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What changed in HOME BANCSHARES INC's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of HOME BANCSHARES INC's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+468 added−556 removedSource: 10-K (2025-02-27) vs 10-K (2024-02-26)

Top changes in HOME BANCSHARES INC's 2024 10-K

468 paragraphs added · 556 removed · 381 edited across 10 sections

Item 1. Business

Business — how the company describes what it does

64 edited+14 added−18 removed213 unchanged
Biggest changeFailure of a financial institution to maintain and implement adequate programs to combat money laundering and terrorist financing, or to comply with all of the relevant laws or regulations, could have serious legal and reputational consequences for the institution, including causing applicable bank regulatory authorities not to approve merger or acquisition transactions when regulatory approval is required or to prohibit such transactions even if approval is not required. 20 Table of Contents As part of our bank subsidiary’s anti-money laundering (“AML”) program, we are required to designate a BSA officer, maintain a BSA/AML training program, maintain internal controls to effectuate the BSA/AML program, implement independent testing of the BSA/AML program, and comply with the Financial Crimes Enforcement Network’s “Customer Due Diligence for Financial Institutions Rule” (the “CDD Rule”).
Biggest changeFailure of a financial institution to maintain and implement adequate programs to combat money laundering and terrorist financing, or to comply with all of the relevant laws or regulations, could have serious legal and reputational consequences for the institution, including causing applicable bank regulatory authorities not to approve merger or acquisition transactions when regulatory approval is required or to prohibit such transactions even if approval is not required.
Federal Home Loan Bank System. The Federal Home Loan Bank (“FHLB”) system, of which our bank subsidiary is a member, consists of regional FHLBs governed and regulated by the Federal Housing Finance Agency, or FHFA. The FHLBs serve as reserve or credit facilities for member institutions within their assigned regions.
The Federal Home Loan Bank (“FHLB”) system, of which our bank subsidiary is a member, consists of regional FHLBs governed and regulated by the Federal Housing Finance Agency, or FHFA. The FHLBs serve as reserve or credit facilities for member institutions within their assigned regions.
As of December 31, 2023, we also operate loan production offices in Los Angeles, California; Miami, Florida and Dallas, Texas through our Centennial CFG division and in Chesapeake, Virginia and Baltimore, Maryland through our SPF division. Lending Activities We originate loans primarily secured by single and multi-family real estate, residential construction and commercial buildings.
As of December 31, 2024, we also operate loan production offices in Los Angeles, California; Miami, Florida and Dallas, Texas through our Centennial CFG division and in Chesapeake, Virginia and Baltimore, Maryland through our SPF division. Lending Activities We originate loans primarily secured by single and multi-family real estate, residential construction and commercial buildings.
To be well-capitalized, a banking organization is required to have at least a 10% total risk-based capital ratio, an 8% Tier 1 risk-based capital ratio, a 6.5% CET1 risk-based capital ratio and a 5% Tier 1 leverage ratio. As of December 31, 2023, we met all capital adequacy requirements and our bank subsidiary is considered well-capitalized for regulatory purposes.
To be well-capitalized, a banking organization is required to have at least a 10% total risk-based capital ratio, an 8% Tier 1 risk-based capital ratio, a 6.5% CET1 risk-based capital ratio and a 5% Tier 1 leverage ratio. As of December 31, 2024, we met all capital adequacy requirements and our bank subsidiary is considered well-capitalized for regulatory purposes.
Additionally, through our SPF division, we operate a lending platform focusing on commercial and consumer marine loans. As opportunities arise, we will evaluate new (commonly referred to as de novo ) branches in our current markets and in other attractive market areas. We did not open any de novo branch locations in 2023.
Additionally, through our SPF division, we operate a lending platform focusing on commercial and consumer marine loans. As opportunities arise, we will evaluate new (commonly referred to as de novo ) branches in our current markets and in other attractive market areas. We did not open any de novo branch locations in 2024.
We have 79 separate relationships that exceed this in-house limit. 10 Table of Contents Deposits and Other Sources of Funds Our principal source of funds for loans and investing in securities is core deposits. We offer a wide range of deposit services, including checking, savings, money market accounts and certificates of deposit.
We have 86 separate relationships that exceed this in-house limit. 10 Table of Contents Deposits and Other Sources of Funds Our principal source of funds for loans and investing in securities is core deposits. We offer a wide range of deposit services, including checking, savings, money market accounts and certificates of deposit.
As a result, the Bank is no longer required to maintain required reserve balance with either the FRB or in the form of cash on hand. Concentrated Commercial Real Estate Lending Regulations. The federal banking agencies, including the FDIC, have promulgated guidance governing financial institutions with concentrations in commercial real estate lending.
As a result, the Bank is no longer required to maintain required reserve balance with either the Federal Reserve Board or in the form of cash on hand. Concentrated Commercial Real Estate Lending Regulations. The federal banking agencies, including the FDIC, have promulgated guidance governing financial institutions with concentrations in commercial real estate lending.
The required minimum capital and leverage ratios under the Basel III capital adequacy requirements in effect as of December 31, 2023, including the required capital conservation buffer, consist of CET1 capital of 7.0% (4.5% plus the required 2.5% capital conservation buffer), Tier 1 risk-based capital of 8.5% (6.0% plus the required 2.5% capital conservation buffer), total risk-based capital of 10.5% (8.0% plus the required 2.5% capital conservation buffer) and a leverage ratio of 4.0%.
The required minimum capital and leverage ratios under the Basel III capital adequacy requirements in effect as of December 31, 2024, including the required capital conservation buffer, consist of CET1 capital of 7.0% (4.5% plus the required 2.5% capital conservation buffer), Tier 1 risk-based capital of 8.5% (6.0% plus the required 2.5% capital conservation buffer), total risk-based capital of 10.5% (8.0% plus the required 2.5% capital conservation buffer) and a leverage ratio of 4.0%.
For additional discussions 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 this Annual Report on Form 10-K for the year ended December 31, 2023.
For additional discussions 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 this Annual Report on Form 10-K for the year ended December 31, 2024.
Like SPF, LH-Finance provides direct consumer financing for United States Coast Guard ("USCG") registered high-end sail and power boats, as well as inventory floor plan lines of credit to marine dealers, primarily those selling USCG documented vessels.
Like SPF, LH-Finance provided direct consumer financing for United States Coast Guard ("USCG") registered high-end sail and power boats, as well as inventory floor plan lines of credit to marine dealers, primarily those selling USCG documented vessels.
Failure to adequately meet these criteria could impose additional requirements and limitations on our bank subsidiary. Additionally, we must publicly disclose the terms of various Community Reinvestment Act-related agreements. Our bank subsidiary received a “satisfactory” CRA rating from the Federal Reserve Bank during its last exam as published in our bank’s CRA Public Evaluation. 17 Table of Contents Capital Requirements.
Failure to adequately meet these criteria could impose additional requirements and limitations on our bank subsidiary. Additionally, we must publicly disclose the terms of various Community Reinvestment Act-related agreements. Our bank subsidiary received a “satisfactory” CRA rating from the Federal Reserve Bank during its last exam as published in our bank’s CRA Public Evaluation. Capital Requirements.
For an additional discussion regarding the acquisition of LendingClub's Marine Portfolio, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in this Annual Report on Form 10-K for the year ended December 31, 2023.
For an additional discussion regarding the acquisition of LendingClub's Marine Portfolio, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in this Annual Report on Form 10-K for the year ended December 31, 2024.
