What changed in this filing

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Item 1. Financial Statements

2025-05-05 compared with 2024-11-01 · 412 added, 413 removed, 1392 unchanged (37% of the section changed)

2 unchanged sentences

Consolidated Balance Sheets

(In thousands, except share data) September 30, 2024 December 31, 2023

(In thousands, except share data) March 31, 2025 December 31, 2024

Cash and due from banks $ 319,747 $ 281,063

2 unchanged sentences

Fed funds sold 6,275 3,725

Investment securities — available-for-sale, net of allowance for credit losses of $ 2,195 and $ 2,525 at September 30, 2024 and December 31, 2023, respectively (amortized cost of $ 3,529,325 and $ 3,840,927 at September 30, 2024 and December 31, 2023, respectively)

Investment securities — available-for-sale, net of allowance for credit losses of $ 2,195 at both March 31, 2025 and December 31, 2024 (amortized cost of $ 3,299,245 and $ 3,410,272 at March 31, 2025 and December 31, 2024, respectively)

3,003,320 3,072,639

Investment securities — held-to-maturity, net of allowance for credit losses of $ 2,005 at both September 30, 2024 and December 31, 2023

Investment securities — held-to-maturity, net of allowance for credit losses of $ 2,005 at both March 31, 2025 and December 31, 2024

1,269,896 1,275,204

36 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

(In thousands, except per share data) 2025 2024

9 unchanged sentences

Interest on deposits 86,786 92,548

Federal funds purchased 1 1 1 3

FHLB and other borrowed funds 5,902 14,276

4 unchanged sentences

Provision for credit losses on loans — 5,500

Provision for (recovery of) credit losses on unfunded commitments 1,000 ( 1,500 ) — ( 1,500 )

(Recovery of) provision for credit losses on investment securities ( 330 ) — ( 330 ) 1,683

Recovery of credit losses on unfunded commitments — ( 1,000 )

Total credit loss expense — 4,500

9 unchanged sentences

Gain on sale of SBA loans 288 198

Gain on sale of branches, equipment and other assets, net 32 — 2,076 924

Gain on OREO, net 85 — 151 319

Loss on sale of branches, equipment and other assets, net ( 163 ) ( 8 )

(Loss) gain on OREO, net ( 376 ) 17

Fair value adjustment for marketable securities 442 1,003

16 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

(In thousands) 2025 2024

8 unchanged sentences

Consolidated Statements of Stockholders’ Equity

Three and Nine Months Ended September 30, 2024

Three Months Ended March 31, 2025

(In thousands, except share data) Common

14 unchanged sentences

Balances at March 31, 2025 (unaudited) $ 1,982 $ 2,246,312 $ 2,018,801 $ ( 224,540 ) $ 4,042,555

Comprehensive income:

Net income — — 101,530 — 101,530

Other comprehensive income — — — 9,626 9,626

Net issuance of 149,507 shares of common stock from exercise of stock options

1 ( 2 ) — — ( 1 )

Repurchase of 1,400,094 shares of common stock

( 14 ) ( 32,590 ) — — ( 32,604 )

Share-based compensation net issuance of 200,000 shares of restricted common stock

2 1,946 — — 1,948

Excise tax from repurchase of common stock — ( 285 ) — — ( 285 )

Cash dividends – Common Stock, $ 0.18 per share

— — ( 36,112 ) — ( 36,112 )

Balances at June 30, 2024 (unaudited) $ 1,997 $ 2,295,893 $ 1,819,412 $ ( 261,799 ) $ 3,855,503

Comprehensive income:

Net Income — — 100,038 — 100,038

Other comprehensive loss — — — 66,937 66,937

Net issuance of 95,852 shares of common stock from exercise of stock options

1 698 — — 699

Repurchase of 1,000,000 shares of common stock

( 10 ) ( 26,922 ) — — ( 26,932 )

Share-based compensation net forfeiture of 36,833 shares of restricted stock

1 2,494 — — 2,495

Excise tax from repurchase of common stock — ( 63 ) — — ( 63 )

Cash dividends – Common Stock, $ 0.195 per share

— — ( 38,888 ) — ( 38,888 )

Balances at September 30, 2024 (unaudited) $ 1,989 $ 2,272,100 $ 1,880,562 $ ( 194,862 ) $ 3,959,789

See Condensed Notes to Consolidated Financial Statements.

1 unchanged sentence

Consolidated Statements of Stockholders’ Equity

For the Three and Nine Months Ended September 30, 2023

Three Months Ended March 31, 2024

(In thousands, except share data) Common

3 unchanged sentences

Net income — — 100,109 — 100,109

Other comprehensive income — — — 49,157 49,157

Net issuance of 66,451 shares of common stock from exercise of stock options

Repurchase of 590,000 shares of common stock

( 6 ) ( 13,534 ) — — ( 13,540 )

Share-based compensation net issuance of 258,000 shares of restricted common stock

3 2,504 — — 2,507

Cash dividends – Common Stock, $ 0.18 per share

— — ( 36,649 ) — ( 36,649 )

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

Comprehensive income:

Net Income — — 105,271 — 105,271

Other comprehensive loss — — — ( 22,350 ) ( 22,350 )

3 unchanged sentences

( 10 ) ( 24,007 ) — — ( 24,017 )

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

( 1 ) 2,335 — — 2,334

Cash dividends – Common Stock, $ 0.18 per share

— — ( 36,495 ) — ( 36,495 )

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

Comprehensive income:

Net Income — — 98,453 — 98,453

Other comprehensive loss — — — ( 57,852 ) ( 57,852 )

Net issuance of 11,538 shares of common stock from exercise of stock options

Repurchase of 260,000 shares of common stock

( 3 ) ( 5,655 ) — — ( 5,658 )

Share-based compensation net forfeiture of 1,000 shares of restricted stock

Share-based compensation net issuance of 219,750 shares of restricted common stock

2 2,273 — — 2,275

Excise tax from repurchase of common stock — ( 135 ) — — ( 135 )

Cash dividends – Common Stock, $ 0.18 per share

— — ( 36,227 ) — ( 36,227 )

Balances at September 30, 2023 (unaudited) $ 2,023 $ 2,363,210 $ 1,640,171 $ ( 350,530 ) $ 3,654,874

Balances at March 31, 2024 (unaudited) $ 2,008 $ 2,326,824 $ 1,753,994 $ ( 271,425 ) $ 3,811,401

See Condensed Notes to Consolidated Financial Statements.

1 unchanged sentence

Consolidated Statements of Cash Flows

Nine Months Ended September 30,

Three Months Ended March 31,

(In thousands) 2025 2024

3 unchanged sentences

Depreciation & amortization 7,190 7,350

(Increase) decrease in value of equity securities ( 2,121 ) 6,118

Increase in value of equity securities ( 442 ) ( 1,003 )

Increase in value of equity method investments ( 4,895 ) ( 840 )

Increase in value of foreclosed assets ( 1,253 ) —

Amortization of securities, net 3,347 3,826

1 unchanged sentence

Share-based compensation 2,800 2,275

Gain on assets ( 2,627 ) ( 1,479 )

Loss (gain) on assets 251 ( 207 )

Provision for credit losses - loans — 5,500

Recovery of credit losses - unfunded commitments — ( 1,000 )

(Recovery of) provision for credit losses - investment securities ( 330 ) 1,683

Deferred income tax effect 6,437 1,567

9 unchanged sentences

Net increase in federal funds sold ( 2,550 ) ( 100 )

Net (increase) decrease in loans ( 428,985 ) 181,505

Purchases of investment securities – available-for-sale ( 62,643 ) ( 8,433 )

Net increase in loans ( 177,767 ) ( 99,450 )

Proceeds from maturities of investment securities – available-for-sale 107,669 73,448

Proceeds from maturities of investment securities – held-to-maturity 5,319 1,444

Proceeds from sales of equity securities — 1,522

Purchase of other investments ( 445 ) ( 1,798 )

Proceeds from foreclosed assets held for sale 1,475 846

Redemption (purchase) of other investments 3,184 ( 2,176 )

Proceeds from sale of foreclosed assets 6,229 306

Proceeds from sale of SBA loans 4,308 2,949

Purchases of premises and equipment ( 6,884 ) ( 1,682 )

Proceeds from sales of premises and equipment 14,818 10,724

(Purchase of) return of investment on cash value of life insurance, net ( 1,218 ) 3,813

Net cash (used in) provided by investing activities ( 128,962 ) 678,808

Proceeds from sale of premises and equipment 2,913 —

Return of investment on cash value of life insurance, net — 280

Net cash used in investing activities ( 57,579 ) ( 24,981 )

Financing Activities

Net decrease in deposits ( 82,001 ) ( 1,420,038 )

Net increase in securities sold under agreements to repurchase 37,331 28,974

Net increase in deposits 395,194 78,419

Net (decrease) increase in securities sold under agreements to repurchase ( 949 ) 34,022

Decrease in FHLB and other borrowed funds ( 250 ) ( 1,400,250 )

3 unchanged sentences

Dividends paid on common stock ( 38,758 ) ( 36,227 )

Net cash used in financing activities ( 239,114 ) ( 1,179,692 )

Net cash provided by financing activities 325,948 52,483

Net change in cash and cash equivalents 385,383 175,045

16 unchanged sentences

The Bank is the only significant subsidiary upon which management makes decisions regarding how to allocate resources and assess performance.

