HOME BANCSHARES INC 10-K

Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Liquidity and Market Risk Management Asset/Liability Management . Our management actively measures and manages interest rate risk. The asset/liability committees of the boards of directors of our holding company and bank subsidiary are also responsible for approving our asset/liability management policies, overseeing the formulation and implementation of strategies to improve balance sheet positioning and earnings, and reviewing our interest rate sensitivity position. Our objective is to manage liquidity in a way that ensures cash flow requirements of depositors and borrowers are met in a timely and orderly fashion while ensuring the reliance on various funding sources does not become so heavily weighted to any one source that it causes undue risk to the bank. Our liquidity sources are prioritized based on availability and ease of activation. Our current liquidity condition is a primary driver in determining our funding needs and is a key component of our asset liability management. Various sources of liquidity are available to meet the cash flow needs of depositors and borrowers. Our principal source of funds is core deposits, including checking, savings, money market accounts and certificates of deposit. We may also from time to time obtain wholesale funding through brokered deposits. Secondary sources of funding include advances from the Federal Home Loan Bank of Dallas, the Federal Reserve Bank Discount Window and other borrowings, such as through correspondent banking relationships. These secondary sources enable us to borrow funds at rates and terms which, at times, are more beneficial to us. Additionally, as needed, we can liquidate or utilize our available for sale investment portfolio as collateral to provide funds for an intermediate source of liquidity. Interest Rate Sensitivity. Our primary business is banking and the resulting earnings, primarily net interest income, are susceptible to changes in market interest rates. It is management’s goal to maximize net interest income within acceptable levels of interest rate and liquidity risks. A key element in the financial performance of financial institutions is the level and type of interest rate risk assumed. The single most significant measure of interest rate risk is the relationship of the repricing periods of earning assets and interest-bearing liabilities. The more closely the repricing periods are correlated, the less interest rate risk we assume. We use net interest income simulation modeling and economic value of equity as the primary methods in analyzing and managing interest rate risk. One of the tools that our management uses to measure short-term interest rate risk is a net interest income simulation model. This analysis calculates the difference between net interest income forecasted using base market rates and using a rising and a falling interest rate scenario. The income simulation model includes various assumptions regarding the re-pricing relationships for each of our products. Many of our assets are floating rate loans, which are assumed to re-price immediately, and proportional to the change in market rates, depending on their contracted index. Some loans and investments include the opportunity of prepayment (embedded options), and accordingly, the simulation model uses indexes to estimate these prepayments and reinvest their proceeds at current yields. Our non-term deposit products re-price overnight in the model while we project certain other deposits by product type to have stable balances based on our deposit history. This accounts for the portion of our portfolio that moves more slowly than market rates and changes at our discretion. This analysis indicates the impact of changes in net interest income for the given set of rate changes and assumptions. It assumes the balance sheet remains static and that its structure does not change over the course of the year. It does not account for all factors that impact this analysis, including changes by management to mitigate the impact of interest rate changes or secondary impacts such as changes to our credit risk profile as interest rates change. Furthermore, loan prepayment rate estimates and spread relationships change regularly. Interest rate changes create changes in actual loan prepayment rates that will differ from the market estimates incorporated in this analysis. Changes that vary significantly from the assumptions may have significant effects on our net interest income. For the rising and falling interest rate scenarios, the base market interest rate forecast was increased and decreased over twelve months by 200 and 100 basis points, respectively. At December 31, 2024, our net interest margin exposure related to these hypothetical changes in market interest rates was within the current guidelines established by us. 88 Table of Contents Table 33 presents our sensitivity to net interest income as of December 31, 2024. Table 33: Sensitivity of Net Interest Income Interest Rate Scenario Percentage Change from Base December 31, 2024 Percentage Change from Base December 31, 2023 December 30, 2024 vs. 2024 Up 200 basis points 10.07 % 9.61 % 0.46 % Up 100 basis points 5.08 4.93 0.15 % Down 100 basis points (5.71) (5.70) (0.01) % Down 200 basis points (11.20) (11.82) 0.62 % Item 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Management’s Report on Internal Control Over Financial Reporting The management of Home BancShares, Inc. (the “Company”) is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation and fair presentation of the Company’s consolidated financial statements for external purposes in accordance with U.S. GAAP. The Company's internal control over financial reporting includes those policies and procedures that: • pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company; • provide reasonable assurance that transactions are recorded as necessary to permit preparation of the consolidated financial statements in accordance with U.S. GAAP, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; • provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on the consolidated financial statements. Because of inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Under the supervision and with the participation of management, the Company conducted an assessment of the effectiveness of the Company's internal control over financial reporting as of December 31, 2024. In making this assessment, management used the criteria set forth in Internal Control – Integrated Framework (2013 edition) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on management's assessment and those criteria, management believes that the Company maintained effective internal control over financial reporting as of December 31, 2024. Forvis Mazars, LLP, Little Rock, Arkansas, (U.S. PCAOB Auditor Firm I.D.: 686 ), the independent registered public accounting firm that audited the consolidated financial statements of the Company included in this Annual Report on Form 10-K, has issued an attestation report on the effectiveness of the Company’s internal control over financial reporting as of December 31, 2024. The report, which expresses an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting as of December 31, 2024, is included herein. 89 Table of Contents Report of Independent Registered Public Accounting Firm To the Shareholders, Board of Directors and Audit Committee Home BancShares, Inc. Conway, Arkansas Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Home BancShares, Inc. (the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2024, and the related notes (collectively referred to as the “financial statements”). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 27, 2025, expressed an unqualified opinion thereon. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. 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 audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates. 90 Table of Contents Allowance for Credit Losses As discussed in Notes 1 and 5 to the financial statements, the Company’s loan portfolio and the associated allowance for credit losses (“ACL”) were $14.8 billion and $275.9 million, respectively, as of December 31, 2024. The Company estimates the ACL based on internal and external information relating to past events, current conditions, and reasonable and supportable forecasts. The Company uses the discounted cash flow method to estimate expected losses for all of the Company’s loan segments that exhibit similar risk characteristics and loans that do not share risk characteristics are evaluated on an individual basis. For each loan segment, the Company generates cash flow projections at the instrument level adjusting payment expectations for estimated prepayment speed, curtailments, time to recovery, probability of default and loss given default. Additional qualitative adjustments are applied for risk factors that are not considered within the modeling process but are relevant in assessing the expected credit losses within the loan segments. Consideration is given to the following factors: changes in lending policies, procedures and strategies; changes in nature and volume of the portfolio; staff experience; changes in volume and trends in classified loans, delinquencies and nonaccruals; concentration risk; trends in underlying collateral values; external factors such as competition, legal and regulatory environment; changes in the quality of the loan review system; and economic conditions. Auditing management’s estimate of the allowances for loan credit losses, and more specifically the qualitative factor adjustments applied in the ACL, is a critical audit matter. The principal consideration for our determination of the critical audit matter is a high degree of subjectivity of the assumptions utilized in calculating the qualitative reserve components within the model. Furthermore, certain inputs and assumptions required a higher degree of auditor judgement due to the nature and extent of audit evidence and effort required to address this matter. The primary audit procedures we performed to address this critical audit matter included: • Obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the reliability and accuracy of data used to calculate and estimate the various components of the ACL including: ◦ Loan data completeness and accuracy, ◦ Grouping of loans by segment, ◦ Model inputs utilized, ◦ Approval of model assumptions selected, and ◦ Qualitative factors have been appropriately identified, are adequately supported, and accurately applied. • Evaluated and tested the data and inputs utilized within the ACL calculation for completeness and accuracy including mathematical accuracy of the calculation. • Evaluated the qualitative factors for appropriate identification and application including reasonableness of the basis for adjustment. • Analyzed the total qualitative factor adjustment applied to each loan segment and evaluated the appropriateness of the change in the qualitative factor adjustment in correlation to movement in the quantitative loss rate. • Utilized the assistance of the firm’s internal specialists to test the mathematical operation of the model. /s/ Forvis Mazars, LLP We have served as the Company’s auditor since 2005. Little Rock, Arkansas February 27, 2025 91 Table of Contents Report of Independent Registered Public Accounting Firm To the Shareholders, Board of Directors and Audit Committee Home BancShares, Inc. Conway, Arkansas Opinion on the Internal Control over Financial Reporting We have audited Home BancShares Inc.’s (the “Company”) internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control – Integrated Framework: (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control – Integrated Framework: (2013) issued by COSO. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated financial statements of the Company as of December 31, 2024 and 2023, and for each of the three years in the period ended December 31, 2024, and our report dated February 27, 2025, expressed an unqualified opinion on those financial statements. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. 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 audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definitions and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of reliable financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate. /s/ Forvis Mazars, LLP Little Rock, Arkansas February 27, 2025 92 Table of Contents Home BancShares, Inc. Consolidated Balance Sheets December 31, (In thousands, except share data) 2024 2023 Assets Cash and due from banks $ 281,063 $ 226,363 Interest-bearing deposits with other banks 629,284 773,850 Cash and cash equivalents 910,347 1,000,213 Federal funds sold 3,725 5,100 Investment securities — available-for-sale, net of allowance for credit losses of $ 2,195 and $ 2,525 at December 31, 2024 and December 31, 2023, respectively (amortized cost of $ 3,410,272 and $ 3,840,927 at December 31, 2024 and December 31, 2023, respectively) 3,072,639 3,507,841 Investment securities — held-to-maturity, net of allowance for credit losses of $ 2,005 at both December 31, 2024 and 2023 1,275,204 1,281,982 Total investment securities 4,347,843 4,789,823 Loans receivable 14,764,500 14,424,728 Allowance for credit losses ( 275,880 ) ( 288,234 ) Loans receivable, net 14,488,620 14,136,494 Bank premises and equipment, net 386,322 393,300 Foreclosed assets held for sale 43,407 30,486 Cash value of life insurance 219,786 214,516 Accrued interest receivable 120,129 118,966 Deferred tax asset, net 186,697 197,164 Goodwill 1,398,253 1,398,253 Core deposit intangible 40,327 48,770 Other assets 345,292 323,573 Total assets $ 22,490,748 $ 22,656,658 Liabilities and Stockholders’ Equity Deposits: Demand and non-interest-bearing $ 4,006,115 $ 4,085,501 Savings and interest-bearing transaction accounts 11,347,850 11,050,347 Time deposits 1,792,332 1,651,863 Total deposits 17,146,297 16,787,711 Securities sold under agreements to repurchase 162,350 142,085 FHLB and other borrowed funds 600,750 1,301,300 Accrued interest payable and other liabilities 181,080 194,653 Subordinated debentures 439,246 439,834 Total liabilities 18,529,723 18,865,583 Stockholders’ equity: Common stock, par value $ 0.01 ; shares authorized 300,000,000 in 2024 and 2023; shares issued and outstanding 198,882,402 in 2024 and 201,526,494 in 2023 1,989 2,015 Capital surplus 2,272,794 2,348,023 Retained earnings 1,942,350 1,690,112 Accumulated other comprehensive loss ( 256,108 ) ( 249,075 ) Total stockholders’ equity 3,961,025 3,791,075 Total liabilities and stockholders’ equity $ 22,490,748 $ 22,656,658 See accompanying notes. 