We cannot predict the nature or impact of future changes in monetary and fiscal policies. AVAILABLE INFORMATION We are subject to the information requirements of the Securities Exchange Act of 1934. Accordingly, we file annual, quarterly and current reports, proxy statements and other information with the SEC. In addition, we maintain a website at http://www.homebancshares.com.
We cannot predict the nature or impact of future changes in monetary and fiscal policies. 22 Table of Contents AVAILABLE INFORMATION We are subject to the information requirements of the Securities Exchange Act of 1934. Accordingly, we file annual, quarterly and current reports, proxy statements and other information with the SEC. In addition, we maintain a website at http://www.homebancshares.com.
We will continue to monitor our capital consistent with the safety and soundness expectations of the federal regulators. 15 Table of Contents Risk Management . Regulation YY initially required publicly-traded bank holding companies with $10 billion or more in total assets to establish a risk committee responsible for oversight of enterprise-wide risk management practices.
We will continue to monitor our capital consistent with the safety and soundness expectations of the federal regulators. Risk Management . Regulation YY initially required publicly-traded bank holding companies with $10 billion or more in total assets to establish a risk committee responsible for oversight of enterprise-wide risk management practices.
“Control” of a depository institution is generally defined where an investor is deemed to control a depository institution or other company if the investor owns or controls 25% or more of any class of voting securities. Restrictions on Transactions with Affiliates. We and our bank subsidiary are subject to Section 23A of the Federal Reserve Act.
“Control” of a depository institution is generally defined where an investor is deemed to control a depository institution or other company if the investor owns or controls 25% or more of any class of voting securities. 19 Table of Contents Restrictions on Transactions with Affiliates. We and our bank subsidiary are subject to Section 23A of the Federal Reserve Act.
Our bank subsidiary is subject to the rules and regulations of FHA, VA, FNMA, FHLMC and GNMA with respect to originating, processing, selling and servicing mortgage loans and the issuance and sale of mortgage-backed securities.
Mortgage Banking Operations . Our bank subsidiary is subject to the rules and regulations of FHA, VA, FNMA, FHLMC and GNMA with respect to originating, processing, selling and servicing mortgage loans and the issuance and sale of mortgage-backed securities.
In approving bank acquisitions by bank holding companies, the Federal Reserve Board is required to consider, among other things, the financial and managerial resources and future prospects of the bank holding company and the banks concerned, the convenience and needs of the communities to be served and various competitive factors. 16 Table of Contents Subsidiary Bank General.
In approving bank acquisitions by bank holding companies, the Federal Reserve Board is required to consider, among other things, the financial and managerial resources and future prospects of the bank holding company and the banks concerned, the convenience and needs of the communities to be served and various competitive factors. Subsidiary Bank General.
In addition, lawmakers, regulators and the public are increasingly focused on the use of personal information and efforts to strengthen data protection, information security and consumer and personal privacy. The law in these areas continues to develop, and we expect regulation in these areas to continue to increase. Anti-Terrorism and Anti-Money Laundering Legislation.
In addition, lawmakers, regulators and the public are increasingly focused on the use of personal information and efforts to strengthen data protection, information security and consumer and personal privacy. The law in these areas continues to develop, and we expect regulation in these areas to continue to increase. 20 Table of Contents Anti-Terrorism and Anti-Money Laundering Legislation.
The offices of Cook Insurance Agency are located in Apalachicola and Crawfordville, Florida. 11 Table of Contents Competition As of December 31, 2023, we conducted business through 223 branch locations in our primary market areas of Pulaski, Faulkner, Craighead, Lonoke, Pope, Washington, White, Benton, Greene, Sebastian, Cleburne, Independence, Stone, Baxter, Clay, Conway, Crawford, Johnson, Saline, Sharp and Yell counties in Arkansas; Broward, Monroe, Hillsborough, Leon, Sarasota, Bay, Franklin, Palm Beach, Gulf, Charlotte, Collier, Escambia, Orange, Osceola, Pasco, Pinellas, Polk, Walton, Miami-Dade, Lee, Calhoun, Gadsden, Hernando, Liberty, Okaloosa, Santa Rosa, Seminole, Wakulla and Manatee counties in Florida; Bailey; Briscoe; Carson; Castro; Collin; Comal; Dallam; Dallas; Deaf Smith; Floyd; Garza; Gillespie; Gray; Hale; Hall; Hemphill; Hutchinson; Kendall; Kerr; Lamb; Lipscomb; Lubbock; Lynn; Moore; Motley; Potter; Randall; Sherman; Swisher; Tarrant; Taylor; Travis; Wheeler and Williamson counties in Texas; Baldwin County in Alabama; and New York County in New York.
The offices of Cook Insurance Agency are located in Apalachicola and Crawfordville, Florida. 11 Table of Contents Competition As of December 31, 2024, we conducted business through 218 branch locations in our primary market areas of Pulaski, Faulkner, Craighead, Lonoke, Pope, Washington, White, Benton, Greene, Sebastian, Cleburne, Independence, Stone, Baxter, Clay, Conway, Crawford, Johnson, Saline, Sharp and Yell counties in Arkansas; Broward, Monroe, Hillsborough, Leon, Sarasota, Bay, Franklin, Palm Beach, Gulf, Charlotte, Collier, Escambia, Orange, Osceola, Pasco, Pinellas, Polk, Walton, Miami-Dade, Lee, Calhoun, Gadsden, Hernando, Liberty, Okaloosa, Santa Rosa, Seminole and Wakulla counties in Florida; Bailey, Carson; Castro, Collin, Comal, Dallam, Dallas, Deaf Smith, Garza, Gillespie, Gray, Hale, Hall, Hutchinson, Kendall, Kerr, Lamb, Lubbock, Lynn, Moore, Motley, Parmer, Potter, Randall, Sherman, Swisher, Tarrant, Taylor, Travis, Wheeler and Williamson counties in Texas; Baldwin County in Alabama; and New York County in New York.
However, we will continue to evaluate de novo opportunities during 2024 and make decisions on a case-by-case basis in the best interest of the shareholders.
However, we will continue to evaluate de novo opportunities during 2025 and make decisions on a case-by-case basis in the best interest of the shareholders.
Secondary sources of funding include advances from the Federal Home Loan Bank of Dallas, the Federal Reserve Bank Discount Window, Federal Reserve Bank Term Funding Program ("BTFP") and other borrowings. These secondary sources enable us to borrow funds at rates and terms which, at times, are more beneficial to us.
Secondary sources of funding include advances from the Federal Home Loan Bank of Dallas, the Federal Reserve Bank Discount Window and other borrowings. These secondary sources enable us to borrow funds at rates and terms which, at times, are more beneficial to us.
FDICIA also places certain restrictions on activities of banks depending on their level of capital. The capital classification of a bank affects the frequency of examinations of the bank and impacts the ability of the bank to engage in certain activities and affects the deposit insurance premiums paid by such bank.
FDICIA also places certain restrictions on activities of banks depending on their level of capital. 17 Table of Contents The capital classification of a bank affects the frequency of examinations of the bank and impacts the ability of the bank to engage in certain activities and affects the deposit insurance premiums paid by such bank.
Our Management Team The following table sets forth, as of December 31, 2023, information concerning the individuals who are our executive officers. Name Age Positions Held with Home BancShares, Inc. Positions Held with Centennial Bank John W. Allison 77 Chairman of the Board, Chief Executive Officer and President Director Brian S.