Each of the branches of the Bank provides a group of similar banking services, including such products and services as commercial, real estate and consumer loans, time deposits, checking and savings accounts.

The individual bank branches have similar operating and economic characteristics.

While the chief decision maker monitors the revenue streams of the various products, services and branch locations, operations are managed, and financial performance is evaluated on a company-wide basis.

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 and branch locations are considered by management to be aggregated into one reportable operating segment.

2 unchanged sentences

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.

3 unchanged sentences

Reclassifications

Various items within the accompanying consolidated financial statements for previous years have been reclassified to provide more comparative information.

Various items within the accompanying consolidated financial statements for previous periods 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 $ 11.7 million and $ 15.4 million of restricted cash as of March 31, 2025 and December 31, 2024, respectively.

Interim financial information

10 unchanged sentences

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.

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

These pools are as follows:

construction & land development;

other commercial real estate;

residential real estate;

commercial & industrial;

and consumer & other.

The loan portfolio pools were selected in order to generally align with the loan categories specified in the quarterly call reports required to be filed with the Federal Financial Institutions Examination Council.

For each of these loan pools, the Company generates cash flow projections at the instrument level wherein payment expectations are adjusted for estimated prepayment speed, curtailments, time to recovery, probability of default, and loss given default.

The modeling of expected prepayment speeds, curtailment rates, and time to recovery are based on historical internal data.

The Company uses regression analysis of historical internal and peer data to determine suitable loss drivers to utilize when modeling lifetime probability of default and loss given default.

This analysis also determines how expected probability of default and loss given default will react to forecasted levels of the loss drivers.

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, FHFA housing price index and rental vacancy rate index.

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 loans exhibit similar risk characteristics.

The identified loan segments are as follows:

• 1-4 family construction

• All other construction

• 1-4 family revolving home equity lines of credit (“HELOC”) & junior liens

• 1-4 family senior liens

• Multifamily

• Owner occupied commercial real estate

• Non-owner occupied commercial real estate

• Commercial & industrial, agricultural, non-depository financial institutions, purchase/carry securities, other

• Consumer auto

• Other consumer

• Other consumer - Shore Premier Finance ("SPF")

The allowance for credit losses for each segment is measured through the use of the discounted cash flow method.

• 1-4 family residential construction loans

• Other construction loans and all land development and other land loans

• Secured by farmland (including farm residential and other improvements)

• Revolving, open-end loans secured by 1-4 family residential properties and extended under lines

• Secured by first liens

• Secured by junior liens

• Secured by multifamily (5 or more) residential properties

• Loans secured by owner-occupied, nonfarm nonresidential properties

• Loans secured by other nonfarm nonresidential properties

• Loans to finance agricultural production and other loans to farmers

• Commercial and industrial loans

• Other revolving credit plans

• Automobile loans

• Other consumer loans

• Other consumer loans - Shore Premier Finance

• Obligations (other than securities and leases) of states and political subdivisions in the US

• Loans to nondepository financial institutions

• Loans for purchasing or carrying securities

• All other loans

Loans considered to be collateral dependent, according to ASC 326, are loans for which, repayment is expected to be provided substantially through the operation or sale of the collateral when the borrower is experiencing financial difficulty based on the Company's assessment as of the reporting date.

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 evaluated individually that are considered to be collateral dependent are not included in the collective evaluation.

16 unchanged sentences

(vii) external factors such as competition, legal and regulatory environment;

(viii) changes in the quality of the loan review system;

and (ix) economic conditions.

(viii) changes in the quality of the loan review system and (ix) economic conditions.

Loans are placed on non-accrual status when management believes that the borrower’s financial condition, after giving consideration to economic and business conditions and collection efforts, is such that collection of interest is doubtful, or generally when loans are 90 days or more past due.

2 unchanged sentences

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.

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.

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 the required payments for at least six months, and we reasonably expect to collect all principal and interest.

Allowance for Credit Losses on Off-Balance Sheet Credit Exposures

7 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

(In thousands)

5 unchanged sentences

Diluted earnings per share $ 0.58 $ 0.50

The impact of anti-dilutive shares to the diluted earnings per share calculation was considered immaterial for the periods ended September 30, 2024 and 2023.

Business Combinations

Acquisition of Happy Bancshares, Inc.

The Company's most recent acquisition occurred on April 1, 2022, when the Company completed the acquisition of Happy Bancshares, Inc.

(“Happy”), and merged Happy State Bank into Centennial Bank.

For additional discussion regarding the acquisition of Happy, see "Management's Discussion and Analysis of Financial Condition and Results of Operations" and Note 2 "Business Combinations" in the Notes to Consolidated Financial Statements included in the Annual Report on Form 10-K for the year ended December 31, 2023.

The impact of anti-dilutive shares to the diluted earnings per share calculation was considered immaterial for the periods ended March 31, 2025 and 2024.

Investment Securities

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

September 30, 2024

March 31, 2025

Available-for-Sale

8 unchanged sentences

Total $ 3,299,245 $ ( 2,195 ) $ 3,297,050 $ 3,763 $ ( 297,493 ) $ 3,003,320

September 30, 2024

March 31, 2025

Held-to-Maturity

25 unchanged sentences

Total $ 1,277,209 $ ( 2,005 ) $ 1,275,204 $ 39 $ ( 132,303 ) $ 1,142,940

Assets, principally investment securities, having a carrying value of approximately $ 2.37 billion and $ 3.57 billion at September 30, 2024 and December 31, 2023, respectively, were pledged to secure public deposits, as collateral for repurchase agreements, and for other purposes required or permitted by law.

Investment securities pledged as collateral for repurchase agreements totaled approximately $ 179.4 million and $ 142.1 million at September 30, 2024 and December 31, 2023, respectively.

The amortized cost and estimated fair value of securities classified as available-for-sale and held-to-maturity at September 30, 2024, by contractual maturity, are shown below.

Assets, principally investment securities, having a carrying value of approximately $ 2.75 billion and $ 2.61 billion at March 31, 2025 and December 31, 2024, respectively, were pledged to secure public deposits, as collateral for repurchase agreements, and for other purposes required or permitted by law.

Investment securities pledged as collateral for repurchase agreements totaled approximately $ 161.4 million and $ 162.4 million at March 31, 2025 and December 31, 2024, respectively.

The amortized cost and estimated fair value of securities classified as available-for-sale and held-to-maturity at March 31, 2025, 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.

10 unchanged sentences

Total $ 3,299,245 $ 3,003,320 $ 1,271,901 $ 1,153,262

During the three and nine months ended September 30, 2024 and 2023, no available-for-sale securities were sold.

The following table shows gross unrealized losses and estimated fair value of investment securities classified as available-for-sale and held-to-maturity, aggregated by investment category and length of time that individual investment securities have been in a continuous loss position as of September 30, 2024 and December 31, 2023.

September 30, 2024

During the three months ended March 31, 2025 and 2024, no available-for-sale securities were sold.

March 31, 2025

Less Than 12 Months 12 Months or More Total

36 unchanged sentences

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.

In making this assessment, the Company considers the extent to which fair value is less than amortized cost, 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.

11 unchanged sentences

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

During the quarter ended September 30, 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.

For both the three and nine month periods ended September 30, 2024, the Company determined the $ 2.0 million allowance for credit losses on the held-to-maturity portfolio was adequate.

Therefore, no additional provision was considered necessary for the HTM portfolio.

During the three months ended March 31, 2025, the Company determined the $ 2.2 million allowance for credit losses on the available-for-sale portfolio and the $ 2.0 million allowance for credit losses on the held-to-maturity portfolio was adequate.

Therefore, no additional provision was considered necessary.

Available-for-Sale Investment Securities

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Allowance for credit losses:

(In thousands)

Beginning balance $ 2,525 $ 842

(Recovery of) provision for credit loss ( 330 ) 1,683

Balance, September 30

Beginning balance, January 1

$ 2,195 $ 2,525

Provision for credit loss — —

Balance, March 31

$ 2,195 $ 2,525

Recovery of credit loss ( 330 )

Balance, December 31, 2024

Held-to-Maturity Investment Securities

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Allowance for credit losses:

(In thousands)

Beginning balance $ 2,005 $ 2,005

Beginning balance, January 1

$ 2,005 $ 2,005

Provision for credit loss — —

Balance, September 30

Balance, March 31

$ 2,005 $ 2,005

1 unchanged sentence

Balance, December 31, 2024

For the nine months ended September 30, 2024, the Company had available-for-sale investment securities with approximately $ 261.8 million in unrealized losses, of which $ 260.1 million had been in continuous loss positions for more than twelve months.

For the three months ended March 31, 2025, the Company had available-for-sale investment securities with approximately $ 297.5 million in unrealized losses, of which $ 295.2 million had been in continuous loss positions for more than twelve months.

With the exception of the subordinated debt investment securities which were downgraded during 2023 resulting in the allowance, the Company’s assessments indicated the cause of the market depreciation was primarily due to the change in interest rates and not the issuer’s financial condition or downgrades by rating agencies.