93 Table of Contents Home BancShares, Inc. Consolidated Statements of Income Year Ended December 31, (In thousands, except per share data) 2024 2023 2022 Interest income: Loans $ 1,100,004 $ 989,616 $ 728,342 Investment securities Taxable 125,765 138,575 91,933 Tax-exempt 30,980 31,618 28,356 Deposits – other banks 42,773 15,023 29,110 Federal funds sold 255 221 25 Total interest income 1,299,777 1,175,053 877,766 Interest expense: Interest on deposits 376,638 295,978 85,989 Federal funds purchased 1 3 2 FHLB and other borrowed funds 52,455 30,825 11,076 Securities sold under agreements to repurchase 5,448 4,813 1,430 Subordinated debentures 16,461 16,489 20,593 Total interest expense 451,003 348,108 119,090 Net interest income 848,774 826,945 758,676 Provision for credit losses on loans 48,400 11,950 50,170 (Recovery of) provision for credit losses on unfunded commitments — ( 1,500 ) 11,410 (Recovery of ) provision for credit losses on investment securities ( 330 ) 1,683 2,005 Total credit loss expense 48,070 12,133 63,585 Net interest income after provision for credit losses 800,704 814,812 695,091 Non-interest income: Service charges on deposit accounts 39,223 39,207 37,114 Other service charges and fees 43,009 44,188 44,588 Trust fees 18,717 17,892 12,855 Mortgage lending income 15,789 10,738 17,657 Insurance commissions 2,151 2,086 2,192 Increase in cash value of life insurance 4,850 4,655 3,800 Dividends from FHLB, FRB, FNBB & other 11,462 11,642 9,198 Gain on sale of SBA loans 617 278 183 Gain on branches, equipment and other assets, net 2,102 1,507 15 (Loss) gain on OREO, net ( 2,272 ) 332 500 Fair value adjustment for marketable securities 2,971 ( 1,094 ) ( 1,272 ) Other income 29,955 38,503 48,281 Total non-interest income 168,574 169,934 175,111 Non-interest expense: Salaries and employee benefits 241,022 256,966 238,885 Occupancy and equipment 58,031 60,303 53,417 Data processing expense 36,494 36,329 34,942 Merger and acquisition expenses — — 49,594 Other operating expenses 111,389 119,265 98,789 Total non-interest expense 446,936 472,863 475,627 Income before income taxes 522,342 511,883 394,575 Income tax expense 120,101 118,954 89,313 Net income $ 402,241 $ 392,929 $ 305,262 Basic earnings per common share $ 2.01 $ 1.94 $ 1.57 Diluted earnings per common share $ 2.01 $ 1.94 $ 1.57 See accompanying notes. 94 Table of Contents Home BancShares, Inc. Consolidated Statements of Comprehensive Income Year Ended December 31, (In thousands) 2024 2023 2022 Net income available to all stockholders $ 402,241 $ 392,929 $ 305,262 Net unrealized (loss) gain on available-for-sale securities ( 4,870 ) 72,617 ( 417,349 ) Other comprehensive (loss) income, before tax effect ( 4,870 ) 72,617 ( 417,349 ) Tax effect ( 2,163 ) ( 16,234 ) 101,429 Other comprehensive (loss) income ( 7,033 ) 56,383 ( 315,920 ) Comprehensive income (loss) $ 395,208 $ 449,312 $ ( 10,658 ) See accompanying notes. 95 Table of Contents Home BancShares, Inc. Consolidated Statements of Stockholders’ Equity Years Ended December 31, 2024, 2023 and 2022 (In thousands, except share data) Common Stock Capital Surplus Retained Earnings Accumulated Other Comprehensive Income (Loss) Total Balances at January 1, 2022 $ 1,637 $ 1,487,373 $ 1,266,249 $ 10,462 $ 2,765,721 Comprehensive income: Net income — — 305,262 — 305,262 Other comprehensive loss — — — ( 315,920 ) ( 315,920 ) Net issuance of 78,954 shares of common stock from exercise of stock options 2 154 — — 156 Issuance of 42,425,352 shares of common stock including approximately $ 2.5 million in certain stock award settlements and stock issuance costs - Happy Bancshares acquisition 424 960,866 — — 961,290 Repurchase of 3,098,531 shares of common stock ( 31 ) ( 70,825 ) — — ( 70,856 ) Share-based compensation net issuance of 328,633 shares of restricted common stock 2 9,131 — — 9,133 Cash dividends – Common Stock, $ 0.66 per share — — ( 128,424 ) — ( 128,424 ) Balances at December 31, 2022 2,034 2,386,699 1,443,087 ( 305,458 ) 3,526,362 Comprehensive income: Net income — — 392,929 — 392,929 Other comprehensive income — — — 56,383 56,383 Net issuance of 118,653 shares of common stock from exercise of stock options 1 801 — — 802 Repurchase of 2,225,849 shares of common stock ( 22 ) ( 48,319 ) — — ( 48,341 ) Share-based compensation net issuance of 200,000 shares of restricted common stock 2 9,272 — — 9,274 Excise tax expense from repurchase of common stock — ( 430 ) — — ( 430 ) Cash dividends – Common Stock, $ 0.72 per share — — ( 145,904 ) — ( 145,904 ) Balances at December 31, 2023 2,015 2,348,023 1,690,112 ( 249,075 ) 3,791,075 Comprehensive income: Net income — — 402,241 — 402,241 Other comprehensive income — — — ( 7,033 ) ( 7,033 ) Net issuance of 408,617 shares of common stock from exercise of stock options 4 2,012 — — 2,016 Repurchase of 3,521,792 shares of common stock ( 35 ) ( 86,047 ) — — ( 86,082 ) Share-based compensation net issuance of 469,083 shares of restricted common stock 5 9,217 — — 9,222 Excise tax expense from repurchase of common stock — ( 411 ) — — ( 411 ) Cash dividends – Common Stock, $ 0.75 per share — — ( 150,003 ) — ( 150,003 ) Balances at December 31, 2024 $ 1,989 $ 2,272,794 $ 1,942,350 $ ( 256,108 ) $ 3,961,025 See accompanying notes. 96 Table of Contents Home BancShares, Inc. Consolidated Statements of Cash Flows Years Ended December 31, (In thousands) 2024 2023 2022 Operating Activities Net income $ 402,241 $ 392,929 $ 305,262 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation & amortization 29,198 30,929 31,856 (Increase) decrease in value of equity securities ( 2,971 ) 1,094 1,272 Amortization of securities, net 14,446 16,491 20,335 Accretion of purchased loans ( 8,133 ) ( 10,587 ) ( 16,341 ) Share-based compensation 9,222 9,274 9,133 Gain on assets ( 542 ) ( 2,117 ) ( 698 ) Provision for credit losses - loans 48,400 11,950 50,170 Provision for credit losses - unfunded commitments — ( 1,500 ) 11,410 Provision for credit losses - investment securities ( 330 ) 1,683 2,005 Deferred income taxes 8,304 ( 4,077 ) 2,213 Increase in cash value of life insurance ( 4,850 ) ( 4,655 ) ( 3,800 ) Originations of mortgage loans held for sale ( 630,181 ) ( 480,847 ) ( 510,136 ) Proceeds from sales of mortgage loans held for sale 633,384 437,248 503,020 Changes in assets and liabilities: Accrued interest receivable ( 1,163 ) ( 15,767 ) ( 24,473 ) Other assets ( 22,806 ) ( 1,654 ) 9,342 Accrued interest payable and other liabilities ( 13,573 ) ( 724 ) 22,602 Net cash provided by operating activities 460,646 379,670 413,172 Investing Activities Net decrease (increase) in federal funds sold 1,375 ( 5,100 ) — Net increase in loans, excluding loans acquired ( 420,984 ) ( 9,037 ) ( 673,883 ) Purchases of investment securities – available-for-sale ( 64,073 ) ( 9,894 ) ( 1,258,403 ) Purchases of investment securities - held-to-maturity — — ( 674,178 ) Proceeds from maturities of investment securities – available-for-sale 480,074 597,912 496,551 Proceeds from maturities of investment securities – held-to-maturity 6,993 5,897 501,529 Proceeds from sale of investment securities – available-for-sale — — 67,349 Purchases of equity securities — — ( 49,975 ) Proceeds from sales of equity securities 3,436 1,522 13,778 Purchases of other investments — ( 3,364 ) ( 60,889 ) Proceeds from redemption of other investments 643 — — Proceeds from foreclosed assets held for sale 2,293 1,292 2,319 Proceeds from sale of SBA loans 8,519 3,968 4,304 Purchases of premises and equipment ( 38,531 ) ( 22,465 ) ( 19,579 ) Proceeds from sales of premises and equipment 26,268 13,915 10,563 (Purchase of) return of investment on cash value of life insurance ( 346 ) 3,813 277 Purchase of marine loan portfolio — — ( 242,617 ) Net cash proceeds received – market acquisitions — — 858,584 Net cash provided by (used in) investing activities 5,667 578,459 ( 1,024,270 ) 97 Table of Contents Home BancShares, Inc. Consolidated Statements of Cash Flows Years Ended December 31, (In thousands) 2024 2023 2022 Financing Activities Net increase (decrease) in deposits, excluding deposits acquired 358,586 ( 1,151,072 ) ( 2,177,058 ) Net increase (decrease) in securities sold under agreements to repurchase 20,265 10,939 ( 9,740 ) Increase in FHLB and other borrowed funds 1,401,000 6,476,550 601,000 Decrease in FHLB and other borrowed funds ( 2,101,550 ) ( 5,825,250 ) ( 429,330 ) Retirement of subordinated debentures — — ( 300,000 ) Proceeds from issuance of subordinated debentures — — 296,324 Redemption of trust preferred securities — — ( 96,499 ) Proceeds from exercise of stock options 2,016 802 156 Repurchase of common stock ( 86,493 ) ( 48,771 ) ( 70,856 ) Dividends paid on common stock ( 150,003 ) ( 145,904 ) ( 128,424 ) Net cash (used in) provided by financing activities ( 556,179 ) ( 682,706 ) ( 2,314,427 ) Net change in cash and cash equivalents ( 89,866 ) 275,423 ( 2,925,525 ) Cash and cash equivalents – beginning of year 1,000,213 724,790 3,650,315 Cash and cash equivalents – end of year $ 910,347 $ 1,000,213 $ 724,790 See accompanying notes. 98 Table of Contents Home BancShares, Inc. Notes to Consolidated Financial Statements 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 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 regions and branches of the Bank provide 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 and regions have similar operating and economic characteristics. While the chief decision maker monitors the revenue streams of the various products, services, branch locations and regions, operations are managed, and financial performance is evaluated on a Company-wide basis. Accordingly, all of the banking services, branch locations and regions 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. Cash and Cash Equivalents Cash and cash equivalents consist of cash on hand, cash held as demand deposits at various banks and the Federal Reserve Bank (“FRB”) and interest-bearing deposits with other banks. Included in cash and cash equivalents were $ 15.4 million and $ 22.8 million of restricted cash as of December 31, 2024 and 2023, respectively. Investment Securities Interest on investment securities is recorded as income as earned. Amortization of premiums and accretion of discounts are recorded as interest income from securities. Realized gains and losses are recorded as net security gains (losses). Gains or losses on the sale of securities are determined using the specific identification method. 99 Table of Contents Management determines the classification of securities as available-for-sale, held-to-maturity, or trading at the time of purchase based on the intent and objective of the investment and the ability to hold to maturity. Fair values of securities are based on quoted market prices where available. If quoted market prices are not available, estimated fair values are based on quoted market prices of comparable securities. The Company has no trading securities. Debt securities available-for-sale ("AFS") are reported at fair value with unrealized holding gains and losses reported as a separate component of stockholders’ equity and other comprehensive income (loss), net of taxes. Securities that are held as available-for-sale are used as a part of our asset/liability management strategy. Securities that may be sold in response to interest rate changes, changes in prepayment risk, the need to increase regulatory capital, and other similar factors are classified as available-for-sale. The Company evaluates all securities quarterly to determine if any securities in a loss position require a provision for credit losses in accordance with ASC 326, Measurement of Credit Losses on Financial Instruments ("ASC 326"). 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 in accordance with ASC 326. The Company measures expected credit losses on HTM securities on a collective basis by major security type, with each type sharing similar risk characteristics. 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. 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. 100 Table of Contents The Company uses the discount cash flow ("DCF") method to estimate expected losses for all of 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. 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. 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, the Federal Housing Finance Agency ("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 loan 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 - SPF 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 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. 101 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 considered to be collateral dependent, according to ASC 326, are loans for which, based on current information and events, it is probable that we will be unable to collect all amounts due according to the contractual terms of the loan agreement. The aggregate amount of collateral shortfall on such loans is utilized in evaluating the adequacy of the allowance for credit losses and amount of provisions thereto. Losses on collateral dependent loans are charged against the allowance for credit losses when in the process of collection, it appears likely that such losses will be realized. The accrual of interest on collateral dependent loans is discontinued when, in management’s opinion the collection of interest is doubtful or generally when loans are 90 days or more past due. When accrual of interest is discontinued, all unpaid accrued interest is reversed. Interest income is subsequently recognized only to the extent cash payments are received in excess of principal due. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. 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. 