwritten by addressing cash flow (debt service coverage), primary and secondary sources of repayment, the financial strength of any guarantor, the borrower’s liquidity and leverage, management experience, ownership structure, economic conditions and industry specific trends and collateral. The loan to value ratio depends on the type of collateral. Generally, accounts receivable are financed at between 50 % and 80 % of accounts receivable less than 60 days past due. Inventory financing will range between 50 % and 80 % (with no work in process) depending on the borrower and nature of inventory. We require a first lien position for those loans. Consumer & Other Loans. Our consumer & other loans are primarily composed of loans to finance USCG registered high-end sail and power boats. The performance of consumer & other loans will be affected by the local and regional economies as well as the rates of personal bankruptcies, job loss, divorce and other individual-specific characteristics. Off-Balance Sheet Credit Exposures. The Company estimates expected credit losses over the contractual period in which the Company is exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the Company. The allowance for credit loss on off-balance sheet credit exposures is adjusted as a provision for credit loss expense. The estimate includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded over its estimated life. The Company uses the DCF method to estimate expected losses for all of the Company’s off-balance sheet credit exposures through the use of the existing DCF models for the Company’s loan portfolio pools. The off-balance sheet credit exposures exhibit similar risk characteristics as loans currently in the Company’s loan portfolio. During the three and six months ended June 30, 2024, the Company recorded $ 8.0 million and $ 13.5 million in provision for credit losses on loans, respectively. In addition, during the six months ended June 30, 2024, the Company recovered $ 1.0 million in provision for unfunded commitments. During 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, and the Company determined that no additional provision was necessary for unfunded commitments as the current level of the reserve was considered adequate. 21 Table of Contents The following table presents the activity in the allowance for credit losses for the three and six months ended June 30, 2024: Three Months Ended June 30, 2024 Construction/ Land Development Other Commercial Real Estate Residential Real Estate Commercial & Industrial Consumer & Other Total (In thousands) Allowance for credit losses: Beginning balance $ 35,921 $ 79,128 $ 56,903 $ 91,008 $ 27,334 $ 290,294 Loans charged off ( 80 ) ( 62 ) ( 59 ) ( 2,013 ) ( 884 ) ( 3,098 ) Recoveries of loans previously charged off 82 5 76 259 238 660 Net loans recovered (charged off) 2 ( 57 ) 17 ( 1,754 ) ( 646 ) ( 2,438 ) Provision for credit losses 22,750 7,771 ( 5,566 ) ( 19,619 ) 2,664 8,000 Balance, June 30 $ 58,673 $ 86,842 $ 51,354 $ 69,635 $ 29,352 $ 295,856 Six Months Ended June 30, 2024 Construction/ Land Development Other Commercial Real Estate Residential Real Estate Commercial & Industrial Consumer & Other Total (In thousands) Allowance for credit losses: Beginning balance $ 33,877 $ 78,635 $ 55,860 $ 92,810 $ 27,052 $ 288,234 Loans charged off ( 81 ) ( 1,164 ) ( 218 ) ( 3,759 ) ( 1,854 ) ( 7,076 ) Recoveries of loans previously charged off 89 25 95 360 629 1,198 Net loans recovered (charged off) 8 ( 1,139 ) ( 123 ) ( 3,399 ) ( 1,225 ) ( 5,878 ) Provision for credit losses 24,788 9,346 ( 4,383 ) ( 19,776 ) 3,525 13,500 Balance, June 30 $ 58,673 $ 86,842 $ 51,354 $ 69,635 $ 29,352 $ 295,856 During the second quarter of 2024, the Company implemented updated allowance for credit loss models as part of the annual model review and challenge process. In light of the current commercial real estate ("CRE") environment, the allowance calculation called for a higher level of reserves for the CRE portfolio and a corresponding reduction in reserves for the commercial and industrial portfolio. The following table presents the activity in the allowance for credit losses for the three and six months ended June 30, 2023 and the year ended December 31, 2023: Three Months Ended June 30, 2023 Construction/ Land Development Other Commercial Real Estate Residential Real Estate Commercial & Industrial Consumer & Other Total (In thousands) Allowance for credit losses: Beginning balance $ 31,172 $ 86,978 $ 51,433 $ 92,396 $ 25,190 $ 287,169 Loans charged off — — ( 30 ) ( 3,826 ) ( 870 ) ( 4,726 ) Recoveries of loans previously charged off 63 473 13 147 244 940 Net loans recovered (charged off) 63 473 ( 17 ) ( 3,679 ) ( 626 ) ( 3,786 ) Provision for credit losses 1,040 ( 2,293 ) 316 1,757 1,480 2,300 Balance, June 30 $ 32,275 $ 85,158 $ 51,732 $ 90,474 $ 26,044 $ 285,683 22 Table of Contents Six Months Ended June 30, 2023 and Year Ended December 31, 2023 Construction/ Land Development Other Commercial Real Estate Residential Real Estate Commercial & Industrial Consumer & Other Total (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 (charged off) recovered 45 419 50 ( 6,576 ) ( 1,424 ) ( 7,486 ) Provision for credit loss - loans ( 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 Loans charged off ( 238 ) ( 2,262 ) ( 180 ) ( 2,325 ) ( 2,036 ) ( 7,041 ) Recoveries of loans previously charged off 43 41 190 327 541 1,142 Net loans (charged off) recovered ( 195 ) ( 2,221 ) 10 ( 1,998 ) ( 1,495 ) ( 5,899 ) Provision for credit loss - loans 1,797 ( 4,302 ) 4,118 4,334 2,503 8,450 Balance, December 31 $ 33,877 $ 78,635 $ 55,860 $ 92,810 $ 27,052 $ 288,234 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, 2024 and December 31, 2023: June 30, 2024 Nonaccrual Nonaccrual with Reserve Loans Past Due Over 90 Days Still Accruing (In thousands) Real estate: Commercial real estate loans Non-farm/non-residential $ 35,621 $ — $ 4,387 Construction/land development 5,516 — 603 Agricultural 612 — — Residential real estate loans Residential 1-4 family 23,051 — 716 Total real estate 64,800 — 5,706 Consumer 3,908 — 10 Commercial and industrial 9,226 2,252 2,463 Agricultural & other 156 — 72 Total $ 78,090 $ 2,252 $ 8,251 23 Table of Contents December 31, 2023 Nonaccrual Nonaccrual with Reserve Loans Past Due Over 90 Days Still Accruing (In thousands) Real estate: Commercial real estate loans Non-farm/non-residential $ 13,178 $ — $ 2,177 Construction/land development 12,094 — 255 Agricultural 431 — — Residential real estate loans Residential 1-4 family 20,351 — 84 Multifamily residential — — — Total real estate 46,054 — 2,516 Consumer 3,423 — 79 Commercial and industrial 9,982 2,534 1,535 Agricultural & other 512 — — Total $ 59,971 $ 2,534 $ 4,130 The Company had $ 78.1 million and $ 60.0 million in nonaccrual loans for the periods ended June 30, 2024 and December 31, 2023, respectively. In addition, the Company had $ 8.3 million and $ 4.1 million in loans past due 90 days or more and still accruing for the periods ended June 30, 2024 and December 31, 2023, respectively. The Company had $ 2.3 million and $ 2.5 million in nonaccrual loans with a specific reserve as of June 30, 2024 and December 31, 2023, respectively. Interest income recognized on the non-accrual loans for the periods ended June 30, 2024 and June 30, 2023 was considered immaterial. 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 June 30, 2024 and December 31, 2023: June 30, 2024 Commercial Real Estate Residential Real Estate Other (In thousands) Real estate: Commercial real estate loans Non-farm/non-residential $ 45,660 $ — $ — Construction/land development 6,119 — — Agricultural 612 — — Residential real estate loans Residential 1-4 family — 25,149 — Multifamily residential — — — Total real estate 52,391 25,149 — Consumer — — 3,928 Commercial and industrial — — 13,969 Agricultural & other — — 228 Total $ 52,391 $ 25,149 $ 18,125 24 Table of Contents December 31, 2023 Commercial Real Estate Residential Real Estate Other (In thousands) Real estate: Commercial real estate loans Non-farm/non-residential $ 39,813 $ — $ — Construction/land development 12,350 — — Agricultural 431 — — Residential real estate loans Residential 1-4 family — 21,386 — Multifamily residential — — — Total real estate 52,594 21,386 — Consumer — — 3,511 Commercial and industrial — — 16,890 Agricultural & other — — 512 Total $ 52,594 $ 21,386 $ 20,913 The Company had $ 95.7 million and $ 94.9 million in impaired loans for the periods ended June 30, 2024 and December 31, 2023, respectively. Loans that do not share risk characteristics are evaluated on an individual basis. For these loans, where the Company has determined that foreclosure of the collateral is probable, or where the borrower is experiencing financial difficulty and the Company expects repayment of the financial asset to be provided substantially through the operation or sale of the collateral, the allowance for credit losses is measured based on the difference between the fair value of the collateral, net of estimated costs to sell, and the amortized cost basis of the loan as of the measurement date. When repayment is expected to be from the operation of the collateral, expected credit losses are calculated as the amount by which the amortized cost basis of the loan exceeds the present value of expected cash flows from the operation of the collateral. When repayment is expected to be from the sale of the collateral, expected credit losses are calculated as the amount by which the amortized cost basis of the loan exceeds the fair value of the underlying collateral less estimated costs to sell. 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. 