Our Management Team The following table sets forth, as of December 31, 2024, information concerning the individuals who are our executive officers. Name Age Positions Held with Home BancShares, Inc. Positions Held with Centennial Bank John W. Allison 78 Chairman of the Board, Chief Executive Officer and President Director Brian S.
Enforcement actions may be taken against a banking organization if its incentive compensation arrangements, or related risk-management control or governance processes, pose a risk to the organization’s safety and soundness and the organization is not taking prompt and effective measures to correct the deficiencies. 21 Table of Contents Customer Information Security.
Enforcement actions may be taken against a banking organization if its incentive compensation arrangements, or related risk-management control or governance processes, pose a risk to the organization’s safety and soundness and the organization is not taking prompt and effective measures to correct the deficiencies. Customer Information Security.
Trust and Investment Services Through Centennial Bank and its trust operating subsidiary, GoldStar Trust Company, we provide trust, wealth management and custodial services to customers throughout our footprint from offices in Arkansas and Texas. We had approximately $5.23 billion of assets under management and custody as of December 31, 2023.
Trust and Investment Services Through Centennial Bank and its trust operating subsidiary, GoldStar Trust Company, we provide trust, wealth management and custodial services to customers throughout our footprint from offices in Arkansas and Texas. We had approximately $5.46 billion of assets under management and custody as of December 31, 2024.
Centennial Bank’s deposit accounts are insured up to applicable limits by the FDIC’s Deposit Insurance Fund (“DIF”). The Dodd-Frank Act permanently increased the deposit coverage limit to $250,000 per depositor retroactive to January 1, 2008. The FDIC imposes an assessment against institutions for deposit insurance.
Centennial Bank’s deposit accounts are insured up to applicable limits by the FDIC’s Deposit Insurance Fund (“DIF”). The Dodd-Frank Act permanently increased the deposit coverage limit to $250,000 per depositor retroactive to January 1, 2008. 16 Table of Contents The FDIC imposes an assessment against institutions for deposit insurance.
Those rules and regulations, among other things, prohibit discrimination and establish underwriting guidelines which include provisions for inspections and appraisals, require credit reports on prospective borrowers and fix maximum loan amounts, and, with respect to VA loans, fix maximum interest rates. Consumer Financial Protection.
Those rules and regulations, among other things, prohibit discrimination and establish underwriting guidelines which include provisions for inspections and appraisals, require credit reports on prospective borrowers and fix maximum loan amounts, and, with respect to VA loans, fix maximum interest rates. 18 Table of Contents Consumer Financial Protection.
If a concentration is present, management must employ heightened risk management practices that address the following key elements: including board and management oversight and strategic planning, portfolio management, development of underwriting standards, risk assessment and monitoring through market analysis and stress testing, and maintenance of increased capital levels as needed to support the level of commercial real estate lending. 18 Table of Contents Mortgage Banking Operations .
If a concentration is present, management must employ heightened risk management practices that address the following key elements: including board and management oversight and strategic planning, portfolio management, development of underwriting standards, risk assessment and monitoring through market analysis and stress testing, and maintenance of increased capital levels as needed to support the level of commercial real estate lending.
In addition, we are not dependent upon any single lending relationship for an amount exceeding 10% of our revenues. As of December 31, 2023, the maximum amount outstanding to a single borrower was $232.7 million. As primarily a community lender, we believe from time to time it is in our best interest to agree to modifications or restructurings.
In addition, we are not dependent upon any single lending relationship for an amount exceeding 10% of our revenues. As of December 31, 2024, the maximum amount outstanding to a single borrower was $263.0 million. As primarily a community lender, we believe from time to time it is in our best interest to agree to modifications or restructurings.
Our Market Areas As of December 31, 2023, we conducted business principally through 76 branches in Arkansas, 78 branches in Florida, 63 branches in Texas, five branches in Alabama and one branch in New York City.
Our Market Areas As of December 31, 2024, we conducted business principally through 76 branches in Arkansas, 78 branches in Florida, 58 branches in Texas, five branches in Alabama and one branch in New York City.
The Executive Loan Committee has approval authority up to the Bank’s legal lending limit, subject to exception approval by the full Board for single loans over $100 million or relationships over $200 million. In addition, any relationship above $40 million must have the specific approval of two of the following: the Chairman, the Vice Chairman or our director Richard H.
The Executive Loan Committee has approval authority up to the Bank’s legal lending limit, subject to exception approval by the full Board for single loans over $100 million or relationships over $200 million. In addition, any relationship above $40 million must have the specific approval of the Chairman and the Vice Chairman.
Centennial Bank has branch locations in Arkansas, Florida, Texas, South Alabama and New York City. Although the Company has a diversified loan portfolio, at December 31, 2023 and 2022, commercial real estate loans represented 56.7% and 56.3% of gross loans and 215.5% and 230.1% of total stockholders’ equity, respectively.
Centennial Bank has branch locations in Arkansas, Florida, Texas, South Alabama and New York City. Although the Company has a diversified loan portfolio, at December 31, 2024 and 2023, commercial real estate loans represented 57.6% and 56.7% of gross loans and 214.6% and 215.5% of total stockholders’ equity, respectively.
Because the estimated loss pursuant to the systemic risk determination will be periodically adjusted, the FDIC retains the ability to cease collection early, impose an extended special assessment collection period after the initial eight-quarter collection period to collect the difference between losses and the amounts collected, and impose a one-time final shortfall special assessment after both receiverships terminate.
Because the estimated loss pursuant to the systemic risk determination will be periodically adjusted, the FDIC retains the ability to cease collection early, impose an extended special assessment collection period after the initial eight-quarter collection period to collect the difference between losses and the amounts collected, and impose a one-time final shortfall special assessment after both receiverships terminate if the DIF reserve ratio is not restored as projected.
When secured, we may independently assess the value of the collateral using a third-party valuation source. Commercial and Industrial. Our commercial and industrial loan portfolio primarily consisted of 7.3% unsecured loans, 32.3% inventory/accounts receivable financing, 8.7% equipment/vehicle financing and 51.7% other, including letters of credit at less than 1%, as of December 31, 2023.
When secured, we may independently assess the value of the collateral using a third-party valuation source. Commercial and Industrial. Our commercial and industrial loan portfolio primarily consisted of 8.6% unsecured loans, 28.6% inventory/accounts receivable financing, 9.4% equipment/vehicle financing and 53.4% other, including letters of credit at less than 1%, as of December 31, 2024.
The Federal Reserve Board reviews, as part of the regular, risk-focused examination process, the incentive compensation arrangements of banking organizations, such as the Company, that are not “large, complex banking organizations.” These reviews are tailored to each organization based on the scope and complexity of the organization’s activities and the prevalence of incentive compensation arrangements.
Our board of directors adopted such a policy on October 20, 2023. 21 Table of Contents The Federal Reserve Board reviews, as part of the regular, risk-focused examination process, the incentive compensation arrangements of banking organizations, such as the Company, that are not “large, complex banking organizations.” These reviews are tailored to each organization based on the scope and complexity of the organization’s activities and the prevalence of incentive compensation arrangements.
These provisions, often referred to as the “Collins Amendment,” are intended to subject bank holding companies to the same capital requirements as their bank subsidiaries and to eliminate or significantly reduce the use of hybrid capital instruments, especially trust preferred securities, as regulatory capital.
The Dodd-Frank Act includes certain provisions concerning the capital regulations of the federal banking agencies. These provisions, often referred to as the “Collins Amendment,” are intended to subject bank holding companies to the same capital requirements as their bank subsidiaries and to eliminate or significantly reduce the use of hybrid capital instruments, especially trust preferred securities, as regulatory capital.