102 Table of Contents Foreclosed Assets Held for Sale Real estate and personal properties acquired through or in lieu of loan foreclosure are to be sold and are initially recorded at fair value less cost to sell at the date of foreclosure, establishing a new cost basis. Valuations are periodically performed by management, and the real estate and personal properties are carried at fair value less costs to sell. Gains and losses from the sale of other real estate and personal properties are recorded in non-interest income, and expenses used to maintain the properties are included in non-interest expense. Bank Premises and Equipment Bank premises and equipment are carried at cost or fair value at the date of acquisition less accumulated depreciation. Depreciation expense is computed using the straight-line method over the estimated useful lives of the assets. Accelerated depreciation methods are used for tax purposes. Leasehold improvements are capitalized and amortized using the straight-line method over the terms of the respective leases or the estimated useful lives of the improvements whichever is shorter. The assets’ estimated useful lives for book purposes are as follows: Bank premises 15 - 40 years Furniture, fixtures, and equipment 3 - 15 years Cash value of life insurance The Company has purchased life insurance policies on certain key employees. Life insurance owned by the Company is recorded at the amount that can be realized under the insurance contract at the balance sheet date, which is the cash surrender value adjusted for other charges or other amounts due that are probable at settlement. Intangible Assets Intangible assets consist of goodwill and core deposit intangibles. Goodwill represents the excess purchase price over the fair value of net assets acquired in business acquisitions. The core deposit intangible represents the excess intangible value of acquired deposit customer relationships as determined by valuation specialists. The core deposit intangibles are being amortized over 120 months on a straight-line basis. Goodwill is not amortized, but rather, is evaluated for impairment on at least an annual basis or more frequently if changes or circumstances occur. The Company performed its annual impairment test of goodwill and core deposit intangibles during 2024, 2023 and 2022, as required by FASB ASC 350, Intangibles - Goodwill and Other . The 2024, 2023 and 2022 tests indicated no impairment of the Company’s goodwill or core deposit intangibles. Securities Sold Under Agreements to Repurchase Securities sold under agreements to repurchase consist of obligations of the Company to other parties. At the point funds deposited by customers become investable, those funds are used to purchase securities owned by the Company and held in its general account with the designation of Customers’ Securities. A third party maintains control over the securities underlying overnight repurchase agreements. The securities involved in these transactions are generally U.S. Treasury or Federal Agency issues. Securities sold under agreements to repurchase generally mature on the banking day following that on which the investment was initially purchased and are treated as collateralized financing transactions which are recorded at the amounts at which the securities were sold plus accrued interest. Interest rates and maturity dates of the securities involved vary and are not intended to be matched with funds from customers. Derivative Financial Instruments The Company may enter into derivative contracts for the purposes of managing exposure to interest rate risk. The Company records all derivatives on the consolidated balance sheet at fair value. Historically the Company’s policy has been not to invest in derivative type investments. The Company has standalone derivative financial instruments acquired in a previous acquisition. These derivative financial instruments consist of interest rate swaps and are recognized as assets and liabilities in the consolidated statements of financial condition at fair value. The Bank’s derivative instruments have not been designated as hedging instruments. These undesignated derivative instruments are recognized on the consolidated balance sheet at fair value, with changes in fair value recorded in other non-interest income. In addition, as of December 31, 2024 and December 31, 2023, the Company had derivative contracts outstanding associated with the mortgage loans held for sale portfolio. As of December 31, 2024 and 2023, these derivative instruments are not considered to be material to the Company’s financial position and results of operations. 103 Table of Contents Stock Options The Company accounts for stock options in accordance with FASB ASC 718, Compensation - Stock Compensation, which establishes standards for the accounting for transactions in which an entity (i) exchanges its equity instruments for goods and services, or (ii) incurs liabilities in exchange for goods and services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of the equity instruments. FASB ASC 718 requires that such transactions be recognized as compensation cost in the income statement based on their fair values on the measurement date, which is generally the date of the grant. For additional information on the stock-based compensation plan, see Note 13. Income Taxes The Company accounts for income taxes in accordance with income tax accounting guidance (ASC 740, Income Taxes ). The income tax accounting guidance results in two components of income tax expense: current and deferred. Current income tax expense reflects taxes to be paid or refunded for the current period by applying the provisions of the enacted tax law to the taxable income or excess of deductions over revenues. The Company determines deferred income taxes using the liability (or balance sheet) method. Under this method, the net deferred tax asset or liability is based on the tax effects of the differences between the book and tax bases of assets and liabilities, and enacted changes in tax rates and laws are recognized in the period in which they occur. Deferred income tax expense results from changes in deferred tax assets and liabilities between periods. Deferred tax assets are recognized if it is more likely than not, based on the technical merits, that the tax position will be realized or sustained upon examination. The term more likely than not means a likelihood of more than 50 percent; the terms examined and upon examination also include resolution of the related appeals or litigation processes, if any. A tax position that meets the more-likely-than-not recognition threshold is initially and subsequently measured as the largest amount of tax benefit that has a greater than 50 percent likelihood of being realized upon settlement with a taxing authority that has full knowledge of all relevant information. The determination of whether or not a tax position has met the more-likely-than-not recognition threshold considers the facts, circumstances and information available at the reporting date and is subject to management’s judgment. Deferred tax assets are reduced by a valuation allowance if, based on the weight of evidence available, it is more likely than not that some portion or all of a deferred tax asset will not be realized. The Company and its subsidiaries file consolidated tax returns. Its subsidiary provides for income taxes on a separate return basis, and remits to the Company amounts determined to be currently payable. Revenue Recognition. ASC Topic 606, Revenue from Contracts with Customers ("ASC Topic 606"), establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity's contracts to provide goods or services to customers. The core principle requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration that it expects to be entitled to receive in exchange for those goods or services recognized as performance obligations are satisfied. The majority of our revenue-generating transactions are not subject to ASC Topic 606, including revenue generated from financial instruments, such as our loans, letters of credit, investment securities and mortgage lending income, as these activities are subject to other GAAP discussed elsewhere within our disclosures. Descriptions of our significant revenue-generating activities that are within the scope of ASC Topic 606, which are presented in our income statements as components of non-interest income are as follows: • Service charges on deposit accounts – These represent general service fees for monthly account maintenance and activity or transaction-based fees and consist of transaction-based revenue, time-based revenue (service period), item-based revenue or some other individual attribute-based revenue. Revenue is recognized when our performance obligation is completed which is generally monthly for account maintenance services or when a transaction has been completed (such as a wire transfer). Payment for such performance obligations are generally received at the time the performance obligations are satisfied. • Other service charges and fees – These represent credit card interchange fees and Centennial Commercial Finance Group (“Centennial CFG”) loan fees. The interchange fees are recorded in the period the performance obligation is satisfied which is generally the cash basis based on agreed upon contracts. The Centennial CFG loan fees are based on loan or other negotiated agreements with customers and are accounted for under ASC Topic 310. • Trust fees - The Company enters into contracts with its customers to manage assets for investment, and/or transact on their accounts. The Company generally satisfies its performance obligations as services are rendered. The management fees are percentage based, flat, percentage of income or a fixed percentage calculated upon the average balance of assets depending upon account type. Fees are collected on a monthly or annual basis. 104 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 years ended December 31: 2024 2023 2022 (In thousands, except per share data) Net income $ 402,241 $ 392,929 $ 305,262 Average common shares outstanding 199,939 202,627 194,694 Effect of common stock options 130 146 325 Diluted common shares outstanding 200,069 202,773 195,019 Basic earnings per common share $ 2.01 $ 1.94 $ 1.57 Diluted earnings per common share $ 2.01 $ 1.94 $ 1.57 As of December 31, 2024, 2023 and 2022, the Company's stock options were dilutive to earnings per share. The impact of anti-dilutive shares to the diluted earnings per share calculation was considered immaterial for the periods ended December 31, 2024, 2023 and 2022. 2. Business Combinations Acquisition of Happy Bancshares, Inc. On April 1, 2022, the Company completed the acquisition of Happy Bancshares, Inc. (“Happy”), and merged Happy State Bank into Centennial Bank. The Company issued approximately 42.4 million shares of its common stock valued at approximately $ 958.8 million as of April 1, 2022. In addition, the holders of certain Happy stock-based awards received approximately $ 3.7 million in cash in cancellation of such awards, for a total transaction value of approximately $ 962.5 million. The acquisition added new markets for expansion and brought complementary businesses together to drive synergies and growth. Including the effects of the known purchase accounting adjustments, as of the acquisition date, Happy had approximately $ 6.69 billion in total assets, $ 3.65 billion in loans and $ 5.86 billion in customer deposits. Happy formerly operated its banking business from 62 locations in Texas. The Company has determined that the acquisition of the net assets of Happy constitutes a business combination as defined by ASC Topic 805, Business Combinations. Accordingly, the assets acquired and liabilities assumed are presented at their fair values as required. Fair values were determined based on the requirements of ASC Topic 820, Fair Value Measurements . In many cases, the determination of these fair values required management to make estimates about discount rates, future expected cash flows, market conditions and other future events that are highly subjective in nature. The following schedule is a breakdown of the assets acquired and liabilities assumed as of the acquisition date: 105 Table of Contents Happy Bancshares, Inc. Acquired from Happy Fair Value Adjustments As Recorded by HBI (Dollars in thousands) Assets Cash and due from banks $ 112,999 $ ( 446 ) $ 112,553 Interest-bearing deposits with other banks 746,031 — 746,031 Cash and cash equivalents 859,030 ( 446 ) 858,584 Investment securities - available-for-sale, net of allowance for credit losses 1,773,540 8,485 1,782,025 Total investment securities 1,773,540 8,485 1,782,025 Loans receivable 3,657,009 ( 4,389 ) 3,652,620 Allowance for credit losses ( 42,224 ) 25,408 ( 16,816 ) Loans receivable, net 3,614,785 21,019 3,635,804 Bank premises and equipment, net 153,642 ( 12,270 ) 141,372 Foreclosed assets held for sale 193 ( 77 ) 116 Cash value of life insurance 105,049 3 105,052 Accrued interest receivable 31,575 — 31,575 Deferred tax asset, net 32,908 ( 1,092 ) 31,816 Goodwill 130,428 ( 130,428 ) — Core deposit intangible 10,672 31,591 42,263 Other assets 43,330 15,567 58,897 Total assets acquired $ 6,755,152 $ ( 67,648 ) $ 6,687,504 Liabilities Deposits Demand and non-interest-bearing $ 1,932,756 $ 67 $ 1,932,823 Savings and interest-bearing transaction accounts 3,519,652 — 3,519,652 Time deposits 401,899 903 402,802 Total deposits 5,854,307 970 5,855,277 FHLB and other borrowed funds 74,212 4,118 78,330 Accrued interest payable and other liabilities 50,889 ( 1,892 ) 48,997 Subordinated debentures 159,965 7,625 167,590 Total liabilities assumed 6,139,373 10,821 6,150,194 Equity Total equity assumed 615,779 ( 615,779 ) — Total liabilities and equity assumed $ 6,755,152 $ ( 604,958 ) $ 6,150,194 Net assets acquired 537,310 Purchase price 962,538 Goodwill $ 425,228 106 Table of Contents The following is a description of the methods used to determine the fair values of significant assets and liabilities presented above: Cash and due from banks, interest-bearing deposits with other banks and federal funds sold – The carrying amount of these assets was deemed a reasonable estimate of fair value based on the short-term nature of these assets. Investment securities – Investment securities were acquired from Happy with an approximately $ 8.5 million adjustment to fair value based upon quoted market prices. Otherwise the book value was deemed to approximate fair value. Loans – Fair values for loans were based on a discounted cash flow methodology that considered factors including the type of loan and related collateral, classification status, fixed or variable interest rate, term of loan, whether or not the loan was amortizing and current discount rates. The discount rates used for loans are based on current market rates for new originations of comparable loans and include adjustments for liquidity concerns. The discount rate does not include a factor for credit losses as that has been included in the estimated cash flows. Loans were grouped together according to similar characteristics and were treated in the aggregate when applying various valuation techniques. See Note 5 to the Condensed Notes to Consolidated Financial Statements, for additional information related to purchased financial assets with credit deterioration. Bank premises and equipment – Bank premises and equipment were acquired from Happy with a $ 12.3 million adjustment to fair value. This represents the difference between current appraisals completed in connection with the acquisition and book value acquired. Foreclosed assets held for sale – These assets are presented at the estimated fair values that management expects to receive when the properties are sold, net of related costs of disposal. Cash value of life insurance – Bank owned life insurance is carried at its current cash surrender value, which is the most reasonable estimate of fair value. Accrued interest receivable – The carrying amount of these assets was deemed a reasonable estimate of the fair value. Core deposit intangible – This core deposit intangible asset represents the value of the relationships that Happy had with its deposit customers. The fair value of this intangible asset was estimated based on a discounted cash flow methodology that gave appropriate consideration to expected customer attrition rates, cost of the deposit base, and the net maintenance cost attributable to customer deposits. Deposits – The fair values used for the demand and savings deposits that comprise the transaction accounts acquired, by definition, equal the amount payable on demand at the acquisition date. The $ 903,000 fair value adjustment applied for time deposits was because the weighted-average interest rate of Happy’s certificates of deposits were estimated to be above the current market rates. FHLB borrowed funds – The fair value of FHLB borrowed funds is estimated based on borrowing rates currently available to the Company for borrowings with similar terms and maturities. Accrued interest payable and other liabilities – The fair value adjustment results from certain liabilities whose value was estimated to be more or less than book value, such as certain accounts payable and other miscellaneous liabilities. The carrying amount of accrued interest and the remainder of other liabilities was deemed to be a reasonable estimate of fair value. Subordinated debentures – The fair value of subordinated debentures is estimated based on borrowing rates currently available to the Company for borrowings with similar terms and maturities. 