25 Table of Contents The following is an aging analysis for loans receivable as of June 30, 2024 and December 31, 2023: June 30, 2024 Loans Past Due 30-59 Days Loans Past Due 60-89 Days Loans Past Due 90 Days or More Total Past Due Current Loans Total Loans Receivable Accruing Loans Past Due 90 Days or More (In thousands) Real estate: Commercial real estate loans Non-farm/non-residential $ 3,136 $ 1,268 $ 40,008 $ 44,412 $ 5,555,513 $ 5,599,925 $ 4,387 Construction/land development 237 499 6,119 6,855 2,504,962 2,511,817 603 Agricultural 352 — 612 964 344,497 345,461 — Residential real estate loans Residential 1-4 family 7,207 2,556 23,767 33,530 1,876,613 1,910,143 716 Multifamily residential 20,893 150 — 21,043 488,048 509,091 — Total real estate 31,825 4,473 70,506 106,804 10,769,633 10,876,437 5,706 Consumer 6,426 1,370 3,918 11,714 1,177,672 1,189,386 10 Commercial and industrial 3,622 413 11,689 15,724 2,226,348 2,242,072 2,463 Agricultural & other 1,331 33 228 1,592 471,970 473,562 72 Total $ 43,204 $ 6,289 $ 86,341 $ 135,834 $ 14,645,623 $ 14,781,457 $ 8,251 December 31, 2023 Loans Past Due 30-59 Days Loans Past Due 60-89 Days Loans Past Due 90 Days or More Total Past Due Current Loans Total Loans Receivable Accruing Loans Past Due 90 Days or More (In thousands) Real estate: Commercial real estate loans Non-farm/non-residential $ 8,124 $ 416 $ 15,355 $ 23,895 $ 5,526,059 $ 5,549,954 $ 2,177 Construction/land development 1,430 — 12,349 13,779 2,279,268 2,293,047 255 Agricultural 474 314 431 1,219 323,937 325,156 — Residential real estate loans Residential 1-4 family 4,346 1,423 20,435 26,204 1,818,056 1,844,260 84 Multifamily residential — — — — 435,736 435,736 — Total real estate 14,374 2,153 48,570 65,097 10,383,056 10,448,153 2,516 Consumer 1,022 303 3,502 4,827 1,148,863 1,153,690 79 Commercial and industrial 2,089 3,378 11,517 16,984 2,308,007 2,324,991 1,535 Agricultural and other 1,074 113 512 1,699 496,195 497,894 — Total $ 18,559 $ 5,947 $ 64,101 $ 88,607 $ 14,336,121 $ 14,424,728 $ 4,130 Non-accruing loans at June 30, 2024 and December 31, 2023 were $ 78.1 million and $ 60.0 million, respectively. Interest recognized on impaired loans during the three and six months ended June 30, 2024 was approximately $ 368,000 and $ 737,000 , 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. The amount of interest recognized on impaired loans on the cash basis is not materially different than the accrual basis. 26 Table of Contents Credit Quality Indicators. As part of the on-going monitoring of the credit quality of the Company’s loan portfolio, management tracks certain credit quality indicators including trends related to (i) the risk rating of loans, (ii) the level of classified loans, (iii) net charge-offs, (iv) non-performing loans and (v) the general economic conditions in Arkansas, Florida, Texas, Alabama and New York. The Company utilizes a risk rating matrix to assign a risk rating to each of its loans. Loans are rated on a scale from 1 to 8. Descriptions of the general characteristics of the 8 risk ratings are as follows: • Risk rating 1 – Excellent. Loans in this category are to persons or entities of unquestionable financial strength, a highly liquid financial position, with collateral that is liquid and well margined. These borrowers have performed without question on past obligations, and the Bank expects their performance to continue. Internally generated cash flow covers current maturities of long-term debt by a substantial margin. Loans secured by bank certificates of deposit and savings accounts, with appropriate holds placed on the accounts, are to be rated in this category. • Risk rating 2 – Good. These are loans to persons or entities with strong financial condition and above-average liquidity that have previously satisfactorily handled their obligations with the Bank. Collateral securing the Bank’s debt is margined in accordance with policy guidelines. Internally generated cash flow covers current maturities of long-term debt more than adequately. Unsecured loans to individuals supported by strong financial statements and on which repayment is satisfactory may be included in this classification. • Risk rating 3 – Satisfactory. Loans to persons or entities with an average financial condition, adequate collateral margins, adequate cash flow to service long-term debt, and net worth comprised mainly of fixed assets are included in this category. These entities are minimally profitable now, with projections indicating continued profitability into the foreseeable future. Closely held corporations or businesses where a majority of the profits are withdrawn by the owners or paid in dividends are included in this rating category. Overall, these loans are basically sound. • Risk rating 4 – Watch. Borrowers who have marginal cash flow, marginal profitability or have experienced an unprofitable year and a declining financial condition characterize these loans. The borrower has in the past satisfactorily handled debts with the Bank, but in recent months has either been late, delinquent in making payments, or made sporadic payments. While the Bank continues to be adequately secured, margins have decreased or are decreasing, despite the borrower’s continued satisfactory condition. Other characteristics of borrowers in this class include inadequate credit information, weakness of financial statement and repayment capacity, but with collateral that appears to limit exposure. • Risk rating 5 – Other Loans Especially Mentioned (“OLEM”) . A loan criticized as OLEM has potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the institution’s credit position at some future date. OLEM assets are not adversely classified and do not expose the institution to sufficient risk to warrant adverse classification. • Risk rating 6 – Substandard. A loan classified as substandard is inadequately protected by the sound worth and paying capacity of the borrower or the collateral pledged. Loss potential, while existing in the aggregate amount of substandard loans, does not have to exist in individual assets. • Risk rating 7 – Doubtful. A loan classified as doubtful has all the weaknesses inherent in a loan classified as substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. These are poor quality loans in which neither the collateral, if any, nor the financial condition of the borrower presently ensure collectability in full in a reasonable period of time; in fact, there is permanent impairment in the collateral securing the loan. • Risk rating 8 – Loss. Assets classified as loss are considered uncollectible and of such little value that the continuance as bankable assets is not warranted. This classification does not mean that the asset has absolutely no recovery or salvage value, but rather, it is not practical or desirable to defer writing off this basically worthless asset, even though partial recovery may occur in the future. This classification is based upon current facts, not probabilities. Assets classified as loss should be charged-off in the period in which they became uncollectible. The Company’s classified loans include loans in risk ratings 6, 7 and 8. Loans may be classified, but not considered collateral dependent, due to one of the following reasons: (1) The Company has established minimum dollar amount thresholds for credit loss testing. All loans over $ 2.0 million that are rated 5 – 8 are individually assessed for credit losses on a quarterly basis. Loans rated 5 – 8 that fall under the threshold amount are not individually tested for credit losses and therefore are not included in collateral dependent loans; (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. 27 Table of Contents Based on the most recent analysis performed, the risk category of loans by class of loans as of June 30, 2024 and December 31, 2023 is as follows: June 30, 2024 Term Loans Amortized Cost Basis by Origination Year 2024 2023 2022 2021 2020 Prior Revolving Loans Amortized Cost Basis Total (In thousands) Real estate: Commercial real estate loans Non-farm/non-residential Risk rating 1 $ — $ — $ — $ — $ — $ 337 $ 100 $ 437 Risk rating 2 — — — — — 107 — 107 Risk rating 3 159,400 333,618 586,086 571,400 234,210 1,062,803 251,992 3,199,509 Risk rating 4 86,980 162,414 407,638 266,750 149,629 706,573 343,145 2,123,129 Risk rating 5 — — — 10,006 — 23,751 320 34,077 Risk rating 6 — — 8,167 1,330 24,000 209,074 95 242,666 Risk rating 7 — — — — — — — — Risk rating 8 — — — — — — — — Total non-farm/non-residential 246,380 496,032 1,001,891 849,486 407,839 2,002,645 595,652 5,599,925 Construction/land development Risk rating 1 $ — $ — $ — $ 10 $ — $ — $ — $ 10 Risk rating 2 — 137 — — — 172 — 309 Risk rating 3 248,129 376,645 440,356 97,052 48,293 69,645 55,009 1,335,129 Risk rating 4 67,335 182,148 502,703 178,296 11,237 23,070 204,026 1,168,815 Risk rating 5 — 629 — — — — — 629 Risk rating 6 — 74 2,624 1,340 896 976 943 6,853 Risk rating 7 — — — — — — — — Risk rating 8 — — — 72 — — — 72 Total construction/land development 315,464 559,633 945,683 276,770 60,426 93,863 259,978 2,511,817 Agricultural Risk rating 1 $ 700 $ — $ 1,514 $ — $ — $ — $ — $ 2,214 Risk rating 2 280 — — 1,881 — — — 2,161 Risk rating 3 25,657 244 41,696 19,434 23,432 47,780 26,501 184,744 Risk rating 4 10,015 35,580 22,759 17,951 13,272 38,084 4,640 142,301 Risk rating 5 — 9,364 — — — 571 — 9,935 Risk rating 6 — — — 1,621 1,084 1,401 — 4,106 Risk rating 7 — — — — — — — — Risk rating 8 — — — — — — — — Total agricultural 36,652 45,188 65,969 40,887 37,788 87,836 31,141 345,461 Total commercial real estate loans $ 598,496 $ 1,100,853 $ 2,013,543 $ 1,167,143 $ 506,053 $ 2,184,344 $ 886,771 $ 8,457,203 Residential real estate loans Residential 1-4 family Risk rating 1 $ — $ — $ — $ — $ — $ 94 $ 2 $ 96 Risk rating 2 — 243 — — — 12 6 261 Risk rating 3 121,211 223,643 379,047 238,461 137,141 379,860 122,666 1,602,029 Risk rating 4 6,082 19,129 43,260 26,204 20,053 74,332 80,322 269,382 Risk rating 5 — 1,018 999 148 534 1,057 778 4,534 Risk rating 6 — 1,456 7,359 3,561 4,390 16,302 771 33,839 Risk rating 7 — — — — — — — — Risk rating 8 — — — — — 2 — 2 Total residential 1-4 family 127,293 245,489 430,665 268,374 162,118 471,659 204,545 1,910,143 28 Table of Contents June 30, 2024 Term Loans Amortized Cost Basis by Origination Year 2024 2023 2022 2021 2020 Prior Revolving Loans Amortized Cost Basis Total (In thousands) Multifamily residential Risk rating 1 $ — $ — $ — $ — $ — $ — $ — $ — Risk rating 2 — — — — — — — — Risk rating 3 56,867 3,289 20,471 37,276 42,392 79,577 6,997 246,869 Risk rating 4 — 693 127,076 37,964 59,143 22,109 14,845 261,830 Risk rating 5 — — — — — — — — Risk rating 6 — — 150 — — 242 — 392 Risk rating 7 — — — — — — — — Risk rating 8 — — — — — — — — Total multifamily residential 56,867 3,982 147,697 75,240 101,535 101,928 21,842 509,091 Total real estate $ 782,656 $ 1,350,324 $ 2,591,905 $ 1,510,757 $ 769,706 $ 