Ashley. Currently, our board of directors has established an in-house consolidated lending limit of $40.0 million to any one borrowing relationship without obtaining the approval of two of the following: the Chairman, Vice Chairman or our director Richard H. Ashley.
Currently, our board of directors has established an in-house consolidated lending limit of $40.0 million to any one borrowing relationship without obtaining the approval of the Chairman and Vice Chairman.
Residential mortgage loans to individuals retained in our loan portfolio primarily consisted of approximately 50.1% owner occupied 1-4 family properties and approximately 40.9% non-owner occupied 1-4 family properties (rental) as of December 31, 2023 with the remaining 9.0% relating to condos and mobile homes.
Residential mortgage loans to individuals retained in our loan portfolio primarily consisted of approximately 57.1% owner occupied 1-4 family properties and approximately 36.2% non-owner occupied 1-4 family properties (rental) as of December 31, 2024 with the remaining 6.7% relating to condos and mobile homes.
An affiliate of a bank is generally any company or entity that controls, is controlled by, or is under common control with the bank. 19 Table of Contents Affiliate transactions are also subject to Section 23B of the Federal Reserve Act which generally requires that certain other transactions between the bank and its affiliates be on terms substantially the same, or at least as favorable to the bank, as those prevailing at that time for comparable transactions with or involving other non-affiliated persons.
Affiliate transactions are also subject to Section 23B of the Federal Reserve Act which generally requires that certain other transactions between the bank and its affiliates be on terms substantially the same, or at least as favorable to the bank, as those prevailing at that time for comparable transactions with or involving other non-affiliated persons.
The Company’s total assets, total deposits, total revenue and net income for each of the past three years are as follows: December 31, 2023 2022 2021 (In thousands) Total assets $ 22,656,658 $ 22,883,588 $ 18,052,138 Total deposits 16,787,711 17,938,783 14,260,570 Total revenue (net interest income plus non-interest income) 996,879 933,787 710,540 Net income 392,929 305,262 319,021 Home BancShares acquires, organizes and invests in community banks that serve attractive markets.
The Company’s total assets, total deposits, total revenue and net income for each of the past three years are as follows: December 31, 2024 2023 2022 (In thousands) Total assets $ 22,490,748 $ 22,656,658 $ 22,883,588 Total deposits 17,146,297 16,787,711 17,938,783 Total revenue (net interest income plus non-interest income) 1,017,348 996,879 933,787 Net income 402,241 392,929 305,262 Home BancShares acquires, organizes and invests in community banks that serve attractive markets.
The corresponding NYSE listing rule was approved by the SEC in June 2023 and required listed companies to adopt a compliant clawback policy by December 1, 2023. Our board of directors adopted such a policy on October 20, 2023.
The corresponding NYSE listing rule was approved by the SEC in June 2023 and required listed companies to adopt a compliant clawback policy by December 1, 2023.
Diversity and Inclusion. We seek to recognize the unique contribution each individual brings to the Company, and we understand the associated value that comes with a diverse workforce. We strive to offer an inclusive environment where employees from all backgrounds can succeed.
We seek to recognize the unique contribution each individual brings to the Company, and we understand the associated value that comes with a diverse workforce. We strive to offer an inclusive environment where employees from all backgrounds can succeed. As of December 31, 2024, 69% of our employees were women and 28% of our employees identify as persons of color.
Carter, III 48 Executive Officer Regional President Our Growth Strategy Our goals are to achieve growth in earnings per share and to create and build stockholder value.
Townsell 54 Senior Executive Vice President, Director of Investor Relations and Director Senior Executive Vice President and Director Russell D. Carter, III 49 Executive Officer Regional President Our Growth Strategy Our goals are to achieve growth in earnings per share and to create and build stockholder value.
Statutory and regulatory limitations apply to the dividends that our bank subsidiary can pay to us, as well as to the dividends we can pay to our shareholders.
The principal sources of our cash flow, including cash flow to pay dividends to our shareholders, are dividends that our bank subsidiary pays to us as its sole shareholder. Statutory and regulatory limitations apply to the dividends that our bank subsidiary can pay to us, as well as to the dividends we can pay to our shareholders.
This assessment is only imposed on banks with assets of $5 billion or more. During the fourth quarter of 2023, we recorded $13.0 million in FDIC special assessment expense in anticipation of this assessment. The special assessment will be imposed beginning with the first quarterly assessment period of 2024 for an anticipated total of eight quarterly assessment periods.
This assessment is only imposed on banks with assets of $5 billion or more. During the fourth quarter of 2023, we recorded $13.0 million in FDIC special assessment expense, and during the second quarter of 2024, we recorded $2.3 million in special assessment expense.
Accordingly, we aim to attract, develop and retain employees who can drive financial and strategic growth objectives and build long-term shareholder value while executing our community banking philosophy. On December 31, 2023, we had 2,819 full-time equivalent employees.
Accordingly, we aim to attract, develop and retain employees who can drive financial and strategic growth objectives and build long-term shareholder value while executing our community banking philosophy. On December 31, 2024, we had 2,552 full-time equivalent employees. Except for any additional employees acquired in future acquisitions, we expect that our 2025 staffing levels will be consistent that of 2024.
We cannot predict whether or in what form any proposed regulation or statute will be adopted or the extent to which our business may be affected by any new regulation or statute.
We cannot predict whether or in what form any proposed regulation or statute will be adopted or the extent to which our business may be affected by any new regulation or statute. Additionally, we cannot predict the impact of potential judicial interpretations of regulations or the outcome of the upcoming election cycle on banking statutes and regulations.
Our bank subsidiary has adopted a customer information security program to comply with these requirements. Arkansas Law. Our bank subsidiary is subject to regulation and examination by the Arkansas State Bank Department.
Our bank subsidiary has adopted a customer information security program to comply with these requirements. Cybersecurity. Our bank subsidiary is subject to cybersecurity regulations jointly adopted by the Federal Reserve Board, FDIC, and OCC.
An additional amount may be loaned, up to 10% of unimpaired capital and surplus, if the loan is secured by readily marketable collateral, which generally does not include real estate. As of December 31, 2023, our bank subsidiary was in compliance with the loans-to-one-borrower limitations. Prohibitions Against Tying Arrangements.
Our bank subsidiary generally may not make loans or extend credit to a single or related group of borrowers in excess of 15% of unimpaired capital and surplus. An additional amount may be loaned, up to 10% of unimpaired capital and surplus, if the loan is secured by readily marketable collateral, which generally does not include real estate.
The banking regulators also must seek to make capital standards countercyclical so that the required levels of capital increase in times of economic expansion and decrease in times of economic contraction. Prompt Corrective Action. The Federal Deposit Insurance Corporation Improvement Act of 1991 or “FDICIA” establishes a system of prompt corrective action to resolve the problems of undercapitalized financial institutions.
The banking regulators also must seek to make capital standards countercyclical so that the required levels of capital increase in times of economic expansion and decrease in times of economic contraction. 14 Table of Contents Prompt Corrective Action.
Accordingly, we have adopted a compliant risk management framework. Payment of Dividends . We are a legal entity separate and distinct from our bank subsidiary and other affiliated entities. The principal sources of our cash flow, including cash flow to pay dividends to our shareholders, are dividends that our bank subsidiary pays to us as its sole shareholder.
Accordingly, we have adopted a compliant risk management framework. 15 Table of Contents Payment of Dividends . We are a legal entity separate and distinct from our bank subsidiary and other affiliated entities.