107 Table of Contents The unaudited pro-forma combined consolidated financial information presents how the combined financial information of HBI and Happy might have appeared had the businesses actually been combined. The following schedule represents the unaudited pro forma combined financial information as of the year ended December 31, 2022, assuming the acquisition was completed as of January 1, 2022: December 31, 2022 (In thousands, except per share data) Total interest income $ 935,168 Total non-interest income 188,012 Net income available to all shareholders 406,949 Basic earnings per common share $ 1.98 Diluted earnings per common share 1.98 The unaudited pro-forma consolidated financial information is presented for illustrative purposes only and does not indicate the financial results of the combined company had the companies actually been combined at the beginning of the period presented and had the impact of possible significant revenue enhancements and expense efficiencies from in-market cost savings, among other factors, been considered and, accordingly, does not attempt to predict or suggest future results. Pro-forma results include Happy merger expenses of $ 49.6 million, provision for credit losses on acquired loans of $ 45.2 million, provision for credit losses on acquired unfunded commitments of $ 11.4 million and provision for credit losses on acquired investment securities of $ 2.0 million for the year ended December 31, 2022. The pro-forma financial information also does not necessarily reflect what the historical results of the combined company would have been had the companies been combined during this period. Purchased loans that reflect a more-than-insignificant deterioration of credit from origination are considered PCD. For PCD loans, the initial estimate of expected credit losses is recognized in the allowance for credit losses on the date of acquisition using the same methodology as other loans held-for-investment. The following table provides a summary of loans purchased as part of the Happy acquisition with credit deterioration at acquisition: April 1, 2022 (In thousands) Purchased Loans with Credit Deterioration: Par value $ 165,028 Allowance for credit losses at acquisition ( 16,816 ) Premium on acquired loans 684 Purchase price $ 148,896 108 Table of Contents 3. Investment Securities The amortized cost and estimated fair value of investment securities that are classified as available-for-sale and held-to-maturity are as follows: December 31, 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 $ 297,698 $ — $ 297,698 $ 1,164 $ ( 14,072 ) $ 284,790 U.S. government-sponsored mortgage-backed securities 1,527,463 — 1,527,463 760 ( 203,539 ) 1,324,684 Private mortgage-backed securities 184,643 — 184,643 — ( 13,249 ) 171,394 Non-government-sponsored asset backed securities 228,751 — 228,751 331 ( 3,434 ) 225,648 State and political subdivisions 956,055 — 956,055 335 ( 86,029 ) 870,361 Other securities 215,662 ( 2,195 ) 213,467 576 ( 18,281 ) 195,762 Total $ 3,410,272 $ ( 2,195 ) $ 3,408,077 $ 3,166 $ ( 338,604 ) $ 3,072,639 December 31, 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 $ 43,560 $ — $ 43,560 $ — $ ( 3,021 ) $ 40,539 U.S. government-sponsored mortgage-backed securities 124,169 — 124,169 — ( 6,695 ) 117,474 State and political subdivisions 1,109,480 ( 2,005 ) 1,107,475 39 ( 122,587 ) 984,927 Total $ 1,277,209 $ ( 2,005 ) $ 1,275,204 $ 39 $ ( 132,303 ) $ 1,142,940 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 ) $ 3,507,841 109 Table of Contents 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 fair value of approximately $ 2.61 billion and $ 3.57 billion at December 31, 2024 and 2023, respectively, were pledged to secure public deposits and for other purposes required or permitted by law. Also, investment securities pledged as collateral for repurchase agreements totaled approximately $ 162.4 million and $ 142.1 million at December 31, 2024 and 2023, respectively. The amortized cost and estimated fair value of securities classified as available-for-sale and held-to-maturity at December 31, 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 $ 17,732 $ 17,486 $ — $ — Due after one year through five years 274,948 259,238 55,827 52,805 Due after five years through ten years 364,443 332,408 366,053 328,829 Due after ten years 812,292 741,781 731,160 643,832 U.S. government-sponsored mortgage-backed securities 1,527,463 1,324,684 124,169 117,474 Private mortgage-backed securities 184,643 171,394 — — Non-government-sponsored asset backed securities 228,751 225,648 — — Total $ 3,410,272 $ 3,072,639 $ 1,277,209 $ 1,142,940 During the year ended December 31, 2024, no available-for-sale securities were sold. During the year ended December 31, 2023, no available-for-sale securities were sold. During the year ended December 31, 2022, $ 67.3 million in available-for-sale securities were sold, and no gain or loss was recognized. 110 Table of Contents The following 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 December 31, 2024 and 2023: December 31, 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 $ 25,946 $ ( 326 ) $ 161,759 $ ( 13,746 ) $ 187,705 $ ( 14,072 ) U.S. government-sponsored mortgage-backed securities 34,597 ( 1,088 ) 1,215,317 ( 202,451 ) 1,249,914 ( 203,539 ) Private mortgage-backed securities 9,491 ( 129 ) 161,903 ( 13,120 ) 171,394 ( 13,249 ) Non-government-sponsored asset backed securities 10,849 ( 60 ) 92,857 ( 3,374 ) 103,706 ( 3,434 ) State and political subdivisions 46,591 ( 1,230 ) 761,289 ( 84,799 ) 807,880 ( 86,029 ) Other securities 7,157 ( 911 ) 173,204 ( 17,370 ) 180,361 ( 18,281 ) Total $ 134,631 $ ( 3,744 ) $ 2,566,329 $ ( 334,860 ) $ 2,700,960 $ ( 338,604 ) Held-to-maturity: U.S. government-sponsored enterprises $ — $ — $ 40,539 $ ( 3,021 ) $ 40,539 $ ( 3,021 ) U.S. government-sponsored mortgage-backed securities 48,254 ( 1,979 ) 69,220 ( 4,716 ) 117,474 ( 6,695 ) State and political subdivisions 29,612 ( 1,037 ) 954,335 ( 121,550 ) 983,947 ( 122,587 ) Total $ 77,866 $ ( 3,016 ) $ 1,064,094 $ ( 129,287 ) $ 1,141,960 $ ( 132,303 ) 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 ) 111 Table of Contents 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. During the year ended December 31, 2024, the Company recovered $ 330,000 in AFS reserves due to an improvement in the unrealized loss position of one of the Company's subordinated debt investments. During the year ended December 31, 2023, one of the Company’s AFS subordinated debt investment securities was downgraded below investment grade. As result, the Company wrote down the value of the investment to its unrealized loss position, which required a $ 1.7 million provision, but the remaining $ 842,000 allowance for credit losses on AFS investments associated with certain securities in the subordinated debt portfolio within the banking sector was considered adequate. At December 31, 2022, the Company determined the $ 842,000 allowance for credit losses on AFS investments associated with certain securities in the subordinated debt portfolio within the banking sector was considered adequate. These investments are classified within the other securities category of the AFS portfolio. At both December 31, 2024 and 2023, the $ 2.0 million allowance for credit losses for the held-to-maturity portfolio was considered adequate. No additional provision for credit losses was considered necessary for the HTM portfolio. During the year ended December 31, 2022, the Company recorded a $ 2.0 million provision for credit losses for the HTM portfolio as a result of the investment securities acquired as part of the Happy acquisition. Available-for-Sale Investment Securities Years Ended December 31, 2024 2023 2022 (In thousands) Allowance for credit losses: Beginning balance $ 2,525 $ 842 $ 842 Provision for credit loss ( 330 ) 1,683 — Ending balance, December 31, $ 2,195 $ 2,525 $ 842 112 Table of Contents Held-to-Maturity Investment Securities Years Ended December 31, 2024 2023 2022 Allowance for credit losses: (In thousands) Beginning balance $ 2,005 $ 2,005 $ — Provision for credit loss - acquired securities — — 2,005 Securities charged-off — — — Recoveries — — — Ending balance, December 31, $ 2,005 $ 2,005 $ 2,005 For the year ended December 31, 2024, the Company had available-for-sale investment securities with approximately $ 334.9 million in unrealized losses, which have 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 that the cause of the market depreciation was primarily due to the change in interest rates and not the issuer’s financial condition, or downgrades by rating agencies. In addition, approximately 38.9 % of the Company’s available-for-sale 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. For the year ended December 31, 2023, the Company had available-for-sale investment securities with approximately $ 333.5 million in unrealized losses, which had been in continuous loss positions for more than twelve months. With the exception of the securities with credit losses noted above, the Company’s assessments indicated that the cause of the market depreciation was primarily due to the change in interest rates and not the issuer’s financial condition, or downgrades by rating agencies. In addition, approximately 30.4 % of the Company’s available-for-sale investment portfolio was expected to mature or 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 December 31, 2024, the Company's available-for-sale securities portfolio consisted of 1,535 investment securities, 1,306 of which were in an unrealized loss position. As noted in the table above, the total amount of the unrealized loss was $ 338.6 million. The U.S government-sponsored enterprises portfolio contained unrealized losses of $ 14.1 million on 65 securities. The U.S. government-sponsored mortgage-backed securities portfolio contained $ 203.5 million of unrealized losses on 650 securities, and the private mortgage-backed securities portfolio contained $ 13.2 million of unrealized losses on 32 securities. The non-government-sponsored asset backed securities portfolio contained $ 3.4 million of unrealized losses on 23 securities. The state and political subdivisions portfolio contained $ 86.0 million of unrealized losses on 474 securities. In addition, the other securities portfolio contained $ 18.3 million of unrealized losses on 62 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 December 31, 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 December 31, 2024, the Company's held-to-maturity securities portfolio consisted of 512 investment securities, 507 of which were in an unrealized loss position. As noted in the table above, the total amount of the unrealized loss was $ 132.3 million. The U.S. government-sponsored enterprises portfolio contained unrealized losses of $ 3.0 million on 5 securities. The U.S. government-sponsored mortgage-backed securities portfolio contained $ 6.7 million of unrealized losses on 20 securities. The state and political subdivisions portfolio contained $ 122.6 million of unrealized losses on 482 securities. The unrealized losses on the Company's held-to-maturity investments were a result of interest rate changes. The Company expects to recover the amortized cost basis over the term of the securities. Because the decline in market value was attributable to changes in interest rates and not credit quality, the Company has determined that an additional provision for credit losses is not necessary as of December 31, 2024. 113 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 December 31, 2024 and 2023: December 31, 2024 State and Political Subdivisions U.S. government-sponsored enterprises U.S. government-sponsored mortgage-backed securities Total (In thousands) Aaa/AAA $ 235,504 $ 43,560 $ — $ 279,064 Aa/AA 845,876 — — 845,876 A 23,208 — — 23,208 Not rated 4,892 — — 4,892 Agency Backed — — 124,169 124,169 Total $ 1,109,480 $ 43,560 $ 124,169 $ 1,277,209 December 31, 2023 State and Political Subdivisions U.S. government-sponsored enterprises U.S. government-sponsored mortgage-backed securities Total (In thousands) Aaa/AAA $ 235,557 $ 43,285 $ — $ 278,842 Aa/AA 845,418 — — 845,418 A 27,667 — — 27,667 Not rated 1,782 — — 1,782 Agency Backed — — 130,278 130,278 Total $ 1,110,424 $ 43,285 $ 130,278 $ 1,283,987 Income earned on securities for the years ended is as follows: December 31, 2024 2023 2022 (In thousands) Taxable: Available-for-sale $ 95,940 $ 108,650 $ 71,352 Held-to-maturity 29,825 29,925 20,581 Tax-exempt: Available-for-sale 18,586 19,104 19,168 Held-to-maturity 12,394 12,514 9,188 Total $ 156,745 $ 170,193 $ 120,289 114 Table of Contents 4. Loans Receivable The various categories of loans receivable are summarized as follows: December 31, 2024 2023 (In thousands) Real estate: Commercial real estate loans Non-farm/non-residential $ 5,426,780 $ 5,549,954 Construction/land development 2,736,214 2,293,047 Agricultural 336,993 325,156 Residential real estate loans Residential 1-4 family 1,956,489 1,844,260 Multifamily residential 496,484 435,736 Total real estate 10,952,960 10,448,153 Consumer 1,234,361 1,153,690 Commercial and industrial 2,022,775 2,324,991 Agricultural 367,251 307,327 Other 187,153 190,567 Total Loans receivable $ 14,764,500 $ 14,424,728 Allowance for credit losses ( 275,880 ) ( 288,234 ) Loans receivable, net $ 14,488,620 $ 14,136,494 During the year ended December 31, 2024, the Company sold $ 7.8 million of the guaranteed portion of certain SBA loans, which resulted in a gain of approximately $ 617,000 . During the year ended December 31, 2023, the Company sold $ 3.7 million of the guaranteed portion of certain SBA loans, which resulted in a gain of $ 278,000 . During the year ended December 31, 2022, the Company sold $ 4.1 million of the guaranteed portion of certain SBA loans, which resulted in a gain of $ 183,000 . Mortgage loans held for sale of approximately $ 98.7 million and $ 123.4 million at December 31, 2024 and 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 are derivative instruments and their fair values at December 31, 2024 and 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. For PCD loans not individually analyzed for impairment, the Company develops separate PCD models for each loan segment. 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 $ 76.3 million and $ 130.7 million in PCD loans, as of December 31, 2024 and 2023, respectively. The balance, as of December 31, 2024, consisted of $ 76.3 million resulting from the acquisition of Happy. The balance, as of December 31, 2023, consisted of $ 130.4 million resulting from the acquisition of Happy and $ 376,100 from the acquisition of LH-Finance. 115 Table of Contents 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 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. 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 beginning with the June 30, 2024 allowance for credit losses calculation. The identified loss drivers by segment are included below as of both December 31, 2024 and 2023. December 31, 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 (%) 116 Table of Contents 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. 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 United States Coast Guard 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. 