1 unchanged sentence

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

As of September 30, 2024, the Company's available-for-sale securities portfolio consisted of 1,550 investment securities, 1,256 of which were in an unrealized loss position.

As of March 31, 2025, the Company's available-for-sale securities portfolio consisted of 1,516 investment securities, 1,287 of which were in an unrealized loss position.

As noted in the table above, the total amount of the unrealized loss was $ 297.5 million.

5 unchanged sentences

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 September 30, 2024, an additional provision for credit losses is not necessary because the decline in market value was attributable to changes in interest rates and not credit quality, and because the Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost basis, which may be maturity.

As of September 30, 2024, the Company's held-to-maturity securities portfolio consisted of 510 investment securities, 488 of which were in an unrealized loss position.

The Company has determined that, as of March 31, 2025, 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 March 31, 2025, the Company's held-to-maturity securities portfolio consisted of 511 investment securities, 501 of which were in an unrealized loss position.

As noted in the table above, the total amount of the unrealized loss was $ 116.7 million.

4 unchanged sentences

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

Because the decline in market value was attributable to changes in interest rates and not credit quality, the Company has determined that an additional provision for credit losses was not necessary as of September 30, 2024.

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 September 30, 2024:

State and political subdivisions U.S.

8 unchanged sentences

Total $ 1,105,655 $ 43,629 $ 122,617 $ 1,271,901

Income earned on securities for the three months ended September 30, 2024 and 2023, is as follows:

Income earned on securities for the three months ended March 31, 2025 and 2024, is as follows:

Three Months Ended

September 30, For the Nine Months Ended

September 30,

2024 2023 2024 2023

(In thousands)

6 unchanged sentences

The various categories of loans receivable are summarized as follows:

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

(In thousands)

14 unchanged sentences

Loans receivable, net $ 14,672,172 $ 14,488,620

During the three months ended September 30, 2024, the Company sold $ 1.8 million of the guaranteed portions of certain SBA loans, which resulted in a gain of approximately $ 145,000 .

During the nine months ended September 30, 2024, the Company sold $ 5.1 million of the guaranteed portions of certain SBA loans, which resulted in a gain of approximately $ 399,000 .

During the three months ended September 30, 2023, the Company sold $ 1.0 million guaranteed portions of certain SBA loans, which resulted in a gain of approximately $ 97,000 .

During the nine months ended September 30, 2023, the Company sold $ 3.2 million guaranteed portions of certain SBA loans, which resulted in a gain of approximately $ 236,000 .

Mortgage loans held for sale of approximately $ 92.0 million and $ 123.4 million at September 30, 2024 and December 31, 2023, respectively, are included in residential 1-4 family loans.

During the three months ended March 31, 2025, the Company sold $ 4.0 million of the guaranteed portions of certain SBA loans, which resulted in a gain of approximately $ 288,000 .

During the three months ended March 31, 2024, the Company sold $ 2.7 million guaranteed portions of certain SBA loans, which resulted in a gain of approximately $ 198,000 .

Mortgage loans held for sale of approximately $ 108.7 million and $ 98.7 million at March 31, 2025 and December 31, 2024, 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.

9 unchanged sentences

Upon failure to deliver, the Company is subject to fees based on market movement.

These commitments and IRLCs are derivative instruments and their fair values at September 30, 2024 and December 31, 2023 were not material.

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

These commitments and IRLCs are derivative instruments and their fair values at March 31, 2025 and December 31, 2024 were not material.

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.

4 unchanged sentences

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

The Company held approximately $ 79.6 million and $ 130.7 million in PCD loans, as of September 30, 2024 and December 31, 2023, respectively.

The balance, as of September 30, 2024, results entirely from the acquisition of Happy.

The Company held approximately $ 72.1 million and $ 76.3 million in PCD loans, as of March 31, 2025 and December 31, 2024, respectively.

The balance, as of March 31, 2025, results entirely from the acquisition of Happy Bancshares, Inc.

("Happy") in 2022.

A description of our accounting policies for loans and impaired loans (which includes loans individually analyzed for credit losses for which a specific reserve has been recorded, non-accrual loans, loans past due 90 days or more and restructured loans made to borrowers experiencing financial difficulty) are set forth in our 2024 Form 10-K filed with the SEC on February 27, 2025.

Allowance for Credit Losses, Credit Quality and Other

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

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

These pools are as follows:

22 unchanged sentences

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.

Management then determines if changes to the 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 September 30, 2024 and December 31, 2023.

September 30, 2024

The identified loss drivers by segment are included below as of both March 31, 2025 and December 31, 2024.

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

10 unchanged sentences

Obligations of States and Political Subdivisions 8 National Unemployment (%) & Gross Domestic Product (%)

December 31, 2023

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

1-4 Family Construction 1a1 National Unemployment (%) & Housing Price Index (%)

All Other Construction 1a2 National Unemployment (%) & Gross Domestic Product (%)

1-4 Family Revolving HELOC & Junior Liens 1c1 National Unemployment (%) & Housing Price Index – CoreLogic (%)

1-4 Family Revolving HELOC & Junior Liens 1c2b National Unemployment (%) & Gross Domestic Product (%)

1-4 Family Senior Liens 1c2a National Unemployment (%) & Gross Domestic Product (%)

Multifamily 1d Rental Vacancy Rate (%) & Housing Price Index – Case-Schiller (%)

Owner Occupied CRE 1e1 National Unemployment (%) & Gross Domestic Product (%)

Non-Owner Occupied CRE 1e2,1b,8 National Unemployment (%) & Gross Domestic Product (%)

Commercial & Industrial, Agricultural, Non-Depository Financial Institutions, Purchase/Carry Securities, Other 4a, 3, 9a, 9b1, 9b2, 10, Other National Unemployment (%) & National Retail Sales (%)

Consumer Auto 6c National Unemployment (%) & National Retail Sales (%)

Other Consumer 6b, 6d National Unemployment (%) & National Retail Sales (%)

Other Consumer - SPF 6d National Unemployment (%)

7 unchanged sentences

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.

These loans are generally underwritten by assessing cash flow (debt service coverage), primary and secondary source of repayment, the financial strength of the borrower as well as any guarantors, 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.

8 unchanged sentences

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.

Commercial loans are generally underwritten by addressing cash flow (debt service coverage), primary and secondary sources of repayment, the financial strength of the borrower as well as any guarantors, 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.

3 unchanged sentences

Consumer & Other Loans.

Our consumer & other loans are primarily composed of loans to finance USCG registered high-end sail and power boats.

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.

5 unchanged sentences

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

During the three and nine months ended September 30, 2024, the Company recorded $ 18.2 million and $ 31.7 million in provision for credit losses on loans, respectively.

$ 16.7 million of the provision for credit losses recorded during 2024 was used to establish a hurricane reserve for loans located in the Federal Emergency Management Agency ("FEMA") disaster areas impacted by Hurricane Helene, which made landfall during the third quarter of 2024.

In addition, during the three months ended September 30, 2024, the Company recorded $ 1.0 million in provision for unfunded commitments, which completely offset the $ 1.0 million recovery of credit losses on unfunded commitments that was recorded during the first quarter of 2024.

During the three and nine months ended September 30, 2023, the Company recorded $ 2.8 million and $ 6.3 million in provision for credit losses on loans, respectively.

For the three and nine months ended September 30, 2023, the Company recovered $ 1.5 million in credit losses on unfunded commitments.

The following table presents the activity in the allowance for credit losses for the three and nine months ended September 30, 2024:

Three Months Ended September 30, 2024

During the three months ended March 31, 2025, the Company did not record a provision for credit losses on loans primarily due to the $ 4.1 million in net recoveries experienced during the quarter.

After considering the recoveries, management determined the level of the allowance for credit losses on loans was adequate.

In addition, management determined that a provision was not necessary for the unfunded commitments as the current level of the reserve was considered adequate.

During the three months ended March 31, 2024, the Company recorded $ 5.5 million in provision for credit losses on loans, and the Company reversed $ 1.0 million in provision for unfunded commitments.

The following table presents the activity in the allowance for credit losses for the three months ended March 31, 2025:

Three Months Ended March 31, 2025

Construction/

13 unchanged sentences

Provision for credit losses ( 4,220 ) ( 8,890 ) 2,597 9,704 809 —

Balance, September 30 $ 63,398 $ 96,675 $ 59,425 $ 60,603 $ 32,473 $ 312,574

Nine Months Ended September 30, 2024

Construction/

Development Other

Real Estate Residential

Real Estate Commercial

& Industrial Consumer

& Other Total

(In thousands)

Allowance for credit losses:

Beginning balance $ 33,877 $ 78,635 $ 55,860 $ 92,810 $ 27,052 $ 288,234

Loans charged off ( 81 ) ( 1,164 ) ( 260 ) ( 4,500 ) ( 3,072 ) ( 9,077 )

Recoveries of loans previously charged off 96 59 149 503 910 1,717

Net loans recovered (charged off) 15 ( 1,105 ) ( 111 ) ( 3,997 ) ( 2,162 ) ( 7,360 )

Provision for credit losses 29,506 19,145 3,676 ( 28,210 ) 7,583 31,700

Balance, September 30 $ 63,398 $ 96,675 $ 59,425 $ 60,603 $ 32,473 $ 312,574

During the second quarter of 2024, the Company implemented updated allowance for credit loss models as part of the annual model review and challenge process.