2,757,931 $ 1,113,158 $ 10,876,437 Consumer Risk rating 1 $ 3,316 $ 3,156 $ 2,208 $ 1,597 $ 711 $ 1,152 $ 1,412 $ 13,552 Risk rating 2 — — — — — 160 — 160 Risk rating 3 135,047 216,100 228,339 191,597 97,199 270,424 1,169 1,139,875 Risk rating 4 2,241 7,435 7,726 836 32 5,622 200 24,092 Risk rating 5 — 5,058 5 222 158 1,290 — 6,733 Risk rating 6 8 270 1,470 374 693 2,117 25 4,957 Risk rating 7 — 11 — — — — — 11 Risk rating 8 — — — 6 — — — 6 Total consumer 140,612 232,030 239,748 194,632 98,793 280,765 2,806 1,189,386 Commercial and industrial Risk rating 1 $ 2,809 $ 1,653 $ 825 $ 723 $ 225 $ 21,356 $ 10,686 $ 38,277 Risk rating 2 50 146 1,148 197 7 21 1,434 3,003 Risk rating 3 51,250 529,271 247,437 67,550 55,698 215,339 233,385 1,399,930 Risk rating 4 59,084 32,995 32,387 43,482 19,359 71,144 377,237 635,688 Risk rating 5 — 73 229 15,677 3,394 — 1,320 20,693 Risk rating 6 23 12,313 71,800 5,582 568 13,922 40,234 144,442 Risk rating 7 — — — — — 1 — 1 Risk rating 8 — 1 — — — 37 — 38 Total commercial and industrial 113,216 576,452 353,826 133,211 79,251 321,820 664,296 2,242,072 Agricultural and other Risk rating 1 $ 818 $ 397 $ 120 $ 16 $ 105 $ — $ 532 $ 1,988 Risk rating 2 340 306 28 — — 1,181 810 2,665 Risk rating 3 35,973 51,607 39,854 29,392 24,999 40,000 135,539 357,364 Risk rating 4 11,999 6,638 9,705 6,137 592 13,637 61,035 109,743 Risk rating 5 — — 312 46 61 593 175 1,187 Risk rating 6 — 4 28 — 97 357 129 615 Risk rating 7 — — — — — — — — Risk rating 8 — — — — — — — — Total agricultural and other 49,130 58,952 50,047 35,591 25,854 55,768 198,220 473,562 Total $ 1,085,614 $ 2,217,758 $ 3,235,526 $ 1,874,191 $ 973,604 $ 3,416,284 $ 1,978,480 $ 14,781,457 29 Table of Contents December 31, 2023 Term Loans Amortized Cost Basis by Origination Year 2023 2022 2021 2020 2019 Prior Revolving Loans Amortized Cost Basis Total (In thousands) Real estate: Commercial real estate loans Non-farm/non-residential Risk rating 1 $ — $ — $ — $ — $ 232 $ 116 $ 55 $ 403 Risk rating 2 — — — — 111 — — 111 Risk rating 3 305,742 584,860 568,413 243,177 216,746 934,111 440,414 3,293,463 Risk rating 4 83,089 557,540 242,217 224,378 149,258 590,864 95,360 1,942,706 Risk rating 5 — — 10,000 — 14,095 42,694 758 67,547 Risk rating 6 — 8,198 9,958 23,743 24,380 179,350 95 245,724 Risk rating 7 — — — — — — — — Risk rating 8 — — — — — — — — Total non-farm/non-residential 388,831 1,150,598 830,588 491,298 404,822 1,747,135 536,682 5,549,954 Construction/land development Risk rating 1 $ — $ — $ 10 $ — $ — $ — $ — $ 10 Risk rating 2 759 — — — — 186 — 945 Risk rating 3 300,941 499,984 130,342 62,134 22,656 56,180 44,603 1,116,840 Risk rating 4 198,874 417,244 252,602 22,713 32,342 24,527 209,063 1,157,365 Risk rating 5 641 1,163 — 3,306 218 69 — 5,397 Risk rating 6 — 7,817 1,631 748 641 254 1,327 12,418 Risk rating 7 — — — — — — — — Risk rating 8 — — 72 — — — — 72 Total construction/land development 501,215 926,208 384,657 88,901 55,857 81,216 254,993 2,293,047 Agricultural Risk rating 1 $ — $ 1,605 $ — $ — $ — $ — $ — $ 1,605 Risk rating 2 247 — 1,936 — — — — 2,183 Risk rating 3 30,252 43,291 22,919 25,992 10,678 43,284 20,104 196,520 Risk rating 4 9,477 24,688 20,358 19,532 7,873 32,692 4,612 119,232 Risk rating 5 — — — — 314 571 — 885 Risk rating 6 — — 1,675 1,084 1,620 352 — 4,731 Risk rating 7 — — — — — — — — Risk rating 8 — — — — — — — — Total agricultural 39,976 69,584 46,888 46,608 20,485 76,899 24,716 325,156 Total commercial real estate loans $ 930,022 $ 2,146,390 $ 1,262,133 $ 626,807 $ 481,164 $ 1,905,250 $ 816,391 $ 8,168,157 Residential real estate loans Residential 1-4 family Risk rating 1 $ — $ — $ — $ — $ — $ 144 $ 2 $ 146 Risk rating 2 259 — — — — 20 1 280 Risk rating 3 246,462 366,149 241,985 145,339 93,751 324,569 122,950 1,541,205 Risk rating 4 14,992 37,444 55,406 21,240 13,313 67,084 62,356 271,835 Risk rating 5 — 243 246 479 831 1,343 40 3,182 Risk rating 6 71 5,361 2,926 4,064 3,432 10,567 1,189 27,610 Risk rating 7 — — — — — — — — Risk rating 8 — — — — — 2 — 2 Total residential 1-4 family 261,784 409,197 300,563 171,122 111,327 403,729 186,538 1,844,260 30 Table of Contents December 31, 2023 Term Loans Amortized Cost Basis by Origination Year 2023 2022 2021 2020 2019 Prior Revolving Loans Amortized Cost Basis Total (In thousands) Multifamily residential Risk rating 1 $ — $ — $ — $ — $ — $ — $ — $ — Risk rating 2 — — — — — — — — Risk rating 3 3,314 9,827 37,755 44,407 31,436 53,068 6,537 186,344 Risk rating 4 669 77,185 69,546 64,295 8,116 18,490 7,822 246,123 Risk rating 5 — — — — — 3,006 — 3,006 Risk rating 6 — — — — 263 — — 263 Risk rating 7 — — — — — — — — Risk rating 8 — — — — — — — — Total multifamily residential 3,983 87,012 107,301 108,702 39,815 74,564 14,359 435,736 Total real estate $ 1,195,789 $ 2,642,599 $ 1,669,997 $ 906,631 $ 632,306 $ 2,383,543 $ 1,017,288 $ 10,448,153 Consumer Risk rating 1 $ 5,195 $ 2,952 $ 2,002 $ 839 $ 355 $ 1,114 $ 1,580 $ 14,037 Risk rating 2 — — — — 126 54 — 180 Risk rating 3 240,897 245,543 211,312 108,009 108,063 191,220 1,264 1,106,308 Risk rating 4 9,597 7,534 2,479 69 109 6,073 214 26,075 Risk rating 5 22 — 22 483 872 261 — 1,660 Risk rating 6 204 1,559 830 581 881 1,349 11 5,415 Risk rating 7 15 — — — — — — 15 Risk rating 8 — — — — — — — — Total consumer 255,930 257,588 216,645 109,981 110,406 200,071 3,069 1,153,690 Commercial and industrial Risk rating 1 $ 3,757 $ 918 $ 1,120 $ 236 $ 121 $ 20,835 $ 12,644 $ 39,631 Risk rating 2 174 1,293 220 12 164 218 963 3,044 Risk rating 3 487,896 272,608 78,507 50,340 77,761 170,610 227,043 1,364,765 Risk rating 4 115,025 34,474 55,812 33,000 27,189 71,854 378,417 715,771 Risk rating 5 21 547 16,318 3,352 201 980 1,767 23,186 Risk rating 6 12,498 75,536 4,942 1,154 9,086 12,180 63,198 178,594 Risk rating 7 — — — — — — — — Risk rating 8 — — — — — — — — Total commercial and industrial 619,371 385,376 156,919 88,094 114,522 276,677 684,032 2,324,991 Agricultural and other Risk rating 1 $ 408 $ 131 $ 16 $ 105 $ — $ 2 $ 563 $ 1,225 Risk rating 2 396 28 1 — 1,181 100 693 2,399 Risk rating 3 52,758 45,796 31,378 26,918 3,059 43,984 145,419 349,312 Risk rating 4 14,007 7,663 8,025 955 10,955 3,188 94,186 138,979 Risk rating 5 — 2,286 — 134 — 593 665 3,678 Risk rating 6 71 33 63 108 — 370 1,656 2,301 Risk rating 7 — — — — — — — — Risk rating 8 — — — — — — — — Total agricultural and other 67,640 55,937 39,483 28,220 15,195 48,237 243,182 497,894 Total $ 2,138,730 $ 3,341,500 $ 2,083,044 $ 1,132,926 $ 872,429 $ 2,908,528 $ 1,947,571 $ 14,424,728 31 Table of Contents The following table presents gross write-offs by origination date as of June 30, 2024 and December 31, 2023. June 30, 2024 Gross Loan Write-Offs by Origination Year 2024 2023 2022 2021 2020 Prior Revolving Loans Amortized Cost Basis Total (In thousands) Real estate Commercial real estate loans Non-farm/non-residential $ — $ — $ — $ 780 $ 1 $ 383 $ — $ 1,164 Construction/land development — — — 48 1 32 — 81 Agricultural — — — — — — — — Residential real estate loans Residential 1-4 family — 1 101 — 26 90 — 218 Total real estate — 1 101 828 28 505 — 1,463 Consumer 4 57 56 36 105 139 — 397 Commercial and industrial — 557 71 258 5 102 2,766 3,759 Agricultural & other 1,386 * 71 — — — — — 1,457 Total $ 1,390 $ 686 $ 228 $ 1,122 $ 138 $ 746 $ 2,766 $ 7,076 *The 2024 write-off consists entirely of overdrafts. December 31, 2023 Gross Loan Write-Offs by Origination Year 2023 2022 2021 2020 2019 Prior Revolving Loans Amortized Cost Basis Total (In thousands) Real estate Commercial real estate loans Non-farm/non-residential $ — $ — $ — $ — $ 1,826 $ 502 $ — $ 2,328 Construction/land development — 2 168 5 — 88 — 263 Agricultural — — — — 1 6 — 7 Residential real estate loans Residential 1-4 family — 29 28 73 13 126 — 269 Total real estate — 31 196 78 1,840 722 — 2,867 Consumer — 51 44 98 63 263 25 544 Commercial and industrial — 407 1,110 894 911 5,369 466 9,157 Agricultural & other 3,252 ** 1 1 2 64 3 164 3,487 Total $ 3,252 $ 490 $ 1,351 $ 1,072 $ 2,878 $ 6,357 $ 655 $ 16,055 **The 2023 write-offs consist entirely of overdrafts. 32 Table of Contents The Company considers the performance of the loan portfolio and its impact on the allowance for credit losses. 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 June 30, 2024 and December 31, 2023. June 30, 2024 Term Loans Amortized Cost Basis by Origination Year 2024 2023 2022 2021 2020 Prior Revolving Loans Amortized Cost Basis Total (In thousands) Real estate: Commercial real estate loans Non-farm/non-residential Performing $ 246,380 $ 496,032 $ 1,001,833 $ 848,885 $ 406,448 $ 1,959,115 $ 595,572 $ 5,554,265 Non-performing — — 58 601 1,391 43,530 80 45,660 Total non-farm/non-residential 246,380 496,032 1,001,891 849,486 407,839 2,002,645 595,652 5,599,925 Construction/land development Performing $ 315,464 $ 559,633 $ 943,476 $ 275,358 $ 59,649 $ 93,082 $ 259,036 $ 2,505,698 Non-performing — — 2,207 1,412 777 781 942 6,119 Total construction/ land development 315,464 559,633 945,683 276,770 60,426 93,863 259,978 2,511,817 Agricultural Performing $ 36,652 $ 45,188 $ 65,969 $ 40,821 $ 37,788 $ 87,290 $ 31,141 $ 344,849 Non-performing — — — 66 — 546 — 612 Total agricultural 36,652 45,188 65,969 40,887 37,788 87,836 31,141 345,461 Total commercial real estate loans $ 598,496 $ 1,100,853 $ 2,013,543 $ 1,167,143 $ 506,053 $ 2,184,344 $ 886,771 $ 8,457,203 Residential real estate loans Residential 1-4 family Performing $ 127,293 $ 244,414 $ 426,495 $ 264,868 $ 158,533 $ 459,240 $ 204,151 $ 1,884,994 Non-performing — 1,075 4,170 3,506 3,585 12,419 394 25,149 Total residential 1-4 family 127,293 245,489 430,665 268,374 162,118 471,659 204,545 1,910,143 Multifamily residential Performing $ 56,867 $ 3,982 $ 147,697 $ 75,240 $ 101,535 $ 101,928 $ 21,842 $ 509,091 Non-performing — — — — — — — — Total multifamily residential 56,867 3,982 147,697 75,240 101,535 101,928 21,842 509,091 Total real estate $ 782,656 $ 1,350,324 $ 2,591,905 $ 1,510,757 $ 769,706 $ 2,757,931 $ 1,113,158 $ 10,876,437 Consumer Performing $ 140,604 $ 231,803 $ 239,118 $ 194,331 $ 98,132 $ 278,684 $ 2,786 $ 1,185,458 Non-performing 8 227 630 301 661 2,081 20 3,928 Total consumer 140,612 232,030 239,748 194,632 98,793 280,765 2,806 1,189,386 Commercial and industrial Performing $ 113,216 $ 573,528 $ 350,689 $ 132,118 $ 78,770 $ 316,636 $ 663,146 $ 2,228,103 Non-performing — 2,924 3,137 1,093 481 5,184 1,150 13,969 Total commercial and industrial 113,216 576,452 353,826 133,211 79,251 321,820 664,296 2,242,072 Agricultural and other Performing $ 49,130 $ 58,948 $ 50,019 $ 35,545 $ 25,854 $ 55,739 $ 198,099 $ 473,334 Non-performing — 4 28 46 — 29 121 228 Total agricultural and other 49,130 58,952 50,047 35,591 25,854 55,768 198,220 473,562 Total $ 1,085,614 $ 2,217,758 $ 3,235,526 $ 1,874,191 $ 973,604 $ 3,416,284 $ 1,978,480 $ 14,781,457 33 Table of Contents December 31, 2023 Term Loans Amortized Cost Basis by Origination Year 2023 2022 2021 2020 2019 Prior Revolving Loans Amortized Cost Basis Total (In thousands) Real estate: Commercial real estate loans Non-farm/non-residential Performing $ 388,831 $ 1,150,598 $ 821,373 $ 490,153 $ 404,061 $ 1,718,776 $ 536,349 $ 5,510,141 Non-performing — — 9,215 1,145 761 28,359 333 39,813 Total non-farm/non-residential 388,831 1,150,598 830,588 491,298 404,822 1,747,135 536,682 5,549,954 Construction/land development Performing $ 501,215 $ 918,390 $ 382,954 $ 88,204 $ 55,239 $ 81,028 $ 253,667 $ 2,280,697 Non-performing — 7,818 1,703 697 618 188 1,326 12,350 Total construction/land development 501,215 926,208 384,657 88,901 55,857 81,216 254,993 2,293,047 Agricultural Performing $ 39,976 $ 69,584 $ 46,809 $ 46,608 $ 20,485 $ 76,547 $ 24,716 $ 324,725 Non-performing — — 79 — — 352 — 431 Total agricultural 39,976 69,584 46,888 46,608 20,485 76,899 24,716 325,156 Total commercial real estate loans $ 930,022 $ 2,146,390 $ 1,262,133 $ 626,807 $ 481,164 $ 1,905,250 $ 816,391 $ 8,168,157 Residential real estate loans Residential 1-4 family Performing $ 261,784 $ 405,239 $ 298,207 $ 167,475 $ 108,091 $ 396,130 $ 185,948 $ 1,822,874 Non-performing — 3,958 2,356 3,647 3,236 7,599 590 21,386 Total residential 1-4 family 261,784 409,197 300,563 171,122 111,327 403,729 186,538 1,844,260 Multifamily residential Performing $ 3,983 $ 87,012 $ 107,301 $ 108,702 $ 39,815 $ 74,564 $ 14,359 $ 435,736 Non-performing — — — — — — — — Total multifamily residential 3,983 87,012 107,301 108,702 39,815 74,564 14,359 435,736 Total real estate $ 1,195,789 $ 2,642,599 $ 1,669,997 $ 906,631 $ 632,306 $ 2,383,543 $ 1,017,288 $ 10,448,153 Consumer Performing $ 255,771 $ 256,826 $ 215,831 $ 109,442 $ 110,267 $ 198,982 $ 3,060 $ 1,150,179 Non-performing 159 762 814 539 139 1,089 9 3,511 Total consumer 255,930 257,588 216,645 109,981 110,406 200,071 3,069 1,153,690 Commercial and industrial Performing $ 616,809 $ 382,190 $ 156,056 $ 87,531 $ 111,529 $ 273,434 $ 680,552 $ 2,308,101 Non-performing 2,562 3,186 863 563 2,993 3,243 3,480 16,890 Total commercial and industrial 619,371 385,376 156,919 88,094 114,522 276,677 684,032 2,324,991 Agricultural and other Performing $ 67,569 $ 55,904 $ 39,473 $ 28,220 $ 15,195 $ 48,203 $ 242,818 $ 497,382 Non-performing 71 33 10 — — 34 364 512 Total agricultural and other 67,640 55,937 39,483 28,220 15,195 48,237 243,182 497,894 Total $ 2,138,730 $ 3,341,500 $ 2,083,044 $ 1,132,926 $ 872,429 $ 2,908,528 $ 1,947,571 $ 14,424,728 The Company had approximately $ 27.3 million or 114 total revolving loans convert to term loans for the six months ended June 30, 2024 compared to $ 21.8 million or 120 total revolving loans convert to term loans for the six months ended June 30, 2023. These loans were considered immaterial for vintage disclosure inclusion. 34 Table of Contents The following table presents the amortized cost basis of modified loans to borrowers experiencing financial difficulty by class and modification type at June 30, 2024 and December 31, 2023. The percentage of the amortized cost basis of loans that were modified to borrowers in financial distress as compared to the amortized cost basis of each class of financing receivable is also presented below. June 30, 2024 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- Modification Outstanding Balance Percentage of Total Class of Loans Receivable (In thousands) Real estate: Commercial real estate loans Non-farm/non-residential $ 391 $ — $ — $ 1,363 $ 344 $ — $ 16,023 $ — $ 18,121 0.32 % Construction/land development — — — 117 — — — — 117 — Residential real estate loans Residential 1-4 family 940 975 104 23 627 — — 118 2,787 0.15 Total real estate 1,331 975 104 1,503 971 — 16,023 118 21,025 0.19 Consumer 6 11 — 10 — 3 — — 30 — Commercial and industrial 2,282 — — 1,042 74 — — — 3,398 0.15 Total $ 3,619 $ 986 $ 104 $ 2,555 $ 1,045 $ 3 $ 16,023 $ 118 $ 24,453 0.17 % December 31, 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- Modification Outstanding Balance Percentage of Total Class of Loans Receivable (In thousands) Real estate: Commercial real estate loans Non-farm/non-residential $ 398 $ — $ — $ 1,537 $ 348 $ — $ 16,023 $ — $ 18,306 0.33 % Construction/land development — — — 149 — — — — 149 0.01 Residential real estate loans Residential 1-4 family 560 598 106 59 516 — — 116 1,955 0.11 Total real estate 958 598 106 1,745 864 — 16,023 116 20,410 0.20 Consumer 14 — 1 10 — 5 — — 30 — Commercial and industrial 2,253 38 42 1,763 74 — — — 4,170 0.18 Total $ 3,225 $ 636 $ 149 $ 3,518 $ 938 $ 5 $ 16,023 $ 116 $ 24,610 0.17 % During the six months ended June 30, 2024, the Company restructured approximately $ 1.0 million in loans to 8 borrowers. The ending balance of these loans as of June 30, 2024, was $ 968,000 . 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 six months ended June 30, 2024 and June 30, 2023 as well as the unadvanced balances to these borrowers immaterial for tabular disclosure inclusion. 35 Table of Contents The following table presents the amortized cost basis of loans that had a payment default during the six months ended June 30, 2024 and were modified in the twelve months prior to that default to borrowers experiencing financial difficulty. June 30, 2024 Term Extension Interest Rate Reduction Interest Only Combination Interest Rate Reduction and Term Extension (Dollars in thousands) Real estate Commercial real estate loans Non-farm/non-residential $ — $ — $ — $ — Residential real estate loans Residential 1-4 family 255 518 — 413 Total real estate 255 518 — 413 Consumer 6 11 — — Commercial and industrial — — 28 — Total $ 261 $ 529 $ 28 $ 413 The Company closely monitors the performance of the loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. The Company has modified 16 loans over the past 12 months to borrowers experiencing financial difficulty. The pre-modification balance of the loans was $ 2.1 million, and the ending balance as of June 30, 2024 was $ 3.9 million. The $ 3.9 million balance consists of $ 1.2 million of non-accrual loans and $ 2.7 million of current loans, of which $ 77,000 were 30-59 days past due. The remaining balance of the loans was current as of June 30, 2024. 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. Therefore, the amortized cost basis of the loan is reduced by the uncollectible amount and the allowance for credit losses on loans is adjusted by the same amount. The defaults impact the loss rate by applicable loan pool for the quarterly CECL calculation. For individually analyzed loans which are not considered to be collateral dependent, an allowance is recorded based on the loss rate for the respective pool within the collective evaluation. The following is a presentation of total foreclosed assets as of June 30, 2024 and December 31, 2023: June 30, 2024 December 31, 2023 (In thousands) Commercial real estate loans Non-farm/non-residential $ 29,824 $ 29,894 Construction/land development 10,882 47 Residential real estate loans Residential 1-4 family 641 545 Total foreclosed assets held for sale $ 41,347 $ 30,486 6. 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 June 30, 2024 and December 31, 2023, were as follows: June 30, 2024 December 31, 2023 (In thousands) Goodwill Balance, beginning of period $ 1,398,253 $ 1,398,253 Balance, end of period $ 1,398,253 $ 1,398,253 36 Table of Contents June 30, 2024 December 31, 2023 (In thousands) Core Deposit Intangibles Balance, beginning of period $ 48,770 $ 58,455 Amortization expense ( 4,280 ) ( 4,955 ) Balance, June 30 $ 44,490 53,500 Amortization expense ( 4,730 ) Balance, end of year $ 48,770 The carrying basis and accumulated amortization of core deposit intangibles at June 30, 2024 and December 31, 2023 were : June 30, 2024 December 31, 2023 (In thousands) Gross carrying basis $ 128,888 $ 128,888 Accumulated amortization ( 84,398 ) ( 80,118 ) Net carrying amount $ 44,490 $ 48,770 Core deposit intangible amortization expense was approximately $ 2.1 million and $ 2.5 million for the three months ended June 30, 2024 and 2023, respectively. Core deposit intangible amortization expense was approximately $ 4.3 million and $ 5.0 million for the six months ended June 30, 2024 and 2023, respectively. The Company’s estimated amortization expense of core deposits intangibles for each of the years 2024 through 2028 is approximately: 2024 – $ 8.4 million; 2025 – $ 8.0 million; 2026 – $ 7.8 million; 2027– $ 6.6 million; 2028 – $ 4.2 million. The carrying amount of the Company’s goodwill was $ 1.40 billion at both June 30, 2024 and December 31, 2023. Goodwill is tested annually for impairment during the fourth quarter or more often if events and circumstances indicate there may be an impairment. During the 2023 review, no impairment was found. If the implied fair value of goodwill is lower than its carrying amount, goodwill impairment is indicated, and goodwill is written down to its implied fair value. Subsequent increases in goodwill value are not recognized in the consolidated financial statements. 7. Other Assets Other assets consist primarily of equity securities without a readily determinable fair value and other miscellaneous assets. As of June 30, 2024 and December 31, 2023, other assets were $ 350.2 million and $ 323.6 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 $ 134.7 million and $ 133.4 million at June 30, 2024 and December 31, 2023, 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 $ 92.3 million and $ 90.3 million at June 30, 2024 and December 31, 2023, respectively. There were no transactions during the period that would indicate a material change in fair value. 