117 Table of Contents 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 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 year ended December 31, 2024, the Company recorded a $ 48.4 million provision for credit losses on loans. $ 33.4 million of the provision for credit losses on loans recorded during 2024 was used to establish a hurricane reserve for loans located in the Federal Emergency Management Agency ("FEMA") disaster areas impacted by Hurricanes Helene and Milton which made landfall during the third and fourth quarters of 2024. The remaining portion of the provision was related to loan growth. In addition, during the third quarter of 2024, the Company recorded a $ 1.0 million provision for credit losses on unfunded commitments, which completely offset the $ 1.0 million recovery of credit losses on unfunded commitments which was recorded during the first quarter of 2024. During the year ended December 31, 2023, the Company recorded a $ 12.0 million provision for credit losses on loans, and the Company reversed $ 1.5 million in provision for unfunded commitments. During the year ended December 31, 2022, the Company completed the acquisition of Happy. As a result, the Company recorded $ 4.4 million in net loan discounts and a $ 16.8 million increase in the allowance for credit losses related to PCD loans. In addition, the Company recorded a $ 45.2 million provision for credit losses on acquired loans for the CECL "double count" and an $ 11.4 million provision for credit losses on acquired unfunded commitments. In addition, the Company recorded a $ 5.0 million provision for credit losses on loans due to increased loan growth. However, the Company determined that no additional provision was necessary for unfunded commitments as the current level of the reserve was considered adequate. The following table presents the activity in the allowance for credit losses for the year ended December 31, 2024. Year Ended December 31, 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 ( 1,437 ) ( 38,132 ) ( 7,067 ) ( 11,089 ) ( 5,311 ) ( 63,036 ) Recoveries of loans previously charged off 221 59 180 628 1,194 2,282 Net loans (charged off) recovered ( 1,216 ) ( 38,073 ) ( 6,887 ) ( 10,461 ) ( 4,117 ) ( 60,754 ) Provision for credit loss - loans 19,610 50,753 1,862 ( 32,728 ) 8,903 48,400 Balance, December 31 $ 52,271 $ 91,315 $ 50,835 $ 49,621 $ 31,838 $ 275,880 The following table presents the balance in the allowance for credit losses for the year ended December 31, 2023. 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 ( 263 ) ( 2,335 ) ( 269 ) ( 9,157 ) ( 4,031 ) ( 16,055 ) Recoveries of loans previously charged off 113 533 329 583 1,112 2,670 Net loans (charged off) recovered ( 150 ) ( 1,802 ) 60 ( 8,574 ) ( 2,919 ) ( 13,385 ) Provision for credit loss - loans 1,784 ( 13,411 ) 4,837 12,030 6,710 11,950 Balance, December 31 $ 33,877 $ 78,635 $ 55,860 $ 92,810 $ 27,052 $ 288,234 118 Table of Contents The following table presents the balance in the allowance for loan losses for the year ended December 31, 2022. Year Ended December 31, 2022 Construction/ Land Development Other Commercial Real Estate Residential Real Estate Commercial & Industrial Consumer & Other Total (In thousands) Allowance for loan losses: Beginning balance $ 28,415 $ 87,218 $ 48,458 $ 53,062 $ 19,561 $ 236,714 Allowance for credit losses on PCD loans - Happy acquisition 950 9,283 980 5,596 7 16,816 Loans charged off ( 1 ) — ( 446 ) ( 9,773 ) ( 7,047 ) ( 17,267 ) Recoveries of loans previously charged off 405 967 119 780 965 3,236 Net loans recovered (charged off) 404 967 ( 327 ) ( 8,993 ) ( 6,082 ) ( 14,031 ) Provision for credit loss - acquired loans 7,205 18,711 7,380 11,303 571 45,170 Provision for credit loss - loans ( 4,731 ) ( 22,331 ) ( 5,528 ) 28,386 9,204 5,000 Balance December 31 $ 32,243 $ 93,848 $ 50,963 $ 89,354 $ 23,261 $ 289,669 The following table presents the amortized cost basis of loans on nonaccrual status and loans past due over 90 days still accruing as of December 31, 2024 and 2023, respectively: December 31, 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 $ 35,868 $ 28,768 $ 304 Construction/land development 3,702 — 600 Agricultural 559 — — Residential real estate loans Residential 1-4 family 22,539 — 1,835 Multifamily residential 13,083 — — Total real estate 75,751 28,768 2,739 Consumer 6,178 — 32 Commercial and industrial 10,931 — 2,263 Agricultural & other 993 — — Total $ 93,853 $ 28,768 $ 5,034 119 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 $ 93.9 million and $ 60.0 million in nonaccrual loans for the periods ended December 31, 2024 and 2023, respectively. In addition, the Company had $ 5.0 million and $ 4.1 million in loans past due 90 days or more and still accruing for the periods ended December 31, 2024 and 2023, respectively. The Company had $ 28.8 million and $ 2.5 million in nonaccrual loans with a specific reserve as of December 31, 2024 and 2023, respectively. Interest income recognized on the non-accrual loans for the years ended December 31, 2024, 2023 and 2022 was considered immaterial . The following table presents the amortized cost basis of impaired loans by class of 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) as of December 31, 2024 and 2023, respectively: December 31, 2024 Commercial Real Estate Residential Real Estate Other (In thousands) Real estate: Commercial real estate loans Non-farm/non-residential $ 125,861 $ — $ — Construction/land development 4,301 — — Agricultural 559 — — Residential real estate loans Residential 1-4 family — 26,549 — Multifamily residential — 13,083 — Total real estate 130,721 39,632 — Consumer — — 14,228 Commercial and industrial — — 82,422 Agricultural & other — — 993 Total $ 130,721 $ 39,632 $ 97,643 120 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 $ 268.0 million and $ 94.9 million in impaired loans for the periods ended December 31, 2024 and 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. 121 Table of Contents The following is an aging analysis for loans receivable as of December 31, 2024 and 2023: December 31, 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 $ 4,352 $ 38,944 $ 36,172 $ 79,468 $ 5,347,312 $ 5,426,780 $ 304 Construction/land development 369 799 4,302 5,470 2,730,744 2,736,214 600 Agricultural 90 43 559 692 336,301 336,993 — Residential real estate loans Residential 1-4 family 1,897 4,877 24,374 31,148 1,925,341 1,956,489 1,835 Multifamily residential — — 13,083 13,083 483,401 496,484 — Total real estate 6,708 44,663 78,490 129,861 10,823,099 10,952,960 2,739 Consumer 7,046 68 6,210 13,324 1,221,037 1,234,361 32 Commercial and industrial 309 1,028 13,194 14,531 2,008,244 2,022,775 2,263 Agricultural and other 1,082 291 993 2,366 552,038 554,404 — Total $ 15,145 $ 46,050 $ 98,887 $ 160,082 $ 14,604,418 $ 14,764,500 $ 5,034 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 were $ 93.9 million and $ 60.0 million at December 31, 2024 and 2023, respectively. Interest recognized on impaired loans during the years ended December 31, 2024, 2023 and 2022 was approximately $ 13.5 million, $ 2.5 million and $ 9.6 million, respectively. The amount of interest recognized on impaired loans on the cash basis is not materially different than the accrual basis. 122 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 risks 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 impairment 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. 123 Table of Contents Based on the most recent analysis performed, the risk category of loans by class as of December 31, 2024 and 2023 is as follows: December 31, 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 $ — $ — $ — $ — $ — $ 326 $ 68 $ 394 Risk rating 2 — — — — — — — — Risk rating 3 178,690 331,274 645,431 512,315 220,835 934,598 228,198 3,051,341 Risk rating 4 120,700 91,233 531,601 267,040 131,943 617,978 313,529 2,074,024 Risk rating 5 27 — 1,266 — 1,040 9,613 343 12,289 Risk rating 6 33,781 825 33,998 5,701 9,892 204,535 — 288,732 Risk rating 7 — — — — — — — — Risk rating 8 — — — — — — — — Total non-farm/non-residential 333,198 423,332 1,212,296 785,056 363,710 1,767,050 542,138 5,426,780 Construction/land development Risk rating 1 $ — $ — $ — $ 9 $ — $ — $ — $ 9 Risk rating 2 100 134 — — — 157 — 391 Risk rating 3 791,840 397,607 337,382 85,069 40,870 60,994 70,755 1,784,517 Risk rating 4 171,954 173,190 320,896 29,010 6,848 20,977 207,563 930,438 Risk rating 5 13 — 16,390 198 — — — 16,601 Risk rating 6 — 108 1,852 1,182 195 871 38 4,246 Risk rating 7 — — — — — — — — Risk rating 8 — — — 12 — — — 12 Total construction/land development 963,907 571,039 676,520 115,480 47,913 82,999 278,356 2,736,214 Agricultural Risk rating 1 $ 449 $ — $ 1,393 $ — $ — $ — $ — $ 1,842 Risk rating 2 277 238 — 1,080 — — — 1,595 Risk rating 3 38,900 32,890 29,013 15,091 20,240 42,896 37,392 216,422 Risk rating 4 13,582 10,167 27,987 19,765 10,453 25,539 5,015 112,508 Risk rating 5 — — — — — 571 — 571 Risk rating 6 — — — 1,555 1,084 1,228 188 4,055 Risk rating 7 — — — — — — — — Risk rating 8 — — — — — — — — Total agricultural 53,208 43,295 58,393 37,491 31,777 70,234 42,595 336,993 Total commercial real estate loans $ 1,350,313 $ 1,037,666 $ 1,947,209 $ 938,027 $ 443,400 $ 1,920,283 $ 863,089 $ 8,499,987 Residential real estate loans Residential 1-4 family Risk rating 1 $ — $ — $ — $ — $ — $ 91 $ 2 $ 93 Risk rating 2 — 221 — — — 10 4 235 Risk rating 3 219,885 232,289 370,485 222,761 126,372 342,594 120,626 1,635,012 Risk rating 4 14,380 18,404 43,419 22,952 19,318 69,811 93,464 281,748 Risk rating 5 854 1,948 887 2,263 193 1,639 778 8,562 Risk rating 6 — 2,630 8,135 2,971 4,230 12,609 263 30,838 Risk rating 7 — — — — — — — — Risk rating 8 — — — — — 1 — 1 Total residential 1-4 family 235,119 255,492 422,926 250,947 150,113 426,755 215,137 1,956,489 124 Table of Contents December 31, 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 3,744 11,304 33,411 39,828 51,573 71,488 7,457 218,805 Risk rating 4 297 395 160,913 8,908 58,236 22,820 12,413 263,982 Risk rating 5 — — — — — 242 — 242 Risk rating 6 — — 12,647 586 — 222 — 13,455 Risk rating 7 — — — — — — — — Risk rating 8 — — — — — — — — Total multifamily residential 4,041 11,699 206,971 49,322 109,809 94,772 19,870 496,484 Total real estate $ 1,589,473 $ 1,304,857 $ 2,577,106 $ 1,238,296 $ 703,322 $ 2,441,810 $ 1,098,096 $ 10,952,960 Consumer Risk rating 1 $ 4,977 $ 2,256 $ 1,548 $ 789 $ 524 $ 1,001 $ 1,589 $ 12,684 Risk rating 2 — — — — — 142 — 142 Risk rating 3 268,747 208,277 206,878 173,224 87,540 234,802 1,152 1,180,620 Risk rating 4 7,232 4,556 4,926 1,464 161 5,626 195 24,160 Risk rating 5 — 4 8 216 156 407 — 791 Risk rating 6 75 5,741 3,618 181 339 5,946 55 15,955 Risk rating 7 — 2 — — — — — 2 Risk rating 8 — 1 — 6 — — — 7 Total consumer 281,031 220,837 216,978 175,880 88,720 247,924 2,991 1,234,361 Commercial and industrial Risk rating 1 6,417 $ 833 $ 575 $ 417 $ 214 $ 20,878 $ 12,044 $ 41,378 Risk rating 2 47 117 442 66 4 18 2,709 3,403 Risk rating 3 131,583 509,552 230,981 60,652 43,587 219,289 196,538 1,392,182 Risk rating 4 74,388 53,103 30,832 29,032 6,626 59,163 230,272 483,416 Risk rating 5 — 113 324 4,526 15 — 1,068 6,046 Risk rating 6 47,007 3,198 3,646 12,617 11 9,406 20,464 96,349 Risk rating 7 — — — — — — — — Risk rating 8 — — 1 — — — — 1 Total commercial and industrial 259,442 566,916 266,801 107,310 50,457 308,754 463,095 2,022,775 Agricultural and other Risk rating 1 $ 705 $ 375 $ 120 $ 16 $ 100 $ — $ 993 $ 2,309 Risk rating 2 153 301 23 — — — 2,175 2,652 Risk rating 3 33,060 42,562 38,428 26,408 24,261 31,552 180,103 376,374 Risk rating 4 31,896 2,287 7,467 6,998 338 14,067 106,309 169,362 Risk rating 5 1,914 — 312 — 61 543 5 2,835 Risk rating 6 — 3 — 39 57 663 110 872 Risk rating 7 — — — — — — — — Risk rating 8 — — — — — — — — Total agricultural and other 67,728 45,528 46,350 33,461 24,817 46,825 289,695 554,404 Total $ 2,197,674 $ 2,138,138 $ 3,107,235 $ 1,554,947 $ 867,316 $ 3,045,313 $ 1,853,877 $ 14,764,500 125 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 1,844,260 126 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 $ 14,424,728 127 Table of Contents The following table presents gross write-offs by origination date for the year ended December 31, 2024 and December 31, 2023. December 31, 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 $ — $ — $ 26,059 $ 779 $ 9,979 $ 1,220 $ 95 $ 38,132 Construction/land development — — 666 526 33 — 212 1,437 Agricultural — — — — — — — — Residential real estate loans Residential 1-4 family — 57 170 1 58 184 97 567 Multifamily residential — — 6,500 — — — — 6,500 Total real estate — 57 33,395 1,306 10,070 1,404 404 46,636 Consumer 18 * 134 997 246 336 474 9 2,214 Commercial and industrial — 576 97 691 116 6,005 3,604 11,089 Agricultural & other 3,026 * 71 — — — — — 3,097 Total $ 3,044 $ 838 $ 34,489 $ 2,243 $ 10,522 $ 7,883 $ 4,017 $ 63,036 *The 2024 write-offs primarily consist of overdrafts. 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 $ — $ — $ — $ — $ 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-off primarily consists of overdrafts. 128 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 December 31, 2024 and 2023. December 31, 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 $ 301,127 $ 423,332 $ 1,178,297 $ 784,102 $ 359,710 $ 1,712,213 $ 542,138 $ 5,300,919 Non-performing 32,071 — 33,999 954 4,000 54,837 — 125,861 Total non-farm/ non-residential 333,198 423,332 1,212,296 785,056 363,710 1,767,050 542,138 5,426,780 Construction/land development Performing 963,903 570,931 674,668 114,157 47,736 82,199 278,319 2,731,913 Non-performing 4 108 1,852 1,323 177 800 37 4,301 Total construction/ land development 963,907 571,039 676,520 115,480 47,913 82,999 278,356 2,736,214 Agricultural Performing $ 53,208 $ 43,295 $ 58,393 $ 37,491 $ 31,777 $ 69,863 $ 42,407 $ 336,434 Non-performing — — — — — 371 188 559 Total agricultural 53,208 43,295 58,393 37,491 31,777 70,234 42,595 336,993 Total commercial real estate loans $ 1,350,313 $ 1,037,666 $ 1,947,209 $ 938,027 $ 443,400 $ 1,920,283 $ 863,089 $ 8,499,987 Residential real estate loans Residential 1-4 family Performing $ 235,119 $ 252,691 $ 416,981 $ 247,959 $ 146,817 $ 415,401 $ 214,972 $ 1,929,940 Non-performing — 2,801 5,945 2,988 3,296 11,354 165 26,549 Total residential 1-4 family 235,119 255,492 422,926 250,947 150,113 426,755 215,137 1,956,489 Multifamily residential Performing $ 4,041 $ 11,699 $ 194,474 $ 48,736 $ 109,809 $ 94,772 $ 19,870 $ 483,401 Non-performing — — 12,497 586 — — — 13,083 Total multifamily residential 4,041 11,699 206,971 49,322 109,809 94,772 19,870 496,484 Total real estate 1,589,473 1,304,857 2,577,106 1,238,296 703,322 2,441,810 1,098,096 10,952,960 Consumer Performing $ 280,956 $ 215,196 $ 214,938 $ 175,706 $ 88,409 $ 241,992 $ 2,936 $ 1,220,133 Non-performing 75 5,641 2,040 174 311 5,932 55 14,228 Total consumer 281,031 220,837 216,978 175,880 88,720 247,924 2,991 1,234,361 Commercial and industrial Performing $ 212,469 $ 564,063 $ 263,604 $ 106,405 $ 50,453 $ 300,351 $ 443,008 $ 1,940,353 Non-performing 46,973 2,853 3,197 905 4 8,403 20,087 82,422 Total commercial and industrial 259,442 566,916 266,801 107,310 50,457 308,754 463,095 2,022,775 Agricultural and other Performing $ 67,728 $ 45,525 $ 46,350 $ 33,422 $ 24,815 $ 45,922 $ 289,649 $ 553,411 Non-performing — 3 — 39 2 903 46 993 Total agricultural and other 67,728 45,528 46,350 33,461 24,817 46,825 289,695 554,404 Total $ 2,197,674 $ 2,138,138 $ 3,107,235 $ 1,554,947 $ 867,316 $ 3,045,313 $ 1,853,877 $ 14,764,500 129 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 $ 55.0 million or 213 total revolving loans convert to term loans for the year ended December 31, 2024 compared to $ 69.0 million or 217 total revolving loans convert to term loans for the year ended December 31, 2023. These loans were considered immaterial for vintage disclosure inclusion. 