In light of the current commercial real estate ("CRE") environment, the allowance calculation called for a higher level of reserves for the CRE portfolio and a corresponding reduction in reserves for the commercial and industrial portfolio.

The following table presents the activity in the allowance for credit losses for the three and nine months ended September 30, 2023 and the year ended December 31, 2023:

Three Months Ended September 30, 2023

Construction/

Development Other

Real Estate Residential

Real Estate Commercial

& Industrial Consumer

& Other Total

(In thousands)

Allowance for credit losses:

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

Loans charged off ( 150 ) ( 1,950 ) ( 103 ) ( 183 ) ( 1,063 ) ( 3,449 )

Recoveries of loans previously charged off 33 25 22 119 329 528

Net loans recovered (charged off) ( 117 ) ( 1,925 ) ( 81 ) ( 64 ) ( 734 ) ( 2,921 )

Provision for credit losses 484 ( 4,680 ) 3,233 2,059 1,704 2,800

Balance, September 30 $ 32,642 $ 78,553 $ 54,884 $ 92,469 $ 27,014 $ 285,562

Nine Months Ended September 30, 2023 and Year Ended December 31, 2023

Balance, March 31 $ 48,176 $ 86,285 $ 53,408 $ 60,122 $ 31,953 $ 279,944

During the three months ended March 31, 2025, the Company reduced the level of the hurricane reserve from $ 33.4 million to $ 6.0 million as the majority of deferred loans returned to regular payment during the first quarter of 2025.

The reduction in the hurricane reserve and the increase in the economic uncertainty related qualitative factor drove the significant changes in reserve levels between commercial real estate and commercial & industrial loans.

The following table presents the activity in the allowance for credit losses for the three months ended March 31, 2024 and the year ended December 31, 2024:

Three Months Ended March 31, 2024 and Year Ended December 31, 2024

Construction/

12 unchanged sentences

Provision for credit loss - loans 2,038 1,575 1,183 ( 157 ) 861 5,500

Balance, September 30

Balance, March 31

35,921 79,128 56,903 91,008 27,334 290,294

7 unchanged sentences

$ 52,271 $ 91,315 $ 50,835 $ 49,621 $ 31,838 $ 275,880

The following table presents the amortized cost basis of loans on nonaccrual status and loans past due over 90 days still accruing as of September 30, 2024 and December 31, 2023:

September 30, 2024

During the second quarter of 2024, the Company implemented updated allowance for credit loss models as part of the annual model review and challenge process.

The following table presents the amortized cost basis of loans on nonaccrual status and loans past due over 90 days still accruing as of March 31, 2025 and December 31, 2024:

March 31, 2025

Nonaccrual Nonaccrual

25 unchanged sentences

Residential 1-4 family 22,539 — 1,835

Multifamily residential 13,083 — —

Total real estate 75,751 28,768 2,739

3 unchanged sentences

Total $ 93,853 $ 28,768 $ 5,034

The Company had $ 95.7 million and $ 60.0 million in nonaccrual loans for the periods ended September 30, 2024 and December 31, 2023, respectively.

In addition, the Company had $ 5.4 million and $ 4.1 million in loans past due 90 days or more and still accruing for the periods ended September 30, 2024 and December 31, 2023, respectively.

The Company had $ 46.5 million and $ 2.5 million in nonaccrual loans with a specific reserve as of September 30, 2024 and December 31, 2023, respectively.

Interest income recognized on the non-accrual loans for the periods ended September 30, 2024 and September 30, 2023 was considered immaterial.

The following table presents the amortized cost basis of impaired loans (which includes loans individually analyzed for credit losses for which a specific reserve has been recorded, non-accrual loans, loans past due 90 days or more and restructured loans made to borrowers experiencing financial difficulty) by class of loans as of September 30, 2024 and December 31, 2023:

September 30, 2024

The Company had $ 86.4 million and $ 93.9 million in nonaccrual loans as of March 31, 2025 and December 31, 2024, respectively.

In addition, the Company had $ 3.3 million and $ 5.0 million in loans past due 90 days or more and still accruing as of March 31, 2025 and December 31, 2024, respectively.

The Company had $ 28.4 million and $ 28.8 million in nonaccrual loans with a specific reserve as of March 31, 2025 and December 31, 2024, respectively.

Interest income recognized on the non-accrual loans for the periods ended March 31, 2025 and March 31, 2024 was considered immaterial .

March 31, 2025

Real Estate Residential

29 unchanged sentences

Total $ 130,721 $ 39,632 $ 97,643

The Company had $ 134.1 million and $ 94.9 million in impaired loans for the periods ended September 30, 2024 and December 31, 2023, respectively.

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

For these loans, where the Company has determined that foreclosure of the collateral is probable, or where the borrower is experiencing financial difficulty and the Company expects repayment of the financial asset to be provided substantially through the operation or sale of the collateral, the allowance for credit losses is measured based on the difference between the fair value of the collateral, net of estimated costs to sell, and the amortized cost basis of the loan as of the measurement date.

When repayment is expected to be from the operation of the collateral, expected credit losses are calculated as the amount by which the amortized cost basis of the loan exceeds the present value of expected cash flows from the operation of the collateral.

When repayment is expected to be from the sale of the collateral, expected credit losses are calculated as the amount by which the amortized cost basis of the loan exceeds the fair value of the underlying collateral less

estimated costs to sell.

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

The following is an aging analysis for loans receivable as of September 30, 2024 and December 31, 2023:

September 30, 2024

The Company had $ 241.1 million and $ 268.0 million in impaired loans for the periods ended March 31, 2025 and December 31, 2024, respectively.

Interest recognized on impaired loans during the three months ended March 31, 2025 was approximately $ 3.0 million.

Interest recognized on impaired loans during the three months ended March 31, 2024 was approximately $ 685,000 .

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

The following is an aging analysis for loans receivable as of March 31, 2025 and December 31, 2024:

March 31, 2025

30-59 Days Loans

35 unchanged sentences

Total $ 15,145 $ 46,050 $ 98,887 $ 160,082 $ 14,604,418 $ 14,764,500 $ 5,034

Non-accruing loans at September 30, 2024 and December 31, 2023 were $ 95.7 million and $ 60.0 million, respectively.

Interest recognized on impaired loans during the three and nine months ended September 30, 2024 was approximately $ 1.3 million and $ 3.7 million, respectively.

Interest recognized on impaired loans during the three and nine months ended September 30, 2023 was approximately $ 347,000 and $ 1.0 million, respectively.

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

Credit Quality Indicators.

39 unchanged sentences

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.

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

All loans over $ 2.0 million that are rated 5 – 8 are individually assessed for credit losses on a quarterly basis.

Loans rated 5 – 8 that fall under the threshold amount are not individually tested for credit losses and therefore are not included in collateral dependent loans;

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

Based on the most recent analysis performed, the risk category of loans by class of loans as of September 30, 2024 and December 31, 2023 is as follows:

September 30, 2024

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 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.

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

Based on the most recent analysis performed, the risk category of loans by class of loans as of March 31, 2025 and December 31, 2024 is as follows:

March 31, 2025

Term Loans Amortized Cost Basis by Origination Year

43 unchanged sentences

Total residential 1-4 family 57,864 198,421 259,235 420,531 244,440 552,619 214,762 1,947,872

September 30, 2024

March 31, 2025

Term Loans Amortized Cost Basis by Origination Year

133 unchanged sentences

Total $ 2,197,674 $ 2,138,138 $ 3,107,235 $ 1,554,947 $ 867,316 $ 3,045,313 $ 1,853,877 $ 14,764,500

The following table presents gross write-offs by origination date as of September 30, 2024 and December 31, 2023.

September 30, 2024

The following table presents gross write-offs by origination date as of March 31, 2025 and December 31, 2024.

March 31, 2025

Gross Loan Write-Offs by Origination Year

23 unchanged sentences

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

3 unchanged sentences

Total $ 3,044 $ 838 $ 34,489 $ 2,243 $ 10,522 $ 7,883 $ 4,017 $ 63,036

**The 2023 write-offs consist entirely of overdrafts.

**The 2024 write-offs primarily consists of overdrafts.

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 September 30, 2024 and December 31, 2023.

September 30, 2024

The following tables present the amortized cost of performing and nonperforming loans as of March 31, 2025 and December 31, 2024.

March 31, 2025

Term Loans Amortized Cost Basis by Origination Year

85 unchanged sentences

Total $ 2,197,674 $ 2,138,138 $ 3,107,235 $ 1,554,947 $ 867,316 $ 3,045,313 $ 1,853,877 $ 14,764,500

The Company had approximately $ 45.3 million or 180 total revolving loans convert to term loans for the nine months ended September 30, 2024 compared to $ 32.1 million or 182 total revolving loans convert to term loans for the nine months ended September 30, 2023.

The Company had approximately $ 15.2 million or 44 total revolving loans convert to term loans for the three months ended March 31, 2025 compared to $ 10.3 million or 61 total revolving loans convert to term loans for the three months ended March 31, 2024.