8. Deposits The aggregate amount of time deposits with a minimum denomination of $250,000 was $ 869.9 million and $ 836.7 million at June 30, 2024 and December 31, 2023, respectively. The aggregate amount of time deposits with a minimum denomination of $100,000 was $ 1.13 billion and $ 1.09 billion at June 30, 2024 and December 31, 2023, respectively. Interest expense applicable to certificates in excess of $100,000 totaled $ 12.2 million and $ 5.2 million for the three months ended June 30, 2024 and 2023, respectively. Interest expense applicable to certificates in excess of $100,000 totaled $ 23.8 million and $ 8.2 million for the six months ended June 30, 2024 and 2023, respectively. As of June 30, 2024 and December 31, 2023, brokered deposits were $ 407.3 million and $ 401.0 million, respectively. Deposits totaling approximately $ 2.94 billion and $ 3.05 billion at June 30, 2024 and December 31, 2023, respectively, were public funds obtained primarily from state and political subdivisions in the United States. 37 Table of Contents 9. Securities Sold Under Agreements to Repurchase At June 30, 2024 and December 31, 2023, securities sold under agreements to repurchase totaled $ 138.0 million and $ 142.1 million, respectively. For the three-month periods ended June 30, 2024 and 2023, securities sold under agreements to repurchase daily weighted-average totaled $ 159.9 million and $ 144.0 million, respectively. For the six-month periods ended June 30, 2024 and 2023, securities sold under agreements to repurchase daily weighted-average totaled $ 166.0 million and $ 139.5 million, respectively. The remaining contractual maturity of securities sold under agreements to repurchase in the consolidated balance sheets as of June 30, 2024 and December 31, 2023 is presented in the following table: June 30, 2024 December 31, 2023 Overnight and Continuous Total Overnight and Continuous Total (In thousands) Securities sold under agreements to repurchase: Mortgage-backed securities $ 12,421 $ 12,421 $ — $ — Other securities 125,575 125,575 142,085 142,085 Total borrowings $ 137,996 $ 137,996 $ 142,085 $ 142,085 10. FHLB and Other Borrowed Funds The Company’s FHLB borrowed funds, which are secured by our loan portfolio, were $ 600.0 million at both June 30, 2024 and December 31, 2023. At June 30, 2024 and December 31, 2023, the entire $ 600.0 million of the outstanding balances were classified as long-term advances. The FHLB advances mature from 2025 to 2037 with fixed interest rates ranging from 3.37 % to 4.84 %. 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. Other borrowed funds were $ 701.1 million as of June 30, 2024 and were classified as short-term advances. The Company had $ 701.3 million in other borrowed funds as of December 31, 2023. As of both June 30, 2024 and December 31, 2023, the Company had drawn $ 700.0 million from the Bank Term Funding Program in the ordinary course of business, and these advances mature on January 16, 2025. Additionally, the Company had $ 1.26 billion and $ 1.33 billion at June 30, 2024 and December 31, 2023, respectively, in letters of credit under a FHLB blanket borrowing line of credit, which are used to collateralize public deposits. 11. Subordinated Debentures Subordinated debentures at June 30, 2024 and December 31, 2023 consisted of the following components: As of June 30, 2024 As of December 31, 2023 (In thousands) Subordinated debt securities Subordinated notes, net of issuance costs, issued in 2020, due 2030, fixed rate of 5.50 % during the first five years and at a floating rate of 534.5 basis points above the then three-month SOFR rate, reset quarterly, thereafter, callable in 2025 without penalty $ 141,428 $ 142,084 Subordinated notes, net of issuance costs, issued in 2022, due 2032, fixed rate of 3.125 % during the first five years and at a floating rate of 182 basis points above the then three-month SOFR rate, reset quarterly, thereafter, callable in 2027 without penalty 298,114 297,750 Total $ 439,542 $ 439,834 38 Table of Contents Subordinated Debt Securities . On April 1, 2022, the Company acquired $ 140.0 million in aggregate principal amount of 5.500 % Fixed-to-Floating Rate Subordinated Notes due 2030 (the “2030 Notes”) from Happy, and the Company recorded approximately $ 144.4 million which included fair value adjustments. The 2030 Notes are unsecured, subordinated debt obligations of the Company and will mature on July 31, 2030. From and including the date of issuance to, but excluding July 31, 2025 or the date of earlier redemption, the 2030 Notes will bear interest at an initial rate of 5.50 % per annum, payable in arrears on January 31 and July 31 of each year. From and including July 31, 2025 to, but excluding, the maturity date or earlier redemption, the 2030 Notes will bear interest at a floating rate equal to the Benchmark rate (which is expected to be 3-month Secured Overnight Funding Rate (SOFR)), each as defined in and subject to the provisions of the applicable supplemental indenture for the 2030 Notes, plus 5.345 %, payable quarterly in arrears on January 31, April 30, July 31, and October 31 of each year, commencing on October 31, 2025. The Company may, beginning with the interest payment date of July 31, 2025, and on any interest payment date thereafter, redeem the 2030 Notes, in whole or in part, subject to prior approval of the Federal Reserve if then required, at a redemption price equal to 100 % of the principal amount of the 2030 Notes to be redeemed plus accrued and unpaid interest to but excluding the date of redemption. The Company may also redeem the 2030 Notes at any time, including prior to July 31, 2025, at the Company’s option, in whole but not in part, subject to prior approval of the Federal Reserve if then required, if certain events occur that could impact the Company’s ability to deduct interest payable on the 2030 Notes for U.S. federal income tax purposes or preclude the 2030 Notes from being recognized as Tier 2 capital for regulatory capital purposes, or if the Company is required to register as an investment company under the Investment Company Act of 1940, as amended. In each case, the redemption would be at a redemption price equal to 100 % of the principal amount of the 2030 Notes plus any accrued and unpaid interest to, but excluding, the redemption date. On January 18, 2022, the Company completed an underwritten public offering of $ 300.0 million in aggregate principal amount of its 3.125 % Fixed-to-Floating Rate Subordinated Notes due 2032 (the “2032 Notes”) for net proceeds, after underwriting discounts and issuance costs of approximately $ 296.4 million. The 2032 Notes are unsecured, subordinated debt obligations of the Company and will mature on January 30, 2032. From and including the date of issuance to, but excluding January 30, 2027 or the date of earlier redemption, the 2032 Notes will bear interest at an initial rate of 3.125 % per annum, payable in arrears on January 30 and July 30 of each year. From and including January 30, 2027 to, but excluding, the maturity date or earlier redemption, the 2032 Notes will bear interest at a floating rate equal to the Benchmark rate (which is expected to be Three-Month Term SOFR), each as defined in and subject to the provisions of the applicable supplemental indenture for the 2032 Notes, plus 182 basis points, payable quarterly in arrears on January 30, April 30, July 30, and October 30 of each year, commencing on April 30, 2027. The Company may, beginning with the interest payment date of January 30, 2027, and on any interest payment date thereafter, redeem the 2032 Notes, in whole or in part, subject to prior approval of the Federal Reserve if then required, at a redemption price equal to 100 % of the principal amount of the 2032 Notes to be redeemed plus accrued and unpaid interest to but excluding the date of redemption. The Company may also redeem the 2032 Notes at any time, including prior to January 30, 2027, at the Company’s option, in whole but not in part, subject to prior approval of the Federal Reserve if then required, if certain events occur that could impact the Company’s ability to deduct interest payable on the 2032 Notes for U.S. federal income tax purposes or preclude the 2032 Notes from being recognized as Tier 2 capital for regulatory capital purposes, or if the Company is required to register as an investment company under the Investment Company Act of 1940, as amended. 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. 39 Table of Contents 12. Income Taxes The following is a summary of the components of the provision for income taxes for the three and six months ended June 30, 2024 and 2023: For the Three Months Ended June 30, For the Six Months Ended June 30, 2024 2023 2024 2023 (In thousands) Current: Federal $ 24,769 $ 27,458 $ 48,626 $ 52,197 State 5,042 5,590 9,899 10,627 Total current 29,811 33,048 58,525 62,824 Deferred: Federal 1,720 ( 1,190 ) 3,024 ( 1,043 ) State 350 ( 242 ) 616 ( 212 ) Total deferred 2,070 ( 1,432 ) 3,640 ( 1,255 ) Income tax expense $ 31,881 $ 31,616 $ 62,165 $ 61,569 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, 2024 and 2023: Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Statutory federal income tax rate 21.00 % 21.00 % 21.00 % 21.00 % Effect of non-taxable interest income ( 1.24 ) ( 0.70 ) ( 0.84 ) ( 0.74 ) Stock compensation 0.78 0.18 0.56 0.28 State income taxes, net of federal benefit 2.47 2.70 2.64 2.60 Executive officer compensation & other 0.89 ( 0.08 ) 0.20 ( 0.32 ) Effective income tax rate 23.90 % 23.10 % 23.56 % 22.82 % 40 Table of Contents The types of temporary differences between the tax basis of assets and liabilities and their financial reporting amounts that give rise to deferred income tax assets and liabilities, and their approximate tax effects, are as follows: June 30, 2024 December 31, 2023 (In thousands) Deferred tax assets: Allowance for credit losses $ 82,359 $ 81,251 Deferred compensation 6,034 7,619 Stock compensation 5,258 6,803 Non-accrual interest income 1,627 1,463 Real estate owned 70 79 Unrealized loss on investment securities, available-for-sale 83,938 81,493 Loan discounts 4,117 5,119 Investments 23,925 25,789 Other 19,431 14,691 Gross deferred tax assets 226,759 224,307 Deferred tax liabilities: Accelerated depreciation on premises and equipment 288 1,477 Tax basis on acquisitions 5,814 4,061 Core deposit intangibles 10,073 11,021 FHLB dividends 2,677 2,351 Other 12,866 8,233 Gross deferred tax liabilities 31,718 27,143 Net deferred tax assets $ 195,041 $ 197,164 The Company files income tax returns in the U.S. federal jurisdiction. The Company's income tax returns are open and subject to examinations from the 2020 tax year and forward. The Company's various state income tax returns are generally open from the 2020 and later tax return years based on individual state statute of limitations. 