130 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 December 31, 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. December 31, 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 (Dollars in thousands) Real estate: Commercial real estate loans Non-farm/non-residential $ 388 $ 32,096 $ — $ 1,228 $ 339 $ — $ 15,646 $ — $ 49,697 0.92 % Construction/land development — — — 52 — — — — 52 — % Residential real estate loans Residential 1-4 family 1,076 1,198 102 22 523 — — 117 3,038 0.16 % Total real estate 1,464 33,294 102 1,302 862 — 15,646 117 52,787 0.48 % Consumer 6 — — 9 — 2 — — 17 — % Commercial and industrial 2,337 67,017 — 441 76 — — — 69,871 3.45 % Total $ 3,807 $ 100,311 $ 102 $ 1,752 $ 938 $ 2 $ 15,646 $ 117 $ 122,675 0.83 % 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 (Dollars 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 % Agricultural — — — — — — — — — — % Residential real estate loans Residential 1-4 family 560 598 106 59 516 — — 116 1,955 0.11 % Multifamily residential — — — — — — — — — — % 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 year ended December 31, 2024, the Company restructured approximately $ 108.4 million in loans to 13 borrowers. The ending balance of these loans as of December 31, 2024, was $ 100.5 million. The Company considered the financial effect of these loan modifications to borrowers experiencing financial difficulty during the year ended December 31, 2024 immaterial for tabular disclosure inclusion. Three of the modified loans pertained to one borrower relationship and accounted for $ 99.1 million of the total post-modification outstanding balance. The modification involved three new loans being underwritten resulting in the interest rate decreasing by 12 basis points and one of the loans in the relationship being charged-off. The charged-off amount was $ 26.1 million. Five of the $ 122.7 million in restructured loans held by the Company were considered to be collateral dependent as of December 31, 2024. The outstanding balance of these loans was $ 114.7 million, and the specific reserve was $ 2.9 million. 131 Table of Contents The following table presents the amortized cost basis of loans that had a payment default during the years ended December 31, 2024 and 2023, respectively, and were modified in the twelve months prior to that default to borrowers experiencing financial difficulty. December 31, 2024 Term Extension Combination Interest Rate Reduction and Term Extension (Dollars in thousands) Real estate: Commercial real estate loans Non-farm/non-residential $ — $ — Construction/land development — — Agricultural — — Residential real estate loans — Residential 1-4 family 249 — Total real estate 249 — Consumer 5 — Commercial and industrial — 2 Total $ 254 $ 2 December 31, 2023 Term Extension Interest Rate Reduction Principal Reduction Interest Only Combination Interest Rate Reduction and Term Extension Combination Interest Rate Reduction and Principal Reduction Combination Term Extension and Principal Reduction (Dollars in thousands) Real estate: Commercial real estate loans Non-farm/non-residential $ — $ — $ — $ — $ — $ — $ — Construction/land development — — — — — — — Agricultural — — — — — — — Residential real estate loans — Residential 1-4 family 299 105 9 — 328 — 116 Total real estate 299 105 9 — 328 — 116 Consumer 14 — — 29 — 5 — Commercial and industrial — — — — — — — Total $ 313 $ 105 $ 9 $ 29 $ 328 $ 5 $ 116 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 13 loans over the past 12 months to borrowers experiencing financial difficulty. The pre-modification balance of the loans was $ 134.4 million, and the ending balance as of December 31, 2024 was $ 100.5 million. The $ 100.5 million balance consists of $ 256,190 of non-accrual loans and $ 100.2 million of current loans, of which all were current as of December 31, 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. 132 Table of Contents The Company has purchased loans for which there was, at acquisition, evidence of more than insignificant deterioration of credit quality since origination. The Company held approximately $ 76.3 million and $ 130.7 million in PCD loans, as of December 31, 2024 and 2023, respectively. The balance, as of December 31, 2024, resulted from the acquisition of Happy. The balance, as of December 31, 2023, consisted of $ 130.4 million resulting from the acquisition of Happy and $ 376,100 from the acquisition of LH-Finance. The following is a presentation of total foreclosed assets as of December 31, 2024 and 2023: December 31, 2024 December 31, 2023 (In thousands) Commercial real estate loans Non-farm/non-residential $ 28,392 $ 29,894 Construction/land development 13,391 47 Residential real estate loans Residential 1-4 family 1,624 545 Total foreclosed assets held for sale $ 43,407 $ 30,486 6. Goodwill and Core Deposit Intangible Changes in the carrying amount and accumulated amortization of the Company’s goodwill and core deposit intangible at December 31, 2024 and 2023, were as follows: December 31, 2024 December 31, 2023 Goodwill (In thousands) Balance, beginning of period $ 1,398,253 $ 1,398,253 Balance, end of period $ 1,398,253 $ 1,398,253 December 31, 2024 December 31, 2023 Core Deposit Intangible (In thousands) Balance, beginning of period $ 48,770 $ 58,455 Amortization expense ( 8,443 ) ( 9,685 ) Balance, end of year $ 40,327 $ 48,770 The carrying basis and accumulated amortization of core deposits intangibles at December 31, 2024 and 2023 were: December 31, 2024 December 31, 2023 (In thousands) Gross carrying amount $ 128,888 $ 128,888 Accumulated amortization ( 88,561 ) ( 80,118 ) Net carrying amount $ 40,327 $ 48,770 Core deposit intangible amortization expense for the years ended December 31, 2024, 2023 and 2022 was approximately $ 8.4 million, $ 9.7 million and $ 8.9 million, respectively. The core deposit intangible is tested annually for impairment during the fourth quarter. During the 2024 review, no impairment was found. Including all of the mergers completed as of December 31, 2024, HBI’s estimated amortization expense of the core deposit intangible for each of the years 2025 through 2029 is approximately: 2025 – $ 8.0 million; 2026 – $ 7.8 million; 2027 – $ 6.6 million; 2028 – $ 4.2 million and 2029 – $ 4.2 million. The carrying amount of the Company’s goodwill was $ 1.40 billion at both December 31, 2024 and 2023. Goodwill is tested annually for impairment during the fourth quarter or more frequently if changes or circumstances occur. During the 2024 and 2023 reviews, 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. 133 Table of Contents 7. Other Assets Other assets consist primarily of equity securities without a readily determinable fair value and other miscellaneous assets. As of December 31, 2024 and 2023, other assets were $ 345.3 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”), the Federal Reserve Bank (“Federal Reserve”) and First National Bankers' Bank ("FNBB") which are outside the scope of ASC Topic 321, Investments – Equity Securities (“ASC Topic 321”). These equity securities without a readily determinable fair value were $ 135.2 million and $ 134.6 million at December 31, 2024 and December 31, 2023, respectively, and are accounted for at cost. The Company also has equity securities which are accounted for under ASC Topic 321. These equity securities without a readily determinable fair value were $ 91.2 million and $ 88.6 million at December 31, 2024 and 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 $ 917.1 million and $ 836.7 million at December 31, 2024 and 2023, respectively. The aggregate amount of time deposits with a minimum denomination of $100,000 was $ 1.20 billion and $ 1.09 billion at December 31, 2024 and 2023, respectively. Interest expense applicable to certificates in excess of $100,000 totaled $ 49.3 million, $ 26.1 million and $ 3.4 million for the years ended December 31, 2024, 2023 and 2022, respectively. As of December 31, 2024 and 2023, brokered deposits were $ 448.4 million and $ 401.0 million, respectively. The following is a summary of the scheduled maturities of all time deposits at December 31, 2024 (in thousands): 2025 $ 1,682,838 2026 75,569 2027 15,012 2028 8,304 2029 10,142 Thereafter 467 Total time deposits $ 1,792,332 Deposits totaling approximately $ 3.08 billion and $ 3.05 billion at December 31, 2024 and 2023, respectively, were public funds obtained primarily from state and political subdivisions in the United States. 9. Securities Sold Under Agreements to Repurchase At December 31, 2024 and 2023, securities sold under agreements to repurchase totaled $ 162.4 million and $ 142.1 million, respectively. For the years ended December 31, 2024 and 2023, securities sold under agreements to repurchase daily weighted-average totaled $ 166.0 million and $ 149.0 million, respectively. The remaining contractual maturity of securities sold under agreements to repurchase in the consolidated balance sheets as of December 31, 2024 and 2023 is presented in the following table: December 31, 2024 December 31, 2023 Overnight and Continuous Total Overnight and Continuous Total (In thousands) Securities sold under agreements to repurchase: Mortgage-backed securities 48,056 48,056 — — State and political subdivisions 37,831 37,831 — — Other securities 76,463 76,463 142,085 142,085 Total borrowings $ 162,350 $ 162,350 $ 142,085 $ 142,085 134 Table of Contents 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 December 31, 2024 and 2023. At December 31, 2024, $ 100.0 million and $ 500.0 million balance was classified as short-term and long-term advances, respectively. At December 31, 2023, the entire $ 600.0 million balance was classified as long-term advances. The FHLB advances mature from 2025 to 2037 with fixed interest rates ranging from 3.37 % to 4.84 % and are secured by loans and investments securities. Expected maturities could differ from contractual maturities because the FHLB has have the right to call or the Company has the right to prepay certain obligations. Other borrowed funds were $ 750,000 as of December 31, 2024 and were classified as short-term advances. Other borrowed funds were $ 701.3 million as of December 31, 2023 and were classified as short-term advances. During the fourth quarter of 2024, the Company paid off its $ 700.0 million advance from the Federal Reserve's Bank Term Funding Program ("BTFP"). Additionally, the Company had $ 1.22 billion and $ 1.33 billion at December 31, 2024 and 2023, respectively, in letters of credit under a FHLB blanket borrowing line of credit, which are used to collateralize public deposits at December 31, 2024 and 2023, respectively. Maturities of borrowings with original maturities exceeding one year at December 31, 2024, are as follows (in thousands): By Contractual Maturity By Call Date 2025 $ 100,750 $ 500,750 2026 100,000 100,000 2027 — — 2028 — — 2029 — — Thereafter 400,000 — $ 600,750 $ 600,750 11. Subordinated Debentures As of December 31, 2024 and 2023, subordinated debentures were $ 439.2 million and $ 439.8 million, respectively. Subordinated debentures at December 31, 2024 and 2023 contained the following components: As of December 31, 2024 As of December 31, 2023 (In thousands) Subordinated debt securities Subordinated notes issued in 2020, due 2030, fixed rate of 5.500 % 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 $ 140,764 $ 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 298,482 297,750 Total $ 439,246 $ 439,834 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. 135 Table of Contents 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. 12. Income Taxes The following is a summary of the components of the provision for income taxes for the years ended December 31, 2024, 2023 and 2022: Year Ended December 31, 2024 2023 2022 (In thousands) Current: Federal $ 92,995 $ 99,938 $ 72,367 State 18,802 23,093 14,733 Total current 111,797 123,031 87,100 Deferred: Federal 6,907 ( 3,312 ) 1,839 State 1,397 ( 765 ) 374 Total deferred 8,304 ( 4,077 ) 2,213 Income tax expense $ 120,101 $ 118,954 $ 89,313 136 Table of Contents The reconciliation between the statutory federal income tax rate and effective income tax rate is as follows for the years ended December 31, 2024, 2023 and 2022: Year Ended December 31, 2024 2023 2022 Statutory federal income tax rate 21.00 % 21.00 % 21.00 % Effect of non-taxable interest income ( 1.06 ) ( 0.68 ) ( 1.89 ) Stock compensation 0.56 0.28 0.38 State income taxes, net of federal benefit 2.22 2.97 2.70 Other 0.27 ( 0.33 ) 0.45 Effective income tax rate 22.99 % 23.24 % 22.64 % 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: December 31, 2024 December 31, 2023 (In thousands) Deferred tax assets: Allowance for credit losses $ 76,221 $ 81,251 Deferred compensation 6,783 7,619 Stock compensation 4,981 6,803 Non-accrual interest income 1,798 1,463 Real estate owned 674 79 Unrealized loss on Securities AFS 79,847 82,613 Loan discounts 3,323 5,119 Investments 26,042 24,669 Accelerated depreciation on premises and equipment 664 — Other 14,634 14,691 Gross deferred tax assets 214,967 224,307 Deferred tax liabilities: Accelerated depreciation on premises and equipment — 1,477 Tax basis on acquisitions 7,439 4,061 Core deposit intangibles 8,997 11,021 FHLB dividends 1,919 2,351 Other 9,915 8,233 Gross deferred tax liabilities 28,270 27,143 Net deferred tax assets $ 186,697 $ 197,164 The Company files income tax returns in the U.S. federal jurisdiction. The Company is no longer subject to U.S. federal and state tax examinations by tax authorities for years before 2020. The Company’s income tax returns are open and subject to examinations from the 2021 tax year and forward. The Company recognizes interest related to unrecognized tax benefits in interest expense and penalties in other non-interest expense. During the years ended December 31, 2024, 2023 and 2022, the Company did not recognize any significant interest or penalties. 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. 