These loans were considered immaterial for vintage disclosure inclusion.

The following table presents the amortized cost basis of modified loans to borrowers experiencing financial difficulty by class and modification type at September 30, 2024 and December 31, 2023.

The following table presents the amortized cost basis of modified loans to borrowers experiencing financial difficulty by class and modification type at March 31, 2025 and December 31, 2024.

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.

September 30, 2024

March 31, 2025

Combination of Modifications

25 unchanged sentences

Total $ 3,807 $ 100,311 $ 102 $ 1,752 $ 938 $ 2 $ 15,646 $ 117 $ 122,675 0.83 %

During the nine months ended September 30, 2024, the Company restructured approximately $ 1.2 million in loans to eight borrowers.

The ending balance of these loans as of September 30, 2024, was $ 1.1 million.

During the nine months ended September 30, 2023, the Company restructured approximately $ 19.4 million in loans to 18 borrowers.

The ending balance of these loans as of September 30, 2023, was $ 20.8 million.

The Company considered the financial effect of these loan modifications to borrowers experiencing financial difficulty during the nine months ended September 30, 2024 and September 30, 2023 as well as the unadvanced balances to these borrowers immaterial for tabular disclosure inclusion.

The following table presents the amortized cost basis of loans that had a payment default during the nine months ended September 30, 2024 and were modified in the twelve months prior to that default to borrowers experiencing financial difficulty.

September 30, 2024

Term Extension Interest Rate Reduction Combination Interest Rate Reduction and Term Extension

During the three months ended March 31, 2025, the Company restructured approximately $ 4.0 million in loans to four borrowers.

The ending balance of these loans as of March 31, 2025, was $ 3.9 million.

During the three months ended March 31, 2024, the Company restructured approximately $ 668,000 in loans to 3 borrowers.

The ending balance of these loans as of March 31, 2024, was $ 656,000 .

The Company considered the financial effect of these loan modifications to borrowers experiencing financial difficulty during the three months ended March 31, 2025 and March 31, 2024 as well as the unadvanced balances to these borrowers immaterial for tabular disclosure inclusion.

The following table presents the amortized cost basis of loans that had a payment default during the three months ended March 31, 2025 and were modified in the twelve months prior to that default to borrowers experiencing financial difficulty.

March 31, 2025

Term Extension Combination Interest Rate Reduction and Term Extension

(Dollars in thousands)

4 unchanged sentences

Total real estate 241 959

Consumer 6 — —

Commercial and industrial — 1

2 unchanged sentences

The Company has modified 16 loans over the past 12 months to borrowers experiencing financial difficulty.

The pre-modification balance of the loans was $ 1.4 million, and the ending balance as of September 30, 2024 was $ 1.3 million.

The $ 1.3 million balance consists of $ 1.1 million of non-accrual loans and $ 193,000 of current loans, of which $ 92,000 were 60-89 days past due.

The remaining balance of the loans was current as of September 30, 2024.

The pre-modification balance of the loans was $ 112.3 million, and the ending balance as of March 31, 2025 was $ 100.2 million.

The $ 100.2 million balance consists of $ 1.2 million of non-accrual loans and $ 99.0 million of current loans, of which all were current as of March 31, 2025.

Three of the modified loans pertained to one borrower relationship and accounted for $ 95.0 million of the total post-modification outstanding balance.

These loans were modified during the year ended December 31, 2024.

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, and the charge-off was recorded during 2024.

Six of the $ 122.2 million in restructured loans held by the Company were considered to be collateral dependent as of March 31, 2025.

The outstanding balance of these loans was $ 113.3 million, and the specific reserve was $ 4.2 million.

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

2 unchanged sentences

For individually analyzed loans which are not considered to be collateral dependent, an allowance is recorded based on the loss rate for the respective pool within the collective evaluation.

The following is a presentation of total foreclosed assets as of September 30, 2024 and December 31, 2023:

September 30, 2024 December 31, 2023

The following is a presentation of total foreclosed assets as of March 31, 2025 and December 31, 2024:

March 31, 2025 December 31, 2024

(In thousands)

6 unchanged sentences

Goodwill and Core Deposits and Other Intangibles

Changes in the carrying amount and accumulated amortization of the Company’s goodwill and core deposits and other intangibles at September 30, 2024 and December 31, 2023, were as follows:

September 30, 2024 December 31, 2023

Changes in the carrying amount and accumulated amortization of the Company’s goodwill and core deposits and other intangibles at March 31, 2025 and December 31, 2024, were as follows:

March 31, 2025 December 31, 2024

(In thousands)

1 unchanged sentence

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

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

(In thousands)

Core Deposit Intangibles

Balance, beginning of period $ 48,770 $ 58,455

Balance, beginning of period, January 1 $ 40,327 $ 48,770

Amortization expense ( 2,047 ) ( 2,140 )

Balance, September 30 $ 42,395 51,023

Balance, March 31 $ 38,280 46,630

Amortization expense ( 6,303 )

Balance, end of year $ 40,327

The carrying basis and accumulated amortization of core deposit intangibles at September 30, 2024 and December 31, 2023 were :

September 30, 2024 December 31, 2023

The carrying basis and accumulated amortization of core deposit intangibles at March 31, 2025 and December 31, 2024 were :

March 31, 2025 December 31, 2024

(In thousands)

2 unchanged sentences

Net carrying amount $ 38,280 $ 40,327

Core deposit intangible amortization expense was approximately $ 2.1 million and $ 2.5 million for the three months ended September 30, 2024 and 2023, respectively.

Core deposit intangible amortization expense was approximately $ 6.4 million and $ 7.4 million for the nine months ended September 30, 2024 and 2023, respectively.

Core deposit intangible amortization expense was approximately $ 2.0 million and $ 2.1 million for the three months ended March 31, 2025 and 2024, respectively.

The Company’s estimated amortization expense of core deposits intangibles for each of the years 2025 through 2029 is approximately:

4 unchanged sentences

2029 - $ 4.2 million.

The carrying amount of the Company’s goodwill was $ 1.40 billion at both September 30, 2024 and December 31, 2023.

The carrying amount of the Company’s goodwill was $ 1.40 billion at both March 31, 2025 and December 31, 2024.

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

3 unchanged sentences

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

As of September 30, 2024 and December 31, 2023, other assets were $ 352.6 million and $ 323.6 million, respectively.

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

These equity securities without a readily determinable fair value were $ 133.3 million and $ 133.4 million at September 30, 2024 and December 31, 2023, and are accounted for at cost.

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

These equity securities without a readily determinable fair value were $ 93.3 million and $ 90.3 million at September 30, 2024 and December 31, 2023, respectively.

As of March 31, 2025 and December 31, 2024, other assets were $ 376.0 million and $ 345.3 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 $ 132.9 million and $ 135.2 million at March 31, 2025 and December 31, 2024, and are accounted for at cost.

The Company has equity securities which are accounted for under ASC Topic 321.

These equity securities without a readily determinable fair value were $ 95.7 million and $ 91.2 million at March 31, 2025 and December 31, 2024, respectively.

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

The aggregate amount of time deposits with a minimum denomination of $250,000 was $ 923.9 million and $ 836.7 million at September 30, 2024 and December 31, 2023, respectively.

The aggregate amount of time deposits with a minimum denomination of $100,000 was $ 1.20 billion and $ 1.09 billion at September 30, 2024 and December 31, 2023, respectively.

Interest expense applicable to certificates in excess of $100,000 totaled $ 12.7 million and $ 7.5 million for the three months ended September 30, 2024 and 2023, respectively.

Interest expense applicable to certificates in excess of $100,000 totaled $ 36.5 million and $ 15.7 million for the nine months ended September 30, 2024 and 2023, respectively.

As of September 30, 2024 and December 31, 2023, brokered deposits were $ 421.3 million and $ 401.0 million, respectively.

Deposits totaling approximately $ 2.84 billion and $ 3.05 billion at September 30, 2024 and December 31, 2023, respectively, were public funds obtained primarily from state and political subdivisions in the United States.

The aggregate amount of time deposits with a minimum denomination of $250,000 was $ 1.03 billion and $ 917.1 million at March 31, 2025 and December 31, 2024, respectively.

The aggregate amount of time deposits with a minimum denomination of $100,000 was $ 1.30 billion and $ 1.20 billion at March 31, 2025 and December 31, 2024, respectively.

Interest expense applicable to certificates in excess of $100,000 totaled $ 12.1 million and $ 11.6 million for the three months ended March 31, 2025 and 2024, respectively.

As of March 31, 2025 and December 31, 2024, brokered deposits were $ 444.2 million and $ 448.4 million, respectively.

Deposits totaling approximately $ 3.16 billion and $ 3.08 billion at March 31, 2025 and December 31, 2024, respectively, were public funds obtained primarily from state and political subdivisions in the United States.

Securities Sold Under Agreements to Repurchase

At September 30, 2024 and December 31, 2023, securities sold under agreements to repurchase totaled $ 179.4 million and $ 142.1 million, respectively.

For the three-month periods ended September 30, 2024 and 2023, securities sold under agreements to repurchase daily weighted-average totaled $ 157.2 million and $ 154.7 million, respectively.