Federal Reserve Board guidelines also provide that banking organizations experiencing internal growth or making acquisitions will be expected to maintain strong capital positions, substantially above the minimum supervisory levels, without significant reliance on intangible assets. 14 Table of Contents The Dodd-Frank Act includes certain provisions concerning the capital regulations of the federal banking agencies.
The federal bank regulatory agencies may set capital requirements for a particular banking organization that are higher than the minimum ratios when circumstances warrant. Federal Reserve Board guidelines also provide that banking organizations experiencing internal growth or making acquisitions will be expected to maintain strong capital positions, substantially above the minimum supervisory levels, without significant reliance on intangible assets.
In managing the Company’s business, management focuses on various human capital measures and objectives designed to address the development, attraction and retention of personnel. These include competitive compensation and benefits, paid time off, an employee retirement plan, bonus and other incentive compensation plans, modern equipment and support, leadership development and professional development as well as those benefits described below.
These include competitive compensation and benefits, paid time off, an employee retirement plan, bonus and other incentive compensation plans, modern equipment and support, leadership development and professional development as well as those benefits described below. Diversity and Inclusion.
Davis 58 Chief Financial Officer, Treasurer and Director Chief Financial Officer, Treasurer and Director Jennifer C. Floyd 49 Chief Accounting Officer Chief Accounting Officer Kevin D. Hester 60 Chief Lending Officer Chief Lending Officer and Director J. Stephen Tipton 42 Chief Operating Officer Chief Operating Officer Tracy M.
Davis 59 Chief Financial Officer, Treasurer and Director Chief Financial Officer, Treasurer and Director Jennifer C. Floyd 50 Chief Accounting Officer Chief Accounting Officer Kevin D. Hester 61 President and Chief Lending Officer President, Chief Lending Officer and Director J. Stephen Tipton 43 Chief Operating Officer Chief Executive Officer Tracy M. French 63 Director Chairman of the Board Donna J.
As of December 31, 2023, 69% of our employees were women and 27% of our employees identify as a person of color. Further, as of December 31, 2023, 62% of the Company’s leadership positions were held by women. Employee Safety and Health. The health and well-being of our employees is a priority for our business.
Further, as of December 31, 2024, 62% of the Company’s leadership positions were held by women. Employee Safety and Health. The health and well-being of our employees is a priority for our business. Our full-time officers and employees are provided hospitalization and major medical insurance. We pay a substantial part of the premiums for these coverages.
The severity of the action depends upon the capital category in which the institution is placed. The federal banking agencies have specified by regulation the relevant capital level for each category. An institution that is categorized as undercapitalized, significantly undercapitalized or critically undercapitalized is required to submit an acceptable capital restoration plan to its appropriate federal banking agency.
An institution that is categorized as undercapitalized, significantly undercapitalized or critically undercapitalized is required to submit an acceptable capital restoration plan to its appropriate federal banking agency.
Although our offices have generally returned to a normal working environment following the COVID-19 pandemic, we continue to support working remotely for those employees who have a need to telework for health reasons and in certain other circumstances.
Although our offices have generally returned to a normal working environment following the pandemic, we continue to support working remotely for those employees who have a need to telework for health reasons and in certain other circumstances. 12 Table of Contents SUPERVISION AND REGULATION General We and our bank subsidiary are subject to extensive state and federal banking regulations that impose restrictions on and provide for general regulatory oversight of our company and its operations.
Additionally, we cannot predict the impact of potential judicial interpretations of regulations or the outcome of the upcoming election cycle on banking statutes and regulations. 22 Table of Contents Effect of Governmental Monetary Polices Our earnings are affected by domestic economic conditions and the monetary and fiscal policies of the United States government and its agencies.
Effect of Governmental Monetary Polices Our earnings are affected by domestic economic conditions and the monetary and fiscal policies of the United States government and its agencies.
Under this system, the federal banking regulators have established five capital categories (well-capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized) in which all institutions are placed. Federal banking regulators are required to take various mandatory supervisory actions and are authorized to take other discretionary actions with respect to institutions in the three undercapitalized categories.
Federal banking regulators are required to take various mandatory supervisory actions and are authorized to take other discretionary actions with respect to institutions in the three undercapitalized categories. The severity of the action depends upon the capital category in which the institution is placed. The federal banking agencies have specified by regulation the relevant capital level for each category.
We adopted CECL on January 1, 2020 and have elected to utilize the five-year transition option. Proposed Legislation and Regulatory Action From time to time, various legislative and regulatory initiatives are introduced in Congress and state legislatures, as well as by regulatory agencies.
No such state of emergency has been declared to exist by the Bank Commissioner to date. Proposed Legislation and Regulatory Action From time to time, various legislative and regulatory initiatives are introduced in Congress and state legislatures, as well as by regulatory agencies.
Our loan portfolio as of December 31, 2023, was comprised as follows: Total Loans Receivable Percentage of portfolio (Dollars in thousands) Real estate: Commercial real estate loans Non-farm/non-residential $ 5,549,954 38.5 % Construction/land development 2,293,047 15.9 Agricultural 325,156 2.3 Residential real estate loans Residential 1-4 family 1,844,260 12.8 Multifamily residential 435,736 3.0 Total real estate 10,448,153 72.5 Consumer 1,153,690 8.0 Commercial and industrial 2,324,991 16.1 Agricultural 307,327 2.1 Other 190,567 1.3 Total $ 14,424,728 100.0 % Real Estate – Non-farm/Non-residential.
Our loan portfolio as of December 31, 2024, was comprised as follows: Total Loans Receivable Percentage of portfolio (Dollars in thousands) Real estate: Commercial real estate loans Non-farm/non-residential $ 5,426,780 36.8 % Construction/land development 2,736,214 18.5 Agricultural 336,993 2.3 Residential real estate loans Residential 1-4 family 1,956,489 13.2 Multifamily residential 496,484 3.4 Total real estate 10,952,960 74.2 Consumer 1,234,361 8.4 Commercial and industrial 2,022,775 13.7 Agricultural 367,251 2.5 Other 187,153 1.2 Total $ 14,764,500 100.0 % Real Estate – Non-farm/Non-residential.
The CFPB has examination and enforcement authority over all banks with more than $10 billion in assets, as well as their affiliates. Loans to One Borrower. Our bank subsidiary generally may not make loans or extend credit to a single or related group of borrowers in excess of 15% of unimpaired capital and surplus.
The CFPB has examination and enforcement authority over all banks with more than $10 billion in assets, as well as their affiliates.
As of December 31, 2023, our capital conservation buffer was 8.15%, and our CET1 capital, Tier 1 risk-based capital, total risk-based capital and leverage ratios were 14.15%, 14.15%, 17.79% and 12.44%, respectively.
As of December 31, 2024, our capital conservation buffer was 9.11%, and our CET1 capital, Tier 1 risk-based capital, total risk-based capital and leverage ratios were 15.11%, 15.11%, 18.74% and 13.05%, respectively. The federal banking agencies’ risk-based and leverage ratios are minimum supervisory ratios generally applicable to banking organizations that meet certain specified criteria.
The proposed joint compensation regulations would require compensation practices consistent with the three principles discussed above. As of February 1, 2024, these regulations have not been finalized; however, the agencies have indicated that they intend to issue a third proposed rule in the near future.
The proposed joint compensation regulations would require compensation practices consistent with the three principles discussed above. In May 2024, several of the initial publishing agencies repurposed the joint rule in a new proposal restating the entirety of the 2016 predecessor and requesting comment on several alternative provisions that could be included in a final rule.