137 Table of Contents 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. Stock Repurchases During 2024, the Company repurchased a total of 3,521,792 shares with a weighted-average stock price of $ 24.41 per share. The 2024 earnings were used to fund the repurchases during the year. Shares repurchased under the program as of December 31, 2024 total 26,507,507 shares. The remaining balance available for repurchase was 13,244,493 shares at December 31, 2024. On January 17, 2025, the Board of Directors (the “Board”) of the Company authorized an increase in the shares of the Company’s common stock available for repurchase under its stock repurchase program, which was originally approved by the Board in January 2008 and most recently amended in January 2021, to renew the authorization to 20,000,000 shares. As of January 17, 2025, a total of approximately 13,244,493 shares remained available for repurchase under the existing repurchase authorization, resulting in an increase of 6,755,507 shares of common stock available for repurchase. Stock Compensation Plans The Company has an equity incentive plan known as the Home BancShares, Inc. 2022 Equity Incentive Plan (the "2022 Plan"). The purpose of the 2022 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. The 2022 Plan replaced the Company’s Amended and Restated 2006 Stock Option and Performance Incentive Plan (the “2006 Plan” and, together with the 2022 Plan, the “Plans”), which expired on February 27, 2022. Awards outstanding under the 2006 Plan remain in effect under the terms of the 2006 Plan until such awards vest, expire, lapse or are forfeited or terminated. However, no new awards may be granted under the 2006 Plan. As of December 31, 2024, the maximum total number of shares of the Company’s common stock available for issuance under the 2022 Plan was 14,788,000 shares (representing 13,288,000 shares approved for issuance under the 2006 Plan plus 1,500,000 shares added upon adoption of the 2022 Plan). At December 31, 2024, the Company had 2,052,178 shares of common stock remaining available for future grants under the 2022 Plan and an aggregate of 3,641,537 shares of common stock reserved for issuance pursuant to outstanding awards under the Plans. The intrinsic value of the stock options outstanding at December 31, 2024, 2023, and 2022 was $ 9.0 million, $ 12.2 million and $ 7.8 million, respectively. The intrinsic value of the stock options vested at December 31, 2024, 2023 and 2022 was $ 6.2 million, $ 10.3 million and $ 7.5 million, respectively. The intrinsic value of the stock options exercised during 2024, 2023 and 2022 was $ 8.8 million, $ 1.9 million, and $ 1.8 million, respectively. Total unrecognized compensation cost related to non-vested awards, which are expected to be recognized over the vesting periods, was approximately $ 1.5 million as of December 31, 2024. The table below summarized the stock option transactions under the Plan at December 31, 2024, 2023 and 2022 and changes during the years then ended: 2024 2023 2022 Shares (000) Weighted- average Exercisable Price Shares (000) Weighted- average Exercisable Price Shares (000) Weighted- average Exercisable Price Outstanding, beginning of year 2,776 $ 20.95 2,971 $ 20.45 3,015 $ 20.06 Granted 10 29.41 25 22.63 183 21.13 Forfeited/Expired ( 35 ) 21.87 ( 10 ) 23.38 ( 96 ) 21.89 Exercised ( 1,161 ) 18.65 ( 210 ) 14.01 ( 131 ) 11.30 Outstanding, end of year 1,590 22.66 2,776 20.95 2,971 20.45 Exercisable, end of year 1,044 22.34 1,940 20.05 1,837 18.89 138 Table of Contents 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. The weighted-average fair value of options granted during the year ended December 31, 2024 was $ 7.95 , and the weighted-average fair value of options granted during the year ended December 31, 2023 was $ 5.37 . 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 2024, 2023 and 2022 stock option grants were as follows: For the Years Ended December 31, 2024 2023 2022 Expected dividend yield 2.65 % 2.98 % 3.14 % Expected stock price volatility 28.47 % 27.97 % 31.18 % Risk-free interest rate 4.25 % 3.37 % 2.82 % Expected life of options 6.5 years 6.5 years 6.5 years The following is a summary of currently outstanding and exercisable options at December 31, 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 24 0.29 $ 17.12 24 $ 17.12 $ 18.00 to $ 19.99 118 1.32 18.57 118 18.57 $ 20.00 to $ 21.99 159 4.01 20.83 128 20.89 $ 22.00 to $ 23.99 1,221 3.66 23.22 735 23.18 $ 24.00 to $ 25.99 58 3.87 25.42 39 25.96 $ 26.00 to $ 27.99 — 0.00 — — — $ 28.00 to $ 29.99 10 9.85 29.41 — — 1,590 1,044 The table below summarizes the activity for the Company’s restricted stock issued and outstanding at December 31, 2024, 2023 and 2022 and changes during the years then ended: 2024 2023 2022 (In thousands) Beginning of year 1,429 1,381 1,231 Issued 531 261 409 Vested ( 469 ) ( 152 ) ( 178 ) Forfeited ( 62 ) ( 61 ) ( 81 ) End of year 1,429 1,429 1,381 Amount of expense for twelve months ended $ 8,228 $ 8,016 $ 7,646 Total unrecognized compensation cost, net of income tax benefit, related to non-vested restricted stock awards, which are expected to be recognized over the vesting periods, was approximately $ 14.6 million as of December 31, 2024. 139 Table of Contents 14. Non-Interest Expense The table below shows the components of non-interest expense for years ended December 31, 2024, 2023 and 2022: 2024 2023 2022 (In thousands) Salaries and employee benefits $ 241,022 $ 256,966 $ 238,885 Occupancy and equipment 58,031 60,303 53,417 Data processing expense 36,494 36,329 34,942 Merger expense — — 49,594 Other operating expenses: Advertising 7,097 8,850 7,974 Amortization of intangibles 8,443 9,685 8,853 Electronic banking expense 13,444 14,313 13,632 Directors' fees 1,639 1,814 1,491 Due from bank service charges 1,131 1,115 1,255 FDIC and state assessment 15,388 25,530 8,428 Hurricane expense — — 176 Insurance 3,634 3,567 3,705 Legal and accounting 8,961 5,230 9,401 Other professional fees 8,142 8,815 8,881 Operating supplies 2,680 3,138 3,120 Postage 2,060 2,081 2,078 Telephone 1,807 2,160 1,890 Other expense 36,963 32,967 27,905 Total other operating expenses 111,389 119,265 98,789 Total non-interest expense $ 446,936 $ 472,863 $ 475,627 15. Employee Benefit Plans 401(k) and Employee Stock Ownership Plan The Company has a combined 401(k) plan and employee stock ownership plan, named the Home BancShares, Inc. 401(k) and Employee Stock Ownership Plan, in which substantially all employees may participate. The Company matches employees’ contributions based on a percentage of salary contributed by participants. As of December 31, 2024, participants in the plan held approximately 1.1 million shares of the Company’s stock. These shares are allocated to the individual employees that have elected to own stock within the plan. While the plan also allows for discretionary employer contributions, no discretionary contributions were made for the years ended 2024, 2023 and 2022. The Company’s expense for the plan was approximately $ 3.3 million, $ 3.4 million and $ 3.1 million in 2024, 2023 and 2022, respectively, which is included in salaries and employee benefits expense. Chairman’s Retirement Plan On April 20, 2007, the Company’s Board of Directors approved a Chairman’s Retirement Plan for John W. Allison, the Company’s Chairman. The Chairman’s Retirement Plan provides a supplemental retirement benefit of $ 250,000 a year for 10 consecutive years or until Mr. Allison’s death, whichever occurs later. During 2011, Mr. Allison reached the age of 65 and became 100 % vested in the plan. Therefore, he began receiving the supplemental retirement benefit due to him. He received $ 250,000 of this benefit during 2024, 2023 and 2022, respectively. An expense of $ 71,075 , $ 84,787 and $ 97,449 was accrued for 2024, 2023 and 2022 for this plan, respectively. 140 Table of Contents 16. Related Party Transactions In the ordinary course of business, loans may be made to officers and directors and their affiliated companies at substantially the same terms as comparable transactions with other borrowers. At December 31, 2024 and 2023, related party loans were approximately $ 36.3 million and $ 63.2 million, respectively. New loans and advances on prior commitments made to the related parties were $ 1.7 and $ 662,000 for the years ended December 31, 2024 and 2023, respectively. Repayments of loans made by the related parties were $ 1.7 million and $ 11.0 million for the years ended December 31, 2024 and 2023, respectively. At December 31, 2024 and 2023, directors, officers, and other related interest parties had demand, non-interest-bearing deposits of approximately $ 5.1 million and $ 4.3 million, respectively, savings and interest-bearing transaction accounts of approximately $ 7.8 million and $ 11.6 million, respectively, and time certificates of deposit of approximately $ 1.6 million and $ 878,000 , respectively. During each of 2024, 2023 and 2022, rent expense totaling approximately $ 133,000 , $ 139,000 and $ 137,000 , respectively, was paid to related parties. 17. 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 (“CAM”) 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 under Topic 842 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 December 31, 2024, the balances of the ROU asset and lease liability were $ 42.3 million and $ 45.2 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 as of December 31, 2024 and 2023: December 31, 2024 (In thousands) 2025 $ 10,262 2026 9,663 2027 8,341 2028 6,464 2029 5,675 Thereafter 16,346 Total future minimum lease payments $ 56,751 Discount effect of cash flows ( 11,560 ) Present value of net future minimum lease payments $ 45,191 141 Table of Contents December 31, 2023 (In thousands) 2024 $ 9,373 2025 8,549 2026 8,111 2027 7,223 2028 5,496 Thereafter 19,827 Total future minimum lease payments $ 58,579 Discount effect of cash flows ( 13,551 ) Present value of net future minimum lease payments $ 45,028 Additional information: Year Ended December 31, 2024 Year Ended December 31, 2023 Year Ended December 31, 2022 (In thousands) Lease expense: Operating lease expense $ 9,140 $ 8,087 $ 7,995 Short-term lease expense — — 3 Variable lease expense 1,217 1,105 873 Total lease expense $ 10,357 $ 9,192 $ 8,871 Other information: Cash paid for amounts included in the measurement of lease liabilities $ 8,757 $ 8,384 $ 8,128 Weighted-average remaining lease term 7.67 8.47 9.28 Weighted-average discount rate 3.48 % 3.43 % 3.41 % 18. 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. 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 December 31, 2024 and 2023, commercial real estate loans represented 57.6 % and 56.7 % of total loans receivable, respectively, and 214.6 % and 215.5 % of total stockholders’ equity, respectively. Residential real estate loans represented 16.6 % and 15.8 % of total loans receivable and 61.9 % and 60.1 % of total stockholders’ equity at December 31, 2024 and 2023, respectively. Approximately 79.5 % of the Company’s total loans and 83.7 % of the Company’s real estate loans as of December 31, 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. 142 Table of Contents 19. 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 their 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 December 31, 2024 and 2023, commitments to extend credit of $ 4.47 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 December 31, 2024 and 2023, is $ 153.9 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. 20. Financial Instruments Fair value is the price that would be received to sell 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 value: 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 - Available-for-sale securities are the only material instruments valued on a recurring basis which are held by the Company at fair value. The Company's available-for-sale securities are primarily 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. As of December 31, 2024 and 2023, Level 2 securities were $ 3.05 billion and $ 3.49 billion, respectively. As of December 31, 2024 and 2023, Level 3 securities were $ 21.5 million and $ 22.8 million, respectively. In addition, there were no material transfers between hierarchy levels during 2024, 2023 and 2022. 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. See footnote 3 for further detail related to the fair value of the Company's available-for-sale investment portfolio. 143 Table of Contents Individually Evaluated Loans - Individually evaluated loans are the only material financial assets valued on a non-recurring basis which are held by the Company at fair value. When the Company has a specific expectation to initiate, or has initiated, foreclosure proceedings, and when the repayment of a loan is expected to be substantially dependent upon the liquidation of the underlying collateral, the loan relationship is considered to be collateral dependent. Fair value of the loan is determined by establishing an allowance for credit loss for any exposure based on the valuation of the underlying collateral. The valuation of the collateral is determined by either an independent third-party appraisal or other collateral analysis. Discounts can be made by the Company based upon the overall evaluation of the independent appraisal. Collateral-dependent loans are classified within Level 3 of the fair value hierarchy due to the unobservable inputs used in determining their fair value such as collateral values and the borrower’s underlying financial condition. Collateral values supporting the individually assessed loans are evaluated quarterly for updates to appraised values or adjustments due to non-current valuations. The fair value of collateral-dependent loans was $ 209.8 million and $ 171.7 million as of December 31, 2024 and 2023, respectively. This valuation is considered Level 3, consisting of appraisals of underlying collateral. Foreclosed assets held for sale - Foreclosed assets held for sale are the only material non-financial assets valued on a non-recurring basis which 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 December 31, 2024 and 2023, the fair value of foreclosed assets held for sale, less estimated costs to sell, was $ 43.4 million and $ 30.5 million, respectively. Foreclosed assets held for sale with a carrying value of approximately $ 17.9 million were remeasured during the year ended December 31, 2024, resulting in a write-down of approximately $ 2.5 million. No foreclosed assets held for sale were remeasured during the year ended December 31, 2023. 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. During the reported periods, collateral discounts ranged from approximately 10 % to 70 %. Fair Values of Financial Instruments The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value: Cash and cash equivalents and federal funds sold - For these short-term instruments, the carrying amount is a reasonable estimate of fair value. Investment securities - held-to-maturity securities – These 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. Loans receivable, net of impaired loans and allowance — For variable-rate loans that reprice frequently and with no significant change in credit risk, fair values are assumed to approximate the carrying amounts. The fair values for fixed-rate loans are estimated using discounted cash flow analysis, based on interest rates currently being offered for loans with similar terms to borrowers of similar credit quality. Loan fair value estimates include judgments regarding future expected loss experience and risk characteristics. Fair values for acquired loans are based on a discounted cash flow methodology that considers factors including the type of loan and related collateral, classification status, fixed or variable interest rate, term of loan, current discount rates and whether or not the loan is amortizing. Loans are grouped together according to similar characteristics and are treated in the aggregate when applying various valuation techniques. The discount rates used for loans are based on current market rates for new originations of comparable loans and include adjustments for liquidity concerns. The discount rate does not include a factor for credit losses as that has been included in the estimated cash flows. Accrued interest receivable and payable - The carrying amounts of accrued interest approximates fair value. FHLB, FRB & FNBB stock; other equity investments; marketable equity securities - The carrying amount of these investments approximate fair value. 