For the nine-month periods ended September 30, 2024 and 2023, securities sold under agreements to repurchase daily weighted-average totaled $ 163.0 million and $ 144.6 million, respectively.

The remaining contractual maturity of securities sold under agreements to repurchase in the consolidated balance sheets as of September 30, 2024 and December 31, 2023 is presented in the following table:

September 30, 2024 December 31, 2023

At March 31, 2025 and December 31, 2024, securities sold under agreements to repurchase totaled $ 161.4 million and $ 162.4 million, respectively.

For the three-month periods ended March 31, 2025 and 2024, securities sold under agreements to repurchase daily weighted-average totaled $ 155.9 million and $ 172.0 million, respectively.

The remaining contractual maturity of securities sold under agreements to repurchase in the consolidated balance sheets as of March 31, 2025 and December 31, 2024 is presented in the following table:

March 31, 2025 December 31, 2024

Overnight and

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Securities sold under agreements to repurchase:

government-sponsored enterprises $ 9,964 $ 9,964 $ — $ —

Mortgage-backed securities $ 56,625 $ 56,625 $ 48,056 $ 48,056

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FHLB and Other Borrowed Funds

The Company’s FHLB borrowed funds, which are secured by our loan portfolio, were $ 600.0 million at both September 30, 2024 and December 31, 2023.

At September 30, 2024 and December 31, 2023, the entire $ 600.0 million of the outstanding balances were classified as long-term advances.

The Company’s FHLB borrowed funds, which are secured by our loan portfolio, were $ 600.0 million at both March 31, 2025 and December 31, 2024.

At both March 31, 2025 and December 31, 2024, $ 100.0 million and $ 500.0 million of the outstanding balances were classified as short-term and long-term advances, respectively.

The FHLB advances mature from 2025 to 2037 with fixed interest rates ranging from 3.37 % to 4.84 %.

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

Other borrowed funds were $ 700.8 million as of September 30, 2024 and were classified as short-term advances.

The Company had $ 701.3 million in other borrowed funds as of December 31, 2023.

As of both September 30, 2024 and December 31, 2023, the Company had drawn $ 700.0 million from the Bank Term Funding Program in the ordinary course of business, and these advances mature on January 16, 2025.

Additionally, the Company had $ 1.24 billion and $ 1.33 billion at September 30, 2024 and December 31, 2023, respectively, in letters of credit under a FHLB blanket borrowing line of credit, which are used to collateralize public deposits.

Other borrowed funds were $ 500,000 as of March 31, 2025 and were classified as short-term advances.

The Company had $ 750,000 in other borrowed funds as of December 31, 2024.

Additionally, the Company had $ 1.33 billion and $ 1.22 billion at March 31, 2025 and December 31, 2024, respectively, in letters of credit under a FHLB blanket borrowing line of credit, which are used to collateralize public deposits.

Subordinated Debentures

Subordinated debentures at September 30, 2024 and December 31, 2023 consisted of the following components:

September 30, 2024

Subordinated debentures at March 31, 2025 and December 31, 2024 consisted of the following components:

March 31, 2025 As of

December 31, 2024

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

The following is a summary of the components of the provision for income taxes for the three and nine months ended September 30, 2024 and 2023:

For the Three Months Ended September 30, For the Nine Months Ended September 30,

2024 2023 2024 2023

The following is a summary of the components of the provision for income taxes for the three months ended March 31, 2025 and 2024:

For the Three Months Ended March 31,

(In thousands)

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Income tax expense $ 31,945 $ 30,284

The reconciliation between the statutory federal income tax rate and effective income tax rate is as follows for the three and nine months ended September 30, 2024 and 2023:

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

The reconciliation between the statutory federal income tax rate and effective income tax rate is as follows for the three months ended March 31, 2025 and 2024:

Three Months Ended March 31,

Statutory federal income tax rate 21.00 % 21.00 %

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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:

September 30,

2025 December 31,

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Investments 23,605 26,042

Accelerated depreciation on premises and equipment 1,190 664

Other 14,486 14,634

1 unchanged sentence

Deferred tax liabilities:

Accelerated depreciation on premises and equipment — 1,477

Tax basis on acquisitions 8,326 7,439

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Common Stock, Compensation Plans and Other

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.

As of March 31, 2025, the Company’s Restated Articles of Incorporation, as amended, authorized the issuance of up to 300,000,000 shares of common stock, par value $ 0.01 per share.

However, on April 17, 2025 at the Annual Meeting of Shareholders of the Company, the shareholders approved an amendment to the Company's Restated Articles of Incorporation to increase the number of authorized shares of common stock from 300,000,000 to 400,000,000 .

The Company also has the authority to issue up to 5,500,000 shares of preferred stock, par value $ 0.01 per share under the Company’s Restated Articles of Incorporation, as amended.

Stock Repurchases

During the nine months ended September 30, 2024, the Company repurchased a total of 3,426,028 shares with a weighted-average stock price of $ 24.36 per share.

Shares repurchased under the program as of September 30, 2024 since its inception total 26,411,743 shares.

The remaining balance available for repurchase is 13,340,257 shares at September 30, 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.

During the three months ended March 31, 2025, the Company repurchased a total of 1,000,000 shares with a weighted-average stock price of $ 29.67 per share.

Shares repurchased under the program as of March 31, 2025 since its inception total 27,507,507 shares.

The remaining balance available for repurchase is 19,000,000 shares at March 31, 2025.

Stock Compensation Plans

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

As of September 30, 2024, the maximum total number of shares of the Company’s common stock available for issuance under the Plan was 14,788,000 shares.

At September 30, 2024, the Company had 2,072,278 shares of common stock available for future grants and 3,863,313 shares of common stock reserved for issuance pursuant to the Plan.

The intrinsic value of the stock options outstanding was $ 8.4 million, which includes the intrinsic value of vested stock options of $ 6.2 million at September 30, 2024.

The intrinsic value of stock options exercised during the nine months ended September 30, 2024 was approximately $ 6.8 million.

Total unrecognized compensation cost related to non-vested stock option awards, which are expected to be recognized over the vesting periods, was approximately $ 1.7 million as of September 30, 2024.

The table below summarizes the stock option transactions under the Plan at September 30, 2024 and December 31, 2023 and changes during the nine-month period and year then ended:

For the Nine Months Ended September 30, 2024 For the Year Ended

As of March 31, 2025, the maximum total number of shares of the Company’s common stock available for issuance under the Plan was 14,788,000 shares.

At March 31, 2025, the Company had 1,807,181 shares of common stock available for future grants and 3,207,204 shares of common stock reserved for issuance pursuant to the Plan.

The intrinsic value of the stock options outstanding was $ 7.6 million, which includes the intrinsic value of vested stock options of $ 6.2 million at March 31, 2025.

The intrinsic value of stock options exercised during the three months ended March 31, 2025 was approximately $ 1.6 million.

Total unrecognized compensation cost related to non-vested stock option awards, which are expected to be recognized over the vesting periods, was approximately $ 1.1 million as of March 31, 2025.

The table below summarizes the stock option transactions under the Plan at March 31, 2025 and December 31, 2024 and changes during the three-month period and year then ended:

For the Three Months Ended March 31, 2025 For the Year Ended

December 31, 2024

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

There were no options granted during the nine months ended September 30, 2024.

There were no options granted during the three months ended March 31, 2025.

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

The assumptions used in determining the fair value of the 2025 and 2024 stock option grants were as follows:

For the Nine Months Ended September 30, 2024

For the Three Months Ended March 31, 2025

For the Year Ended December 31, 2024

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Expected life of options Not applicable 6.5 years

The following is a summary of currently outstanding and exercisable options at September 30, 2024:

The following is a summary of currently outstanding and exercisable options at March 31, 2025:

Options Outstanding Options Exercisable

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57 3.56 25.43 45 25.74

The table below summarized the activity for the Company’s restricted stock issued and outstanding at September 30, 2024 and December 31, 2023 and changes during the period and year then ended:

September 30, 2024

$ 28.00 to $ 29.99

10 9.61 29.41 — —

The table below summarized the activity for the Company’s restricted stock issued and outstanding at March 31, 2025 and December 31, 2024 and changes during the period and year then ended:

March 31, 2025

December 31, 2024

5 unchanged sentences

End of period 1,256 1,429

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

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

$ 2,565 $ 8,228

Total unrecognized compensation cost related to non-vested restricted stock awards, which are expected to be recognized over the vesting periods, was approximately $ 16.5 million as of September 30, 2024.

Total unrecognized compensation cost related to non-vested restricted stock awards, which are expected to be recognized over the vesting periods, was approximately $ 19.8 million as of March 31, 2025.

Non-Interest Expense

The table below shows the components of non-interest expense for the three and nine months ended September 30, 2024 and 2023:

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

The table below shows the components of non-interest expense for the three months ended March 31, 2025 and 2024:

Three Months Ended March 31,

(In thousands)

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

As of September 30, 2024, the balances of the ROU asset and lease liability were $ 43.0 million and $ 45.8 million, respectively.

As of March 31, 2025, the balances of the ROU asset and lease liability were $ 43.7 million and $ 46.5 million, respectively.

As of December 31, 2024, the balances of the ROU asset and lease liability were $ 42.3 million and $ 45.2 million, respectively.