Removed
French 62 Director and Executive Officer Chairman of the Board, Chief Executive Officer and President Donna J. Townsell 53 Senior Executive Vice President, Director of Investor Relations and Director Senior Executive Vice President and Director Russell D.
Added
We consider our employee relations to be good, and we have no collective bargaining agreements with any employees. In managing the Company’s business, management focuses on various human capital measures and objectives designed to address the development, attraction and retention of personnel.
Removed
We completed the acquisition of Happy Bancshares, Inc. headquartered in Amarillo, Texas, during the second quarter of 2022.
Added
We also provide other basic insurance coverage including dental, life, and long-term disability insurance. We are committed to providing a healthy and safe environment that allows employees to thrive professionally and personally. To support the well-being of our employees and their families we also offer resources focused on physical, mental, and emotional health.
Removed
Except for any additional employees acquired in future acquisitions, we expect that our 2024 staffing levels will be lower than those at year end 2023 as a reflection of the efforts taken during the fourth quarter of 2023. We consider our employee relations to be good, and we have no collective bargaining agreements with any employees.
Added
The Federal Deposit Insurance Corporation Improvement Act of 1991 or “FDICIA” establishes a system of prompt corrective action to resolve the problems of undercapitalized financial institutions. Under this system, the federal banking regulators have established five capital categories (well-capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized) in which all institutions are placed.
Removed
Our full-time officers and employees are provided hospitalization and major medical insurance. We pay a substantial part of the premiums for these coverages. We also provide other basic insurance coverage including dental, life, and long-term disability insurance.
Added
The special assessment began with the first quarterly assessment period of 2024 and will continue for an anticipated total of eight quarterly assessment periods.
Removed
We also stand ready to re-implement COVID-19 safety protocols should circumstances dictate due a future outbreak of the virus or another public health crisis. 12 Table of Contents SUPERVISION AND REGULATION General We and our bank subsidiary are subject to extensive state and federal banking regulations that impose restrictions on and provide for general regulatory oversight of our company and its operations.
Added
In July 2024, the FDIC proposed a rule to expand the definition of deposits that would be considered brokered, but the rule has not been finalized as of February 1, 2025. Federal Home Loan Bank System.
Removed
The Basel III final rule adopted in 2013 permanently grandfathered trust preferred securities and other non-qualifying capital instruments that were issued and outstanding as of May 19, 2010 in the Tier 1 capital of bank holding companies with total consolidated assets of less than $15 billion as of December 31, 2009.
Added
Beginning February 8, 2025, however, the Trump Administration has taken various actions to temporarily or permanently shut down the CFPB, including issuing a series of directives causing the CFPB to pause or suspend many of its operations, including its supervision, examination, rulemaking and enforcement activity.
Removed
The rule phased out of Tier 1 capital these non-qualifying capital instruments issued before May 19, 2010 by all other bank holding companies.
Added
Some of these actions have been challenged in court proceedings, and further administrative, judicial or legislative developments are likely that may substantially affect the future operations and function of this agency and the oversight and enforcement of federal consumer protection laws.
Removed
Because our total consolidated assets were less than $15 billion as of December 31, 2009, our outstanding trust preferred securities continued to be treated as Tier 1 capital until the completion of our acquisition of Happy Bancshares on April 1, 2022, after which those securities were treated as Tier 2 capital.
Added
As a result, the status of the CFPB’s future regulatory role remains unclear, and uncertainty exists regarding whether and to what extent the agency will continue to function in a supervisory, rulemaking or enforcement capacity going forward. Loans to One Borrower.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWe continually encounter technological change, and we may have fewer resources than many of our competitors to continue to invest in technological improvements and innovations. The financial services industry continues to undergo rapid technological changes, including the development and use of artificial intelligence ("AI").
Biggest changeThe banking business in our primary market areas is very competitive, and the level of competition facing us may increase further, which may limit our asset growth and financial results. 30 Table of Contents We continually encounter technological change, and we may have fewer resources than many of our competitors to continue to invest in technological improvements and innovations.
Our cost of funds may increase as a result of general economic conditions, interest rates and competitive pressures. Our cost of funds may increase as a result of general economic conditions, interest rates and competitive pressures. We have traditionally obtained funds principally through local deposits, and we have a base of lower cost transaction deposits.
Our cost of funds may increase as a result of general economic conditions, interest rates and competitive pressures. We have traditionally obtained funds principally through local deposits, and we have a base of lower cost transaction deposits.
The security and integrity of our systems are increasingly threatened by a variety of interruptions or information security breaches, including those caused by computer hacking, cyber-attacks, electronic fraudulent activity or attempted theft of financial assets. Our information systems have from time to time experienced such interruptions or breaches despite our best efforts to prevent them.
The security and integrity of our systems are increasingly threatened by a variety of interruptions or information security breaches, including those caused by computer hacking, cyber-attacks, electronic fraudulent activity or attempted theft of financial assets. Our information systems have from time to time experienced such interruptions and breaches despite our best efforts to prevent them.
These risks include, among other things, the loss of customers, strain on management resources related to collection and management of problem loans and problems related to integration of personnel and operating systems. In addition to the acquisition of existing financial institutions or their assets or liabilities, as opportunities arise, we may grow through de novo branching.
These risks include, among other things, the loss of customers, strain on management resources related to collection and management of problem loans and problems related to integration of personnel and operating systems. In addition to the acquisition of existing financial institutions or their assets or liabilities, as opportunities arise, we may also grow through de novo branching.
Our ability to pay dividends depends on the following factors, among others: • We may not have sufficient earnings since our primary source of income, the payment of dividends to us by our bank subsidiary, is subject to federal and state laws that limit the ability of that bank to pay dividends. • Federal Reserve Board policy requires bank holding companies to pay cash dividends on common stock only out of net income available over the past year and only if prospective earnings retention is consistent with the organization’s expected future needs and financial condition. • Before dividends may be paid on our common stock in any year, payments must be made on our subordinated debentures. • Our board of directors may determine that, even though funds are available for dividend payments, retaining the funds for internal uses, such as expansion of our operations, is a better strategy.
Our ability to pay dividends depends on the following factors, among others: • We may not have sufficient earnings since our primary source of income, the payment of dividends to us by our bank subsidiary, is subject to federal and state laws that limit the ability of that bank to pay dividends. • Federal Reserve Board policy requires bank holding companies to pay cash dividends on common stock only out of net income available over the past year and only if prospective earnings retention is consistent with the organization’s expected future needs and financial condition. • Before dividends may be paid on our common stock in any year, payments must be made on our subordinated debentures. 32 Table of Contents • Our board of directors may determine that, even though funds are available for dividend payments, retaining the funds for internal uses, such as expansion of our operations, is a better strategy.
While some of these requirements, such as annual stress testing, were eliminated by the reforms enacted in May 2018, our continued compliance with the remaining requirements and compliance with any additional requirements that may be imposed in the future may necessitate that we hire additional compliance or other personnel, design and implement additional internal controls, or incur other significant expenses, any of which could have a material adverse effect on our business, financial condition or results of operations.
While some of these requirements, such as annual stress testing, were eliminated by subsequently enacted reforms, our continued compliance with the remaining requirements and compliance with any additional requirements that may be imposed in the future may necessitate that we hire additional compliance or other personnel, design and implement additional internal controls, or incur other significant expenses, any of which could have a material adverse effect on our business, financial condition or results of operations.