13. Common Stock, Compensation Plans and Other Common Stock The Company’s Restated Articles of Incorporation, as amended, authorize the issuance of up to 300,000,000 shares of common stock, par value $ 0.01 per share. The Company also has the authority to issue up to 5,500,000 shares of preferred stock, par value $ 0.01 per share under the Company’s Restated Articles of Incorporation, as amended. Stock Repurchases During the six months ended June 30, 2024, the Company repurchased a total of 2,426,028 shares with a weighted-average stock price of $ 23.31 per share. Shares repurchased under the program as of June 30, 2024 since its inception total 25,411,743 shares. The remaining balance available for repurchase is 14,340,257 shares at June 30, 2024. Stock Compensation Plans The Company has a stock option and performance incentive plan know as the Home BancShares, Inc. 2022 Equity Incentive Plan (the “Plan”). The purpose of the Plan 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 June 30, 2024, the maximum total number of shares of the Company’s common stock available for issuance under the Plan was 14,788,000 shares. At June 30, 2024, the Company had 2,734,345 shares of common stock available for future grants and 4,768,113 shares of common stock reserved for issuance pursuant to the Plan. 41 Table of Contents The intrinsic value of the stock options outstanding was $ 4.0 million, which includes the intrinsic value of vested stock options of $ 3.6 million at June 30, 2024. The intrinsic value of stock options exercised during the six months ended June 30, 2024 was approximately $ 4.9 million. Total unrecognized compensation cost related to non-vested stock option awards, which are expected to be recognized over the vesting periods, was approximately $ 1.9 million as of June 30, 2024. The table below summarizes the stock option transactions under the Plan at June 30, 2024 and December 31, 2023 and changes during the six-month period and year then ended: For the Six Months Ended June 30, 2024 For the Year Ended December 31, 2023 Shares (000) Weighted- Average Exercisable Price Shares (000) Weighted- Average Exercisable Price Outstanding, beginning of year 2,776 $ 20.95 2,971 $ 20.45 Granted — — 25 22.63 Forfeited/Expired ( 29 ) 22.03 ( 10 ) 23.38 Exercised ( 713 ) 17.71 ( 210 ) 14.01 Outstanding, end of period 2,034 22.07 2,776 20.95 Exercisable, end of period 1,494 21.68 1,940 20.05 Stock-based compensation expense for stock-based compensation awards granted is based on the grant-date fair value. For stock option awards, the fair value is estimated at the date of grant using the Black-Scholes option-pricing model. This model requires the input of highly subjective assumptions, changes to which can materially affect the fair value estimate. Additionally, there may be other factors that would otherwise have a significant effect on the value of employee stock options granted but are not considered by the model. 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. There were no options granted during the six months ended June 30, 2024. 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 2024 and 2023 stock option grants were as follows: For the Six Months Ended June 30, 2024 For the Year Ended December 31, 2023 Expected dividend yield Not Applicable 2.98 % Expected stock price volatility Not Applicable 27.97 % Risk-free interest rate Not Applicable 3.37 % Expected life of options Not Applicable 6.5 years The following is a summary of currently outstanding and exercisable options at June 30, 2024: Options Outstanding Options Exercisable Exercise Prices Options Outstanding Shares (000) Weighted- Average Remaining Contractual Life (in years) Weighted- Average Exercise Price Options Exercisable Shares (000) Weighted- Average Exercise Price $ 16.00 to $ 17.99 62 0.79 $ 17.12 62 $ 17.12 $ 18.00 to $ 19.99 336 1.41 18.50 336 18.50 $ 20.00 to $ 21.99 254 4.03 20.90 219 20.93 $ 22.00 to $ 23.99 1,291 4.15 23.22 806 23.18 $ 24.00 to $ 25.99 91 3.90 25.59 71 25.95 2,034 1,494 42 Table of Contents The table below summarized the activity for the Company’s restricted stock issued and outstanding at June 30, 2024 and December 31, 2023 and changes during the period and year then ended: As of June 30, 2024 As of December 31, 2023 (In thousands) Beginning of year 1,429 1,381 Issued 458 261 Vested ( 448 ) ( 152 ) Forfeited ( 38 ) ( 61 ) End of period 1,401 1,429 Amount of expense for the six months and twelve months ended, respectively $ 3,708 $ 8,016 Total unrecognized compensation cost related to non-vested restricted stock awards, which are expected to be recognized over the vesting periods, was approximately $ 17.8 million as of June 30, 2024. 14. Non-Interest Expense The table below shows the components of non-interest expense for the three and six months ended June 30, 2024 and 2023: Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 (In thousands) Salaries and employee benefits $ 60,427 $ 64,534 $ 121,337 $ 129,024 Occupancy and equipment 14,408 14,923 28,959 29,875 Data processing expense 8,935 9,151 18,082 18,119 Other operating expenses: Advertising 1,692 2,098 3,346 4,329 Amortization of intangibles 2,140 2,478 4,280 4,955 Electronic banking expense 3,412 3,675 6,568 7,005 Directors’ fees 423 538 921 998 Due from bank service charges 282 286 558 559 FDIC and state assessment 5,494 3,220 8,812 6,720 Insurance 905 927 1,808 1,816 Legal and accounting 2,617 1,436 4,698 2,524 Other professional fees 2,108 2,774 4,344 5,058 Operating supplies 613 763 1,296 1,501 Postage 497 586 1,020 1,087 Telephone 444 573 914 1,101 Other expense 8,788 8,320 17,738 16,255 Total other operating expenses 29,415 27,674 56,303 53,908 Total non-interest expense $ 113,185 $ 116,282 $ 224,681 $ 230,926 43 Table of Contents 15. Leases The Company leases land and office facilities under long-term, non-cancelable operating lease agreements. The leases expire at various dates through 2044 and do not include renewal options based on economic factors that would have implied that continuation of the lease was reasonably certain. 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 charges in the rental payments. Short-term leases are leases having a term of twelve months or less. The Company does not separate nonlease components from the associated lease component of our operating leases. As a result, the Company accounts for these components as a single component since (i) the timing and pattern of transfer of the nonlease components and the associated lease component are the same and (ii) the lease component, if accounted for separately, would be classified as an operating lease. The Company recognizes short term leases on a straight-line basis and does not record a related right-of-use ("ROU") asset and liability for such leases. In addition, equipment leases were determined to be immaterial and a related ROU asset and liability for such leases is not recorded. As of June 30, 2024, the balances of the ROU asset and lease liability were $ 39.0 million and $ 41.7 million, respectively. As of December 31, 2023, the balances of the ROU asset and lease liability were $ 42.2 million and $ 45.0 million, respectively. The ROU 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, 2024 and December 31, 2023: June 30, 2024 December 31, 2023 2024 $ 4,632 $ 9,373 2025 8,611 8,549 2026 8,130 8,111 2027 7,227 7,223 2028 5,496 5,496 Thereafter 19,827 19,827 Total future minimum lease payments $ 53,923 $ 58,579 Discount effect of cash flows ( 12,263 ) ( 13,551 ) Present value of net future minimum lease payments $ 41,660 $ 45,028 Additional information (dollar amounts in thousands): Three Months Ended Six Months Ended Lease expense: June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023 Operating lease expense $ 2,037 $ 1,923 $ 4,635 $ 3,878 Short-term lease expense — — — — Variable lease expense 296 260 592 520 Total lease expense $ 2,333 $ 2,183 $ 5,227 $ 4,398 Other information: Cash paid for amounts included in the measurement of lease liabilities $ 2,120 $ 1,987 $ 4,830 $ 4,010 Weighted-average remaining lease term (in years) 7.73 8.69 7.81 8.77 Weighted-average discount rate 3.43 % 3.39 % 3.42 % 3.44 % The Company currently leases two properties from two related parties. Total rent expense from the leases was $ 28,000 , or 1.18 % of total lease expense and $ 62,000 , or 1.19 % of total lease expense, for the three and six months ended June 30, 2024, respectively. 16. Significant Estimates and Concentrations of Credit Risks Accounting principles generally accepted in the United States of America require disclosure of certain significant estimates and current vulnerabilities due to certain concentrations. Estimates related to the allowance for credit losses and certain concentrations of credit risk are reflected in Note 5, while deposit concentrations are reflected in Note 8. 44 Table of Contents The Company’s primary market areas are in Arkansas, Florida, Texas, South Alabama and New York. The Company primarily grants loans to customers located within these markets unless the borrower has an established relationship with the Company. The diversity of the Company’s economic base tends to provide a stable lending environment. 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 June 30, 2024 and December 31, 2023, commercial real estate loans represented 57.2 % and 56.7 % of total loans receivable, respectively, and 219.4 % and 215.5 % of total stockholders’ equity at June 30, 2024 and December 31, 2023, respectively. Residential real estate loans represented 16.4 % and 15.8 % of total loans receivable and 62.7 % and 60.1 % of total stockholders’ equity at June 30, 2024 and December 31, 2023, respectively. Approximately 79.6 % of the Company’s total loans and 83.8 % of the Company’s real estate loans as of June 30, 2024, 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. Any future volatility in the economy could cause the values of assets and liabilities recorded in the financial statements to change rapidly, resulting in material future adjustments in asset values, the allowance for credit losses and capital that could negatively impact the Company’s ability to meet regulatory capital requirements and maintain sufficient liquidity. 