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

The minimum rental commitments under these noncancelable operating leases are as follows (in thousands) as of September 30, 2024 and December 31, 2023:

September 30, 2024 December 31, 2023

The minimum rental commitments under these noncancelable operating leases are as follows (in thousands) as of March 31, 2025 and December 31, 2024:

March 31, 2025 December 31, 2024

2025 $ 8,018 $ 10,262

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Three Months Ended

Nine Months Ended

Lease expense:

September 30, 2024 September 30, 2023 September 30, 2024 September 30, 2023

March 31, 2025 March 31, 2024

Operating lease expense $ 2,307 $ 2,598

Short-term lease expense — — — —

Variable lease expense 270 296

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Weighted-average remaining lease term (in years)

7.64 8.33 7.75 8.62

Weighted-average discount rate 3.62 % 3.42 %

The Company currently leases two properties from two related parties.

Total rent expense from the leases was $ 35,000 , or 1.37 % of total lease expense and $ 97,000 , or 1.25 % of total lease expense, for the three and nine months ended September 30, 2024, respectively.

Total rent expense from the leases was $ 20,000 , or 0.77 % of total lease expense for the three months ended March 31, 2025.

Significant Estimates and Concentrations of Credit Risks

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

Although the Company has a diversified loan portfolio, at September 30, 2024 and December 31, 2023, commercial real estate loans represented 57.8 % and 56.7 % of total loans receivable, respectively, and 216.5 % and 215.5 % of total stockholders’ equity at September 30, 2024 and December 31, 2023, respectively.

Residential real estate loans represented 16.3 % and 15.8 % of total loans receivable and 61.0 % and 60.1 % of total stockholders’ equity at September 30, 2024 and December 31, 2023, respectively.

Approximately 79.6 % of the Company’s total loans and 83.5 % of the Company’s real estate loans as of September 30, 2024, are to borrowers whose collateral is located in Alabama, Arkansas, Florida, Texas and New York, the states in which the Company has its branch locations.

Although the Company has a diversified loan portfolio, at March 31, 2025 and December 31, 2024, commercial real estate loans represented 57.9 % and 57.6 % of total loans receivable, respectively, and 214.2 % and 214.6 % of total stockholders’ equity, respectively.

Residential real estate loans represented 16.9 % and 16.6 % of total loans receivable and 62.4 % and 61.9 % of total stockholders’ equity at March 31, 2025 and December 31, 2024, respectively.

Approximately 79.8 % of the Company’s total loans and 83.9 % of the Company’s real estate loans as of March 31, 2025, 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.

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

At September 30, 2024 and December 31, 2023, commitments to extend credit of $ 4.53 billion and $ 4.59 billion, respectively, were outstanding.

At March 31, 2025 and December 31, 2024, commitments to extend credit of $ 4.04 billion and $ 4.47 billion, respectively, were outstanding.

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

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

The maximum amount of future payments the Company could be required to make under these guarantees at September 30, 2024 and December 31, 2023, was $ 154.4 million and $ 185.5 million, respectively.

The maximum amount of future payments the Company could be required to make under these guarantees at March 31, 2025 and December 31, 2024, was $ 154.7 million and $ 153.9 million, respectively.

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

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

During the nine months ended September 30, 2024, the Company requested approximately $ 232.4 million in regular dividends from its banking subsidiary.

During the three months ended March 31, 2025, the Company requested approximately $ 76.4 million in regular dividends from its banking subsidiary.

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

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

Management believes that, as of September 30, 2024, the Company meets all capital adequacy requirements to which it is subject.

Management believes that, as of March 31, 2025, 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.

1 unchanged sentence

The interim final rule allows bank holding companies and banks to delay for two years 100 % of the day-one impact of adopting CECL and 25 % of the cumulative change in the reported allowance for credit losses since adopting CECL.

The Company elected to adopt the interim final rule, which is reflected in the Company's risk-based capital ratios.

The Company elected to adopt the interim final rule, which is reflected in the risk-based capital ratios presented below as of December 31, 2024.

The risk-based capital ratios presented below as of March 31, 2025 do not include a transitional period adjustment as the transition period has ended.

Basel III became effective for the Company and its bank subsidiary on January 1, 2015.

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

As of September 30, 2024, the Bank met the capital standards for a well-capitalized institution.

The Company’s CET1 risk-based capital ratio, Tier 1 leverage capital ratio, Tier 1 risk-based capital ratio, and total risk-based capital ratio were 14.65 %, 12.54 %, 14.65 %, and 18.28 %, respectively, as of September 30, 2024.

As of March 31, 2025, the Bank met the capital standards for a well-capitalized institution.

The Company’s CET1 risk-based capital ratio, Tier 1 leverage capital ratio, Tier 1 risk-based capital ratio, and total risk-based capital ratio were 15.43 %, 13.25 %, 15.43 %, and 19.07 %, respectively, as of March 31, 2025.

Additional Cash Flow Information

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

September 30,

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

(In thousands)

13 unchanged sentences

Transfers of financial instruments between levels within the fair value hierarchy are recognized on the date management determines that the underlying circumstances or assumptions have changed.

Available-for-sale securities – the Company's available-for-sale securities are considered to be Level 2 securities.

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.

3 unchanged sentences

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.

There were no material transfers between hierarchy levels during the period ended March 31, 2025 and December 31, 2024.

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.

2 unchanged sentences

The Company uses a third-party comparison pricing vendor in order to reflect consistency in the fair values of the investment securities sampled by the Company each quarter.

Held-to-maturity securities – the Company's held-to-maturity securities are considered to be Level 2 securities.

The Level 2 securities consist primarily of U.S.

government-sponsored enterprises, mortgage-backed securities plus state and political subdivisions.

For these securities, the Company obtains fair value measurements from an independent pricing service.

The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S.

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

Impaired loans – Impaired loans include loans individually analyzed for credit losses for which a specific reserve has been recorded, non-accrual loans, loans past due 90 days or more and restructured loans made to borrowers experiencing financial difficulty.

Impaired loans are carried at the net realizable value of the collateral if the loan is collateral dependent.

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

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

The fair value of loans with specific allocated losses was $ 74.3 million and $ 10.5 million as of September 30, 2024 and December 31, 2023, respectively.

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

The Company reversed $ 470,000 and $ 1.3 million of accrued interest receivable when impaired loans were put on non-accrual status during the three months ended September 30, 2024 and 2023, respectively.

The Company reversed $ 956,000 and $ 1.9 million of accrued interest receivable when impaired loans were put on non-accrual status during the nine months ended September 30, 2024 and 2023, respectively.

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

The following table presents the Company's financial assets by level within the fair value hierarchy that were measured at fair value on a recurring basis as of March 31, 2025 and December 31, 2024 (in thousands):

March 31, 2025

Fair Value Measurements

Fair Value Level 1 Level 2 Level 3

(in thousands)

government-sponsored enterprises $ 273,656 $ — $ 273,656 $ —

government-sponsored mortgage-backed securities 1,298,558 — 1,298,558 —

Private mortgage-backed securities 171,337 — 171,337 —

Non-government-sponsored asset backed securities 200,431 — 200,431 —

State and political subdivisions 860,054 — 843,390 16,664

Other securities 199,284 — 194,416 4,868

Total $ 3,003,320 $ — $ 2,981,788 $ 21,532

December 31, 2024

Fair Value Measurements

Fair Value Level 1 Level 2 Level 3

(in thousands)

government-sponsored enterprises $ 284,790 $ — $ 284,790 $ —

government-sponsored mortgage-backed securities 1,324,684 — 1,324,684 —

Private mortgage-backed securities 171,394 — 171,394 —

Non-government-sponsored asset backed securities 225,648 — 225,648 —

State and political subdivisions 870,361 — 853,699 16,662

Other securities 195,762 — 190,895 4,867

Total $ 3,072,639 $ — $ 3,051,110 $ 21,529

Certain assets and liabilities are measured at fair value on a nonrecurring basis;

that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances.

Assets and liabilities measured at fair value on a nonrecurring basis include the following:

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 Company reversed $ 857,000 and $ 314,000 of accrued interest receivable when impaired loans were put on non-accrual status during the three months ended March 31, 2025 and 2024, respectively.

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 September 30, 2024 and December 31, 2023, the fair value of foreclosed assets held for sale, less estimated costs to sell, was $ 43.0 million and $ 30.5 million, respectively.

No foreclosed assets held for sale were remeasured during the nine months ended September 30, 2024.

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

The Company’s policy is to comply with the regulatory guidelines.

The following table presents the Company's assets by level within the fair value hierarchy that were measured at fair value on a nonrecurring basis as of March 31, 2025 and December 31, 2024:

Fair Value Measurements

Fair Value Level 1 Level 2 Level 3

March 31, 2025 (in thousands)

Individually evaluated loans (collateral-dependent) (1)(2)

$ 187,720 $ — $ — $ 187,720

Foreclosed assets and other real estate owned (1)(3)

37,324 — — 37,324

December 31, 2024

Individually evaluated loans (collateral-dependent) (1)(2)

$ 209,799 $ — $ — $ 209,799

Foreclosed assets and other real estate owned (1)(3)

17,882 — — 17,882

(1) These amounts represent the resulting carrying amounts on the consolidated balance sheets for collateral-dependent loans and foreclosed assets and other real estate owned for which fair value re-measurements took place during the period.