We are subject to heightened regulatory requirements as our total assets exceed $10 billion. Because our total assets exceed $10 billion, we and our bank subsidiary are subject to increased regulatory requirements. The Dodd-Frank Act and its implementing regulations impose various additional requirements on bank holding companies with $10 billion or more in total assets.
Because our total assets exceed $10 billion, we and our bank subsidiary are subject to increased regulatory requirements. The Dodd-Frank Act and its implementing regulations impose various additional requirements on bank holding companies with $10 billion or more in total assets.
Accordingly, our inability to receive dividends from our bank subsidiary could also have a material adverse effect on our business, financial condition and results of operations and the value of your investment in our common stock.
Accordingly, our inability to receive dividends from our bank subsidiary could also have a material adverse effect on our business, financial condition and results of operations and the value of your investment in our common stock. Item 1B.
If we are required to liquidate the collateral securing a loan to satisfy the debt during a period of reduced real estate values, our earnings and capital could be adversely affected. 27 Table of Contents Because we have a concentration of exposure to a number of individual borrowers, a significant loss on any of those loans could materially and adversely affect us.
If we are required to liquidate the collateral securing a loan to satisfy the debt during a period of reduced real estate values, our earnings and capital could be adversely affected. Because we have a concentration of exposure to a number of individual borrowers, a significant loss on any of those loans could materially and adversely affect us.
If we were to become subject to significant environmental liabilities, it could have a material adverse effect on our results of operations and financial condition. Our operations could be interrupted if certain external vendors on which we rely experience difficulty, terminate their services or fail to comply with banking laws and regulations.
If we were to become subject to significant environmental liabilities, it could have a material adverse effect on our results of operations and financial condition. 31 Table of Contents Our operations could be interrupted if certain external vendors on which we rely experience difficulty, terminate their services or fail to comply with banking laws and regulations.
In addition, banks with $10 billion or more in total assets are primarily examined by the CFPB with respect to various federal consumer financial protection laws and regulations.
In addition, banks with $10 billion or more in total assets, at present, are primarily examined by the CFPB with respect to various federal consumer financial protection laws and regulations.
Because of changing economic and market conditions affecting issuers, we may be required to record provisions for credit losses in future periods, which could have a material adverse effect on our business, financial condition or results of operations. 28 Table of Contents As of December 31, 2023, we owned $1.28 billion of held-to-maturity investment securities.
Because of changing economic and market conditions affecting issuers, we may be required to record provisions for credit losses in future periods, which could have a material adverse effect on our business, financial condition or results of operations. As of December 31, 2024, we owned $1.28 billion of held-to-maturity investment securities.
We may compete with other banks or financial service companies with similar acquisition strategies, many of which are larger and have greater financial and other resources. We cannot assure you that we will be able to successfully identify and acquire suitable acquisition targets on acceptable terms and conditions.
We expect that competition for suitable acquisition candidates may be significant. We may compete with other banks or financial service companies with similar acquisition strategies, many of which are larger and have greater financial and other resources. We cannot assure you that we will be able to successfully identify and acquire suitable acquisition targets on acceptable terms and conditions.
As a relatively new agency with evolving regulations and practices, the CFPB’s examination and regulatory authority has been and continues to be the subject of policy debates and uncertainty among lawmakers and differing presidential administrations, and thus we cannot ascertain the impact, if any, that future changes to the CFPB may have on our business.
As a relatively new agency with evolving regulations and practices, the CFPB’s examination and regulatory authority, including its continued existence as a supervisory agency, has been and continues to be the subject of policy debates and uncertainty among lawmakers and differing presidential administrations, and thus we cannot ascertain the impact, if any, that future changes to or discontinuation of the CFPB may have on our business.
Our results of operations are affected by the monetary policies of the Federal Reserve Board. Most of our assets and liabilities are monetary in nature, and thus subject us to significant risks from changes in interest rates. Consequently, our results of operations can be significantly affected by changes in interest rates and our ability to manage interest rate risk.
Most of our assets and liabilities are monetary in nature, and thus subject us to significant risks from changes in interest rates. Consequently, our results of operations can be significantly affected by changes in interest rates and our ability to manage interest rate risk.
Our high concentration of real estate loans and especially commercial real estate loans exposes us to increased lending risk. As of December 31, 2023, approximately 72.5% of our total loan portfolio was comprised of loans with real estate as a primary or secondary component of collateral.
Our high concentration of real estate loans and especially commercial real estate loans exposes us to increased lending risk. As of December 31, 2024, approximately 74.2% of our total loan portfolio was comprised of loans with real estate as a primary or secondary component of collateral.
If the value of real estate were to deteriorate, a significant portion of our loans could become under-collateralized, which could have a material adverse effect on us. As of December 31, 2023, approximately 72.5% of our total loans were secured by real estate.
If the value of real estate were to deteriorate, a significant portion of our loans could become under-collateralized, which could have a material adverse effect on us. As of December 31, 2024, approximately 74.2% of our total loans were secured by real estate.
Growth through the acquisition of banks or specific bank assets or liabilities, including FDIC-assisted transactions, and de novo branching represent important components of our business strategy. Bank acquisitions are subject to regulatory approval, and we cannot assure that we will be able to obtain approval for a proposed acquisition in a timely manner or at all.
Growth through the acquisition of banks or specific bank assets or liabilities, including FDIC-assisted transactions, represents an important component of our business strategy. Bank acquisitions are subject to regulatory approval, and we cannot assure that we will be able to obtain approval for a proposed acquisition in a timely manner or at all.
Our costs of funds and our profitability and liquidity are likely to be adversely affected if and to the extent we must rely upon higher cost borrowings from other institutional lenders or brokers to fund loan demand or liquidity needs, and changes in our deposit mix and growth could adversely affect our profitability and the ability to expand our loan portfolio.
Our costs of funds and our profitability and liquidity are likely to be adversely affected if and to the extent we must rely upon higher cost borrowings from other institutional lenders or brokers to fund loan demand or liquidity needs, and changes in our deposit mix and growth could adversely affect our profitability and the ability to expand our loan portfolio. 27 Table of Contents The loss of key employees may materially and adversely affect us.
Our FDIC insurance premiums and assessments could increase and result in higher noninterest expense. Our bank subsidiary’s deposits are insured by the FDIC up to legal limits, and accordingly, we are subject to FDIC deposit insurance assessments. As our bank subsidiary exceeds $10 billion in assets, we are subject to higher FDIC assessments.
Our bank subsidiary’s deposits are insured by the FDIC up to legal limits, and accordingly, we are subject to FDIC deposit insurance assessments. As our bank subsidiary exceeds $10 billion in assets, we are subject to higher FDIC assessments.
In addition, if a third-party provider fails to provide the services we require, fails to meet contractual requirements, such as compliance with applicable laws and regulations, or suffers a cyber-attack or other security breach, our business could suffer economic and reputational harm that could have a material adverse effect on our business, financial condition or results of operations. 32 Table of Contents Our earnings could be adversely impacted by incidences of fraud and compliance failure.
In addition, if a third-party provider fails to provide the services we require, fails to meet contractual requirements, such as compliance with applicable laws and regulations, or suffers a cyber-attack or other security breach, our business could suffer economic and reputational harm that could have a material adverse effect on our business, financial condition or results of operations.
However, approximately 79.8% of our total loans and 84.6% of our real estate loans as of December 31, 2023, are to borrowers whose collateral is located in Arkansas, Florida, Texas, Alabama and New York, the states in which the Company has its branch locations.