144 Table of Contents Deposits and securities sold under agreements to repurchase — The fair values of demand deposits, savings deposits and securities sold under agreements to repurchase are, by definition, equal to the amount payable on demand and, therefore, approximate their carrying amounts. The fair values for time deposits are estimated using a discounted cash flow calculation that utilizes interest rates currently being offered on time deposits with similar contractual maturities. FHLB and other borrowed funds - For short-term instruments, the carrying amount is a reasonable estimate of fair value. The fair value of long-term debt is estimated based on the current rates available to the Company for debt with similar terms and remaining maturities. Subordinated debentures - The fair value of subordinated debentures is estimated using the rates that would be charged for subordinated debentures of similar remaining maturities. Commitments to extend credit, letters of credit and lines of credit – The fair value of commitments is estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present creditworthiness of the counterparties. For fixed-rate loan commitments, fair value also considers the difference between current levels of interest rates and the committed rates. The fair values of letters of credit and lines of credit are based on fees currently charged for similar agreements or on the estimated cost to terminate or otherwise settle the obligations with the counterparties at the reporting date. The fair value of these commitments is not material and are therefore, omitted from this disclosure. 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 (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. December 31, 2024 Carrying Amount Fair Value Level (In thousands) Financial assets: Cash and cash equivalents $ 910,347 $ 910,347 1 Federal funds sold 3,725 3,725 1 Investment securities - available for sale 3,051,110 3,051,110 2 Investment securities - available for sale 21,529 21,529 3 Investment securities - held-to-maturity 1,275,204 1,142,940 2 Loans receivable, net of impaired loans and allowance 14,244,458 14,207,935 3 Accrued interest receivable 120,129 120,129 1 FHLB, FRB & FNBB stock; other equity investments 226,910 226,910 3 Marketable equity securities 48,954 48,954 1 Financial liabilities: Deposits: Demand and non-interest bearing $ 4,006,115 $ 4,006,115 1 Savings and interest-bearing transaction accounts 11,347,850 11,347,850 1 Time deposits 1,792,332 1,781,156 3 Securities sold under agreements to repurchase 162,350 162,350 1 FHLB and other borrowed funds 600,750 556,095 2 Accrued interest payable 20,186 20,186 1 Subordinated debentures 439,246 375,887 3 145 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 3,485,031 3,485,031 2 Investment securities - available for sale 22,810 22,810 3 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 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. 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 2024, the Company requested approximately $ 310.1 million in regular dividends from its banking subsidiary. The Company’s banking subsidiary is subject to various regulatory capital requirements administered by the federal banking agencies. 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, 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 December 31, 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 risk-based capital ratios presented below. 146 Table of Contents 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 capital 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 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 now: a 6.5 % CET1 risk-based capital ratio, a 5 % Tier 1 leverage ratio, an 8 % Tier 1 risk-based capital ratio, and a 10 % total risk-based capital ratio. As of December 31, 2024, the Bank met the capital standards for a well-capitalized institution. The Company’s CET1 risk-based capital ratio, Tier 1 leverage ratio, Tier 1 risk-based capital ratio, and total risk-based capital ratio were 15.11 %, 13.05 %, 15.11 %, and 18.74 %, respectively, as of December 31, 2024. The Company’s actual capital amounts and ratios along with the Company’s bank subsidiary are presented in the following table. Actual Minimum Capital Requirement –Basel III Minimum To Be Well-Capitalized Under Prompt Corrective Action Provision Amount Ratio Amount Ratio Amount Ratio (Dollars in thousands) As of December 31, 2024 Common equity Tier 1 capital ratios: Home BancShares $ 2,787,116 15.11 % $ 1,291,348 7.00 % N/A N/A Centennial Bank 2,604,830 14.17 1,286,790 7.00 1,194,876 6.50 Leverage ratios: Home BancShares $ 2,787,116 13.05 % $ 854,602 4.00 % N/A N/A Centennial Bank 2,604,830 12.23 851,948 4.00 1,064,935 5.00 Tier 1 capital ratios: Home BancShares $ 2,787,116 15.11 % $ 1,568,065 8.50 % N/A N/A Centennial Bank 2,604,830 14.17 1,562,530 8.50 1,470,617 8.00 Total risk-based capital ratios: Home BancShares $ 3,458,014 18.74 % $ 1,937,022 10.50 % N/A N/A Centennial Bank 2,835,636 15.43 1,929,629 10.50 1,837,742 10.00 As of December 31, 2023 Common equity Tier 1 capital ratios: Home BancShares $ 2,609,823 14.15 % $ 1,290,867 7.00 % N/A N/A Centennial Bank 2,495,303 13.60 1,284,347 7.00 1,192,608 6.50 Leverage ratios: Home BancShares $ 2,609,823 12.44 % $ 839,271 4.00 % N/A N/A Centennial Bank 2,495,303 11.92 837,350 4.00 1,046,688 5.00 Tier 1 capital ratios: Home BancShares $ 2,609,823 14.15 % $ 1,567,482 8.50 % N/A N/A Centennial Bank 2,495,303 13.60 1,559,564 8.50 1,467,825 8.00 Total risk-based capital ratios: Home BancShares $ 3,281,136 17.79 % $ 1,936,301 10.50 % N/A N/A Centennial Bank 2,725,909 14.85 1,927,410 10.50 1,835,629 10.00 147 Table of Contents 22. Additional Cash Flow Information The following is summary of the Company’s additional cash flow information during the years ended December 31: 2024 2023 2022 (In thousands) Interest paid $ 449,941 $ 339,606 $ 115,046 Income taxes paid 110,743 135,089 86,583 Assets acquired by foreclosure 14,936 30,532 619 23. Condensed Financial Information (Parent Company Only) Condensed Balance Sheets December 31, (In thousands) 2024 2023 Assets Cash and cash equivalents $ 550,340 $ 484,542 Investment securities 58,199 57,032 Investments in wholly-owned subsidiaries 3,782,780 3,679,597 Premises and equipment 221 — Other assets 16,959 18,049 Total assets $ 4,408,499 $ 4,239,220 Liabilities Subordinated debentures $ 439,246 $ 439,834 Other liabilities 8,228 8,311 Total liabilities 447,474 448,145 Stockholders' Equity Common stock 1,989 2,015 Capital surplus 2,272,794 2,348,023 Retained earnings 1,942,350 1,690,112 Accumulated other comprehensive loss ( 256,108 ) ( 249,075 ) Total stockholders' equity 3,961,025 3,791,075 Total liabilities and stockholders' equity $ 4,408,499 $ 4,239,220 Condensed Statements of Income Years Ended December 31, (In thousands) 2024 2023 2022 Income Dividends from equity securities $ 3,589 $ 3,634 $ 2,088 Dividends from banking subsidiary 311,127 329,997 216,086 Other income (loss) 3,842 ( 724 ) ( 1,297 ) Total income 318,558 332,907 216,877 Expenses 32,570 32,361 38,933 Income before income taxes and equity in undistributed net income of subsidiaries 285,988 300,546 177,944 Tax benefit for income taxes 6,036 7,514 10,752 Income before equity in undistributed net income of subsidiaries 292,024 308,060 188,696 Equity in undistributed net income of subsidiaries 110,217 84,869 116,566 Net income $ 402,241 $ 392,929 $ 305,262 148 Table of Contents Condensed Statements of Cash Flows Years Ended December 31, (In thousands) 2024 2023 2022 Cash flows from operating activities Net income $ 402,241 $ 392,929 $ 305,262 Items not requiring (providing) cash (Accretion)/ amortization ( 588 ) ( 586 ) 1,912 Share-based compensation 9,222 9,274 9,133 (Increase) decrease in value of equity securities ( 2,971 ) 1,094 1,272 Equity in undistributed income of subsidiaries ( 110,217 ) ( 84,869 ) ( 116,566 ) Changes in other assets ( 542 ) ( 364 ) ( 4,149 ) Changes in other liabilities ( 82 ) ( 155 ) 2,290 Net cash provided by operating activities 297,063 317,323 199,154 Cash flows from investing activities Purchases of premises and equipment, net ( 221 ) — — Net cash proceeds from Happy Bancshares, Inc. — — 201,428 Purchases of equity securities — — ( 49,975 ) Proceeds from sale of equity securities 3,436 1,522 13,778 Redemptions of other investments — — 2,899 Net cash provided by investing activities 3,215 1,522 168,130 Cash flows from financing activities Retirement of subordinated debentures — — ( 300,000 ) Proceeds from the issuance of subordinated debentures — — 296,324 Redemption of trust preferred securities — — ( 96,499 ) Proceeds from exercise of stock options 2,016 802 156 Repurchase of common stock ( 86,493 ) ( 48,771 ) ( 70,856 ) Dividends paid ( 150,003 ) ( 145,904 ) ( 128,424 ) Net cash used in financing activities ( 234,480 ) ( 193,873 ) ( 299,299 ) Increase in cash and cash equivalents 65,798 124,972 67,985 Cash and cash equivalents, beginning of year 484,542 359,570 291,585 Cash and cash equivalents, end of year $ 550,340 $ 484,542 $ 359,570 24. Segment Information The Company has one reportable segment: The Banking Segment. The Company's reportable segment is determined by the Chairman & Chief Executive Officer, who is the designated chief operating decision maker ("CODM"), based upon information provided about the Company's products and services offered, primarily banking operations. The segment is also distinguished by the level of information provided to the CODM, who uses such information to review performance of various components of the business such as geographical regions and branches, which are then aggregated since these have similar operating and economic characteristics. Each of the branches and regions of the Bank provide 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 CODM will evaluate the financial performance of the Company's business components such as evaluating revenue streams, significant expenses and budget to actual results in order to assess the Company's segment and to determine the allocation of resources. The CODM uses revenue streams to evaluate product pricing and significant expenses to assess performance and evaluate return on assets. The CODM uses consolidated net income in order to benchmark the Company against its competitors. The benchmarking analysis coupled with monitoring of budget to actual results are used in assessment performance and in establishing compensation. Loans, investments and deposits provide the revenues in the banking operation. Interest expense, provision for credit losses and payroll provide the significant expenses in the banking operation. All operations are domestic. 149 Table of Contents Accounting policies for segments are the same as those described in Note 1. Segment performance is evaluated using consolidated net income. The table below presents the information reported internally for performance assessment by the CODM for years ended December 31, 2024, 2023 and 2022: Banking Segment 2024 2023 2022 (In thousands) Interest Income $ 1,299,777 $ 1,175,053 $ 877,766 Reconciliation of revenue: Other Revenues* 168,574 169,934 175,111 Total consolidated revenues $ 1,468,351 $ 1,344,987 $ 1,052,877 Less: Interest Expense 451,003 348,108 119,090 Segment net interest income and noninterest income $ 1,017,348 $ 996,879 $ 933,787 Less: Provision for credit losses 48,070 12,133 63,585 Salaries and employee benefits 241,022 256,966 238,885 Occupancy and equipment** 58,031 60,303 53,417 Data Processing expense 36,494 36,329 34,942 Merger and acquisition expense — — 49,594 Other expense 36,963 32,967 27,905 FDIC and state assessment 15,388 25,530 8,428 Electronic banking expense 13,444 14,313 13,632 Other segment items*** 45,594 46,455 48,824 Income tax expense 120,101 118,954 89,313 Segment net income/consolidated net income 402,241 392,929 305,262 Reconciliation of profit or loss: Adjustments and reconciling items — — — Consolidated net income $ 402,241 $ 392,929 $ 305,262 *Includes earnings in equity method investments of $ 5.1 million, $ 12.7 million and $ 9.9 million for the years ended December 31, 2024, 2023 and 2022, respectively. ** Includes depreciation and amortization expense of $ 29.2 million, $ 30.9 million and $ 31.9 million for the years ended December 31, 2024, 2023 and 2022, respectively. ***Other segment items include expenses for advertising, amortization of intangibles, directors' fees, due from bank service charges, hurricane damage, insurance expense, legal and accounting fees, other professional fees, operating supplies, postage and telephone. 150 Table of Contents 25. Recent Accounting Pronouncements In January 2021, the FASB issued ASU 2021-01, “Reference Rate Reform (Topic 848): Scope.” 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 2021-01 was effective upon issuance and generally could 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. In March 2022, the FASB issued ASU 2022-02, Financial Instruments—Credit Losses (Topic 326): Troubled Debt Restructurings ("TDR") and Vintage Disclosures ("ASU 2022-02") . The amendments eliminate the TDR recognition and measurement guidance and, instead, require that an entity evaluate (consistent with the accounting for other loan modifications) whether the modification represents a new loan or a continuation of an existing loan. The amendments also enhance existing disclosure requirements and introduce new requirements related to certain modifications of receivables made to borrowers experiencing financial difficulty. The amendments require that an entity disclose current-period gross write-offs by year of origination for financing receivables and net investment in leases. Gross write-off information must be included in the vintage disclosures required for public business entities, which requires that an entity disclose the amortized cost basis of financing receivables by credit quality indicator and class of financing receivable by year of origination. ASU 2022-02 is effective for entities that have adopted ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments , for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. These amendments should be applied prospectively. The Company adopted the guidance effective January 1, 2023 and elected to apply the amendments prospectively. The adoption did not have a significant impact on our financial position. 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. The sunset of the provisions did not have a material impact on our financial position. 151 Table of Contents 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 adopted the guidance effective December 31, 2024, and its option did not have a significant impact on our financial position or financial statements. 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. Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE No items are reportable.