17. Commitments and Contingencies In the ordinary course of business, the Company makes various commitments and incurs certain contingent liabilities to fulfill the financing needs of its customers. These commitments and contingent liabilities include lines of credit and commitments to extend credit and issue standby letters of credit. The Company applies the same credit policies and standards as they do in the lending process when making these commitments. The collateral obtained is based on the assessed creditworthiness of the borrower. At June 30, 2024 and December 31, 2023, commitments to extend credit of $ 4.58 billion and $ 4.59 billion, respectively, were outstanding. A percentage of these balances are participated out to other banks; therefore, the Company can call on the participating banks to fund future draws. Since some of these commitments are expected to expire without being drawn upon, the total commitment amount does not necessarily represent future cash requirements. Outstanding standby letters of credit are contingent commitments issued by the Company, generally to guarantee the performance of a customer in third-party borrowing arrangements. The term of the guarantee is dependent upon the creditworthiness of the borrower, some of which are long-term. The amount of collateral obtained, if deemed necessary, is based on management’s credit evaluation of the counterparty. Collateral held varies but may include accounts receivable, inventory, property, plant and equipment, commercial real estate and residential real estate. 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 June 30, 2024 and December 31, 2023, was $ 152.2 million and $ 185.5 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. 18. Regulatory Matters The Bank is subject to a legal limitation on dividends that can be paid to the parent company without prior approval of the applicable regulatory agencies. Arkansas bank regulators have specified that the maximum dividend limit state banks may pay to the parent company without prior approval is 75 % of the current year earnings plus 75 % of the retained net earnings of the preceding year. 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 six months ended June 30, 2024, the Company requested approximately $ 151.4 million in regular dividends from its banking subsidiary. 45 Table of Contents The Company’s banking subsidiary is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s consolidated financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company must meet specific capital guidelines that involve quantitative measures of the Company’s assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. The Company’s capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. Furthermore, the Company’s regulators could require adjustments to regulatory capital not reflected in the consolidated financial statements. 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 June 30, 2024, 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. As part of its response to the impact of COVID-19, on March 27, 2020, the federal banking regulatory agencies issued an interim final rule that provided the option to temporarily delay certain effects of CECL on regulatory capital for two years, followed by a three-year transition period. The interim final rule allows bank holding companies and banks to delay for two years 100 % of the day-one impact of adopting CECL and 25 % of the cumulative change in the reported allowance for credit losses since adopting CECL. The Company elected to adopt the interim final rule, which is reflected in the Company's risk-based capital ratios. Basel III became effective for the Company and its bank subsidiary on January 1, 2015. Basel III amended the prompt corrective action rules to incorporate a CET1 requirement and to raise the capital requirements for certain capital categories. In order to be adequately capitalized for purposes of the prompt corrective action rules, a banking organization is required to have at least a 4.5 % CET1 risk-based capital ratio, a 4 % Tier 1 leverage capital ratio, a 6 % Tier 1 risk-based capital ratio and an 8 % total risk-based capital ratio. The Federal Reserve Board’s risk-based capital guidelines include the definitions for (1) a well-capitalized institution, (2) an adequately-capitalized institution, and (3) an undercapitalized institution. Under Basel III, the criteria for a well-capitalized institution are: 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 June 30, 2024, 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 14.38 %, 12.35 %, 14.38 %, and 17.99 %, respectively, as of June 30, 2024. 19. Additional Cash Flow Information The following is a summary of the Company’s additional cash flow information during the six-month periods ended: June 30, 2024 2023 (In thousands) Interest paid $ 211,371 $ 147,892 Income taxes paid 51,205 71,925 Assets acquired by foreclosure 11,580 316 46 Table of Contents 20. Financial Instruments Fair value is the price that would be received for an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements must maximize the use of observable inputs and minimize the use of unobservable inputs. There is a hierarchy of three levels of inputs that may be used to measure fair values: Level 1 Quoted prices in active markets for identical assets or liabilities Level 2 Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities A financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. Transfers of financial instruments between levels within the fair value hierarchy are recognized on the date management determines that the underlying circumstances or assumptions have changed. Available-for-sale securities – the Company's available-for-sale securities are considered to be Level 2 securities. The Level 2 securities consist primarily of U.S. government-sponsored enterprises, mortgage-backed securities plus state and political subdivisions. For these securities, the Company obtains fair value measurements from an independent pricing service. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. 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. The Company reviews the prices supplied by the independent pricing service, as well as their underlying pricing methodologies, for reasonableness and to ensure such prices are aligned with traditional pricing matrices. In general, the Company does not purchase investment portfolio securities with complicated structures. Pricing for the Company’s investment securities is fairly generic and is easily obtained. The Company uses a third-party comparison pricing vendor in order to reflect consistency in the fair values of the investment securities sampled by the Company each quarter. Held-to-maturity securities – the Company's held-to-maturity securities are considered to be Level 2 securities. The Level 2 securities consist primarily of U.S. government-sponsored enterprises, mortgage-backed securities plus state and political subdivisions. For these securities, the Company obtains fair value measurements from an independent pricing service. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. 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 include 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. Impaired loans are carried at the net realizable value of the collateral if the loan is collateral dependent. A portion of the allowance for credit losses is allocated to impaired 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 $ 8.6 million and $ 10.5 million as of June 30, 2024 and December 31, 2023, respectively. This valuation is considered Level 3, consisting of appraisals of underlying collateral. The Company reversed $ 172,000 and $ 420,000 of accrued interest receivable when impaired loans were put on non-accrual status during the three months ended June 30, 2024 and 2023, respectively. The Company reversed $ 486,000 and $ 656,000 of accrued interest receivable when impaired loans were put on non-accrual status during the six months ended June 30, 2024 and 2023, respectively. Foreclosed assets held for sale – Foreclosed assets held for sale are held by the Company at fair value, less estimated costs to sell. At foreclosure, if the fair value, less estimated costs to sell, of the real estate acquired is less than the Company’s recorded investment in the related loan, a write-down is recognized through a charge to the allowance for credit losses. Additionally, valuations are periodically performed by management and any subsequent reduction in value is recognized by a charge to income. The fair value of foreclosed assets held for sale is estimated using Level 3 inputs based on appraisals of underlying collateral. As of June 30, 2024 and December 31, 2023, the fair value of foreclosed assets held for sale, less estimated costs to sell, was $ 41.3 million and $ 30.5 million, respectively. 47 Table of Contents No foreclosed assets held for sale were remeasured during the six months ended June 30, 2024. Regulatory guidelines require the Company to reevaluate the fair value of foreclosed assets held for sale on at least an annual basis. The Company’s policy is to comply with the regulatory guidelines. The significant unobservable (Level 3) inputs used in the fair value measurement of collateral for collateral-dependent impaired loans and foreclosed assets primarily relate to customized discounting criteria applied to the customer’s reported amount of collateral. The amount of the collateral discount depends upon the condition and marketability of the underlying collateral. As the Company’s primary objective in the event of default would be to monetize the collateral to settle the outstanding balance of the loan, less marketable collateral would receive a larger discount. Fair Values of Financial Instruments The following table presents the estimated fair values of the Company’s financial instruments. 