However, approximately 79.5% of our total loans and 83.7% of our real estate loans as of December 31, 2024, are to borrowers whose collateral is located in Arkansas, Florida, Texas, Alabama and New York, the states in which the Company has its branch locations.
These risks include, among other things: • credit risk associated with the acquired bank’s loans and investments; • the use of inaccurate estimates and judgments to evaluate credit, operations, management and market risks with respect to the target institution or assets; • the potential exposure to unknown or contingent liabilities related to the acquisition; • the time and expense required to integrate an acquisition; • the effectiveness of integrating operations, personnel and customers; • risks of impairment to goodwill or other than temporary impairment; and • potential disruption of our ongoing business. 29 Table of Contents We expect that competition for suitable acquisition candidates may be significant.
These risks include, among other things: • credit risk associated with the acquired bank’s loans and investments; • the use of inaccurate estimates and judgments to evaluate credit, operations, management and market risks with respect to the target institution or assets; • the potential exposure to unknown or contingent liabilities related to the acquisition; • the time and expense required to integrate an acquisition; • the effectiveness of integrating operations, personnel and customers; • risks of impairment to goodwill or other than temporary impairment; and • potential disruption of our ongoing business.
As of December 31, 2023, the legal lending limit of our bank subsidiary for secured loans was approximately $556.7 million. Our board of directors has established an in-house lending limit of $40.0 million to any one borrowing relationship without obtaining the approval of two of the following: our Chairman, John W. Allison, our Vice Chairman, Jack E.
As of December 31, 2024, the legal lending limit of our bank subsidiary for secured loans was approximately $576.1 million. Our board of directors has established an in-house lending limit of $40.0 million to any one borrowing relationship without obtaining the approval of the Chairman, John W. Allison, and our Vice Chairman, Jack E. Engelkes.
The fair value of our available-for-sale investment securities may be adversely affected by market conditions, including changes in interest rates, and the occurrence of any events adversely affecting the issuer of particular securities in our investments portfolio.
As of December 31, 2024, we owned $3.07 billion of available-for-sale investment securities. The fair value of our available-for-sale investment securities may be adversely affected by market conditions, including changes in interest rates, and the occurrence of any events adversely affecting the issuer of particular securities in our investments portfolio.
French, as well as other key Centennial Bank personnel. Centennial Bank, in particular, relies heavily on its management team’s relationships in its local communities to generate business. The loss of services from a member of our current management team may materially and adversely affect our business, financial condition, results of operations and future prospects.
Centennial Bank, in particular, relies heavily on its management team’s relationships in its local communities to generate business. The loss of services from a member of our current management team may materially and adversely affect our business, financial condition, results of operations and future prospects. The value of securities in our investment portfolio may decline in the future.
We endeavor to maintain an allowance for credit losses that we consider adequate to absorb future losses that may occur in our loan portfolio. As of December 31, 2023, our allowance for credit losses was approximately $288.2 million, or 2.00% of our total loans.
We endeavor to maintain an allowance for credit losses that we consider adequate to absorb future losses that may occur in our loan portfolio. As of December 31, 2024, our allowance for credit losses was approximately $275.9 million, or 1.87% of our total loans.
We may incur losses as a result of unforeseen or catastrophic events, including extreme weather events or other natural disasters. As illustrated in recent years by the impact of Hurricanes Michael, Ian and Idalia our markets in Alabama and Florida, like other coastal areas, are susceptible to hurricanes and tropical storms.
We may incur losses as a result of unforeseen or catastrophic events, including extreme weather events or other natural disasters. As illustrated by the impacts of Hurricanes Helene and Milton this past year, our markets in Alabama and Florida, like other coastal areas, are susceptible to hurricanes and tropical storms.
While we believe that our existing capital (which well exceeds the federal and state capital requirements) will be sufficient to support our current operations, anticipated expansion and potential acquisitions, factors such as faster than anticipated growth, reduced earnings levels, operating losses, changes in economic conditions, revisions in regulatory requirements, or additional acquisition opportunities may lead us to seek additional capital.
While we believe that our existing capital (which well exceeds the federal and state capital requirements) will be sufficient to support our current operations, anticipated expansion and potential acquisitions, factors such as faster than anticipated growth, reduced earnings levels, operating losses, changes in economic conditions, revisions in regulatory requirements, or additional acquisition opportunities may lead us to seek additional capital. 28 Table of Contents Our ability to raise additional capital, if needed, will depend on our financial performance and on conditions in the capital markets at that time, which are outside our control.
Further, our stock price may be negatively impacted by failures of other financial institutions and their effects on consumer and investor confidence, and we may experience increased deposit insurance premiums, increased regulatory scrutiny and other adverse effects on our business, profitability or financial condition as a result of these failures.
Further, our stock price may be negatively impacted by failures of other financial institutions and their effects on consumer and investor confidence, and we may experience increased deposit insurance premiums, increased regulatory scrutiny and other adverse effects on our business, profitability or financial condition as a result of these failures. 25 Table of Contents The impacts of national or international pandemics could materially and adversely affect our business, financial condition and results of operations.
The adverse effects of any future economic downturn on us, our customers and the other financial institutions in our market may result in increased foreclosures, delinquencies and customer bankruptcies as well as more restricted access to funds. Any such negative events may have an adverse effect on our business, financial condition, results of operations and stock price.
The adverse effects of any future economic downturn on us, our customers and the other financial institutions in our market may result in increased foreclosures, delinquencies and customer bankruptcies as well as more restricted access to funds.
We conduct a review at least annually to determine whether goodwill is impaired. Our annual goodwill impairment evaluation performed during the fourth quarter of 2023 indicated no impairment of goodwill for our reporting segments. We cannot provide assurance, however, that we will not be required to take an impairment charge in the future.
Our annual goodwill impairment evaluation performed during the fourth quarter of 2024 indicated no impairment of goodwill for our reporting segments. We cannot provide assurance, however, that we will not be required to take an impairment charge in the future.
We have acquired 23 banks since we started our first subsidiary bank in 1999, including a total of 18 banks since 2010. We completed the acquisition of Happy Bancshares, headquartered in Amarillo, Texas, during the second quarter of 2022. We will continue to consider future strategic acquisitions, with a primary focus on Texas, Arkansas, Florida, Alabama and other nearby markets.
Our growth strategy includes strategic acquisitions of banks or bank assets. We have acquired 23 banks since we started our first subsidiary bank in 1999, including a total of 18 banks since 2010. We will continue to consider future strategic acquisitions, with a primary focus on Texas, Arkansas, Florida, Alabama and other nearby markets.
Negative developments in the financial services industry or other new legislation or regulations could adversely impact our operations and our financial performance by subjecting us to additional costs, restricting our business operations, including our ability to originate or sell loans, and/or increasing the ability of non-banks to offer competing financial services. 23 Table of Contents As regulation of the banking industry continues to evolve, we expect the costs of compliance to continue to increase and, thus, to affect our ability to operate profitably.
Negative developments in the financial services industry or other new legislation or regulations could adversely impact our operations and our financial performance by subjecting us to additional costs, restricting our business operations, including our ability to originate or sell loans, and/or increasing the ability of non-banks to offer competing financial services.
The loss of key employees may materially and adversely affect us. Our success depends significantly on our Chairman, Chief Executive Officer and President, John W. Allison, and our executive officers, especially Brian S. Davis, J. Stephen Tipton and Kevin D. Hester plus Centennial Bank Chairman, Chief Executive Officer and President, Tracy M.
Our success depends significantly on our