(2) Specific reserves of $ 19.9 million and $ 23.8 million were related to collateral-dependent loans for which fair value re-measurements took place during the three months ended March 31, 2025 and December 31, 2024, respectively.

(3) Remeasurements of foreclosed assets held for sale resulted in a $ 1.3 million increase in fair value for the three months ended March 31, 2025 and a $ 2.5 million reduction in fair value for the year ended December 31, 2024.

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.

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As the Company’s primary objective in the event of default would be to monetize the collateral to settle the outstanding balance of the loan, less marketable collateral would receive a larger discount.

Fair Values of Financial Instruments

During the reported periods, collateral discounts ranged from approximately 10 % to 50 %.

The following methods and assumptions were used to estimate the fair value of each class of financial instruments not previously disclosed:

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.

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 in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date.

September 30, 2024

Amount Fair Value Level

March 31, 2025

Fair Value Measurements

Amount Level 1 Level 2 Level 3 Total

(In thousands)

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Federal funds sold 6,275 6,275 — 6,275

Investment securities - available-for-sale

3,270,620 3,270,620 2

Investment securities - held-to-maturity 1,269,896 — 1,153,262 — 1,153,262

1 unchanged sentence

Accrued interest receivable 115,983 115,983 — — 115,983

FHLB, FRB & FNBB Bank stock;

FHLB, Federal Reserve & FNBB stock;

other equity investments

10 unchanged sentences

December 31, 2024

Amount Fair Value Level

Fair Value Measurements

Amount Level 1 Level 2 Level 3 Total

(In thousands)

2 unchanged sentences

Federal funds sold 3,725 3,725 — — 3,725

Investment securities - available-for-sale 3,507,841 3,507,841 2

Investment securities - held-to-maturity 1,275,204 — 1,142,940 — 1,142,940

1 unchanged sentence

Accrued interest receivable 120,129 120,129 — — 120,129

FHLB, FRB & FNBB Bank stock;

FHLB, Federal Reserve & FNBB stock;

other equity investments

9 unchanged sentences

Subordinated debentures 439,246 — — 375,887 375,887

Segment Information

The Company has one reportable segment:

The Banking Segment.

The Company's reportable segment is determined by the Chairman and 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 defined by the level of detailed 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.

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 as of the three months ended March 31, 2025 and 2024.

Three Months Ended March 31,

Banking Segment 2025 2024

(In thousands)

Interest Income $ 312,542 $ 316,915

Reconciliation of revenue:

Other Revenues* 45,426 41,799

Total consolidated revenues $ 357,968 $ 358,714

Interest Expense 97,886 112,325

Segment net interest income and noninterest income $ 260,082 $ 246,389

Provision for credit losses — 4,500

Salaries and employee benefits 61,855 60,910

Occupancy and equipment** 14,425 14,551

Data Processing expense 8,558 9,147

Merger and acquisition expense — —

Other expense 8,703 8,950

FDIC and state assessment 3,387 3,318

Electronic banking expense 3,055 3,156

Other segment items*** 12,945 11,464

Income tax expense 31,945 30,284

Segment net income/consolidated net income 115,209 100,109

Reconciliation of profit or loss:

Adjustments and reconciling items — —

Consolidated net income $ 115,209 $ 100,109

*Includes earnings in equity method investments of $ 5.2 million and $ 1.2 million for the three months ended March 31, 2025 and 2024, respectively.

** Includes depreciation and amortization expense of $ 5.3 million and $ 5.4 million for the three ended March 31, 2025 and 2024, 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 .

Recent Accounting Pronouncements

In March 2020, the FASB issued ASU 2020-04 , Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting ( "ASU 2020-04") .

ASU 2020-04 provides optional expedients and exceptions for accounting related to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met.

ASU 2020-04 applies only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform and do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, except for hedging relationships existing as of December 31, 2022, that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship.

ASU 2020-04 was effective upon issuance and generally can be applied through December 31, 2022.

To ensure the relief in Topic 848 covers the period of time during which a significant number of modifications may take place, ASU 2022-06, Reference Rate Reform (Topic 848):

Deferral of the Sunset Date of Topic 848 ( ASU 2022-06) defers the sunset date of Topic 848 from December 31, 2022, to December 31, 2024, after which entities will no longer be permitted to apply the relief in Topic 848.

In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848):

Scope ("ASU 2022-01").

The amendments in the update clarify that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition.

Specifically, certain provisions in Topic 848, if elected by an entity, apply to derivative instruments that use an interest rate for margining, discounting, or contract price alignment that is modified as a result of reference rate reform.

Amendments in the update to the expedients and exceptions in Topic 848 capture the incremental consequences of the scope clarification and tailor the existing guidance to derivative instruments affected by the discounting transition.

The amendments in this Update do not apply to contract modifications made after December 31, 2022, new hedging relationships entered into after December 31, 2022, and existing hedging relationships evaluated for effectiveness in periods after December 31, 2022, except for hedging relationships existing as of December 31, 2022, that apply certain optional expedients in which the accounting effects are recorded through the end of the hedging relationship.

ASU 2020-04 was effective upon issuance and generally can be applied through December 31, 2022.

To ensure the relief in Topic 848 covers the period of time during which a significant number of modifications may take place, ASU 2022-06 defers the sunset date of Topic 848 from December 31, 2022, to December 31, 2024, after which entities will no longer be permitted to apply the relief in Topic 848.

In December 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848):

Deferral of the Sunset Date of Topic 848.

These amendments extend the period of time preparers can utilize the reference rate reform relief guidance in Topic 848.

The objective of the guidance in Topic 848 is to provide relief during the temporary transition period, so the FASB included a sunset provision within Topic 848 based on expectations of when the London Interbank Offered Rate (LIBOR) would cease being published.

In 2021, the UK Financial Conduct Authority (FCA) delayed the intended cessation date of certain tenors of USD LIBOR to June 30, 2023.

To ensure the relief in Topic 848 covers the period of time during which a significant number of modifications may take place, the ASU defers the sunset date of Topic 848 from December 31, 2022, to December 31, 2024, after which entities will no longer be permitted to apply the relief in Topic 848.

ASU 2022-06 was effective upon issuance.

In November 2023, the FASB issued ASU 2023-07, " Segment Reporting (Topic 280):

5 unchanged sentences

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.

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.

4 unchanged sentences

Upon transition, the segment expense categories and amounts disclosed in the prior periods should be based on the significant segment expense categories identified and disclosed in the period of adoption.

The Company is currently evaluating the potential impacts related to the adoption of the ASU.

The Company adopted the guidance effective December 31, 2024, and its adoption 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):

6 unchanged sentences

Retrospective application is permitted.

The Company will implement the guidance beginning with the Company's 2025 Annual Report on Form 10-K.

The Company does not expect the adoption of the guidance to have a significant impact on our financial position or financial statements.

In November 2024, the FASB issued ASU No.

2024-03, "Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses." The ASU requires footnote disclosure about specific expenses by requiring companies to disaggregate, in a tabular presentation, each relevant expense caption on the face of the income statement that includes any of the following natural expenses:

(i) purchases of inventory, (ii) employee compensation, (iii) depreciation, (iv) intangible asset amortization and (v) depreciation, depletion and amortization recognized as part of oil- and gas-producing activities.

The tabular disclosure would also include certain other expenses, when applicable.

The ASU does not change or remove existing expense disclosure requirements;

however, it may affect where that information appears in the footnotes to the financial statements.

The ASU is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted.

The Company is currently evaluating the potential impacts related to the adoption of the ASU.

In January 2025, the FASB issued ASU No.

2025-01, "Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40):

Clarifying the Effective Date." The ASU revises the effective date to clarify that all public business entities are required to adopt the guidance in the annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027.

Entities within the ASU's scope are permitted to early adopt the ASU.

The Company is currently evaluating the potential impacts related to the adoption of the ASU.

Report of Independent Registered Public Accounting Firm

1 unchanged sentence

Home BancShares, Inc.

Conway, Arkansas

Results of Review of Interim Consolidated Financial Statements

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

(the “Company”) and subsidiaries as of September 30, 2024, and the related condensed consolidated statements of income, comprehensive income (loss), and stockholder’s equity for the three-month and nine-month periods ended September 30, 2024 and 2023, and cash flows for the nine-month periods ended September 30, 2024 and 2023, and the related notes (collectively referred to as the “interim financial information or statements”).

(“the Company”) and subsidiaries as of March 31, 2025, and the related condensed consolidated statements of income, comprehensive income, stockholders’ equity for the three-month periods ended March 31, 2025 and 2024, and cash flows for the three-month periods ended March 31, 2025 and 2024, and the related notes (collectively referred to as the “interim financial information or statements”).

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

6 unchanged sentences

We conducted our review in accordance with the standards of the PCAOB.

A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters.

A review of interim financial information statements consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters.

It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole.

2 unchanged sentences

Little Rock, Arkansas

November 1, 2024

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

What changed 10-Q

Item 1. Financial Statements