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. June 30, 2024 Carrying Amount Fair Value Level (In thousands) Financial assets: Cash and cash equivalents $ 1,058,716 $ 1,058,716 1 Investment securities - available for sale 3,344,539 3,344,539 2 Investment securities - held-to-maturity 1,278,853 1,159,160 2 Loans receivable, net of impaired loans and allowance 14,393,901 14,334,637 3 Accrued interest receivable 120,984 120,984 1 FHLB, FRB & FNBB Bank stock; other equity investments 227,067 227,067 3 Marketable equity securities 50,147 50,147 1 Financial liabilities: Deposits: Demand and non-interest bearing $ 4,068,302 $ 4,068,302 1 Savings and interest-bearing transaction accounts 11,150,516 11,150,516 1 Time deposits 1,736,985 1,718,037 3 Securities sold under agreements to repurchase 137,996 137,996 1 FHLB and other borrowed funds 1,301,050 1,281,175 2 Accrued interest payable 35,559 35,559 1 Subordinated debentures 439,542 379,572 3 48 Table of Contents December 31, 2023 Carrying Amount Fair Value Level (In thousands) Financial assets: Cash and cash equivalents $ 1,000,213 $ 1,000,213 1 Federal funds sold 5,100 5,100 1 Investment securities - available for sale 3,507,841 3,507,841 2 Investment securities - held-to-maturity 1,281,982 1,170,481 2 Loans receivable, net of impaired loans and allowance 14,048,002 14,071,775 3 Accrued interest receivable 118,966 118,966 1 FHLB, FRB & FNBB Bank stock; other equity investments 223,748 223,748 3 Marketable equity securities 49,419 49,419 1 Financial liabilities: Deposits: Demand and non-interest bearing $ 4,085,501 $ 4,085,501 1 Savings and interest-bearing transaction accounts 11,050,347 11,050,347 1 Time deposits 1,651,863 1,633,091 3 Securities sold under agreements to repurchase 142,085 142,085 1 FHLB and other borrowed funds 1,301,300 1,291,926 2 Accrued interest payable 19,124 19,124 1 Subordinated debentures 439,834 358,682 3 21. Recent Accounting Pronouncements In March 2020, the FASB issued ASU 2020-04 , Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting ( "ASU 2020-04") . ASU 2020-04 provides optional expedients and exceptions for accounting related to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. ASU 2020-04 applies only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform and do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, except for hedging relationships existing as of December 31, 2022, that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship. ASU 2020-04 was effective upon issuance and generally can be applied through December 31, 2022. To ensure the relief in Topic 848 covers the period of time during which a significant number of modifications may take place, ASU 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848 ( ASU 2022-06) defers the sunset date of Topic 848 from December 31, 2022, to December 31, 2024, after which entities will no longer be permitted to apply the relief in Topic 848. In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848): Scope ("ASU 2022-01"). The amendments in the update clarify that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. Specifically, certain provisions in Topic 848, if elected by an entity, apply to derivative instruments that use an interest rate for margining, discounting, or contract price alignment that is modified as a result of reference rate reform. Amendments in the update to the expedients and exceptions in Topic 848 capture the incremental consequences of the scope clarification and tailor the existing guidance to derivative instruments affected by the discounting transition. The amendments in this Update do not apply to contract modifications made after December 31, 2022, new hedging relationships entered into after December 31, 2022, and existing hedging relationships evaluated for effectiveness in periods after December 31, 2022, except for hedging relationships existing as of December 31, 2022, that apply certain optional expedients in which the accounting effects are recorded through the end of the hedging relationship. ASU 2020-04 was effective upon issuance and generally can be applied through December 31, 2022. To ensure the relief in Topic 848 covers the period of time during which a significant number of modifications may take place, ASU 2022-06 defers the sunset date of Topic 848 from December 31, 2022, to December 31, 2024, after which entities will no longer be permitted to apply the relief in Topic 848. 49 Table of Contents In December 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848. These amendments extend the period of time preparers can utilize the reference rate reform relief guidance in Topic 848. The objective of the guidance in Topic 848 is to provide relief during the temporary transition period, so the FASB included a sunset provision within Topic 848 based on expectations of when the London Interbank Offered Rate (LIBOR) would cease being published. In 2021, the UK Financial Conduct Authority (FCA) delayed the intended cessation date of certain tenors of USD LIBOR to June 30, 2023. To ensure the relief in Topic 848 covers the period of time during which a significant number of modifications may take place, the ASU defers the sunset date of Topic 848 from December 31, 2022, to December 31, 2024, after which entities will no longer be permitted to apply the relief in Topic 848. ASU 2022-06 was effective upon issuance. In November 2023, the FASB issued ASU 2023-07, " Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures ." The amendments apply to all public entities that are required to report segment information in accordance with FASB ASC Topic 280, Segment Reporting . The amendments in the ASU are intended to improve reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. The amendments require that a public entity disclose, on an annual and interim basis, significant segment expenses that are regularly provided to the chief operating decision maker ("CODM") and included within each reported measure of segment profit or loss. Public entities are required to disclose, on an annual and interim basis, an amount for other segment items by reportable segment and a description of its composition. In addition, public entities must provide all annual disclosures about a reportable segment’s profit or loss and assets currently required by FASB ASC Topic 280, Segment Reporting , in interim periods. The amendments clarify that if the CODM uses more than one measure of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources, a public entity may report one or more of those additional measures of segment profit. However, at least one of the reported segment profit or loss measures (or the single reported measure, if only one is disclosed) should be the measure that is most consistent with the measurement principles used in measuring the corresponding amounts in the public entity’s consolidated financial statements. The Amendments require that a public entity disclose the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources. Finally, the amendments require that a public entity that has a single reportable segment provide all the disclosures required by the amendments in the ASU and all existing segment disclosures in ASC Topic 280. The ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. A public entity should apply the amendments retrospectively to all prior periods presented in the financial statements. Upon transition, the segment expense categories and amounts disclosed in the prior periods should be based on the significant segment expense categories identified and disclosed in the period of adoption. The Company is currently evaluating the potential impacts related to the adoption of the ASU. In December 2023, the FASB issued ASU 2023-09, " Income Taxes (Topic 740): Improvements to Income Tax Disclosures ." The amendments require that public business entities on an annual basis (a) disclose specific categories in the rate reconciliation and (b) provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than 5 percent of the amount computed by multiplying pretax income (or loss) by the applicable statutory income tax rate). The amendments also require that all entities disclose on an annual basis the amount of income taxes paid (net of refunds received) disaggregated by federal (national), state, and foreign taxes, and the amount of income taxes paid (net of refunds received) disaggregated by individual jurisdictions in which income taxes paid (net of refunds received) is equal to or greater than 5 percent of total income taxes paid (net of refunds received). The amendments require that all entities disclose income (or loss) from continuing operations before income tax expense (or benefit) disaggregated between domestic and foreign and income tax expense (or benefit) from continuing operations disaggregated by federal (national), state, and foreign. The ASU is effective for public business entities for annual periods beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. The amendments should be applied on a prospective basis. Retrospective application is permitted. The Company is currently evaluating the potential impacts related to the adoption of the ASU. 50 Table of Contents Report of Independent Registered Public Accounting Firm Audit Committee, Board of Directors and Stockholders Home BancShares, Inc. Conway, Arkansas Results of Review of Interim Consolidated Financial Statements We have reviewed the condensed consolidated balance sheet of Home BancShares, Inc. (the “Company”) and subsidiaries as of June 30, 2024, 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, 2024 and 2023, and cash flows for the six-month periods ended June 30, 2024 and 2023, 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, 2023, 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 26, 2024, 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, 2023, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived. Basis for Review Results These interim financial statements are the responsibility of the Company’s management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our review in accordance with the standards of the PCAOB. A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. /s/ Forvis Mazars, LLP Little Rock, Arkansas August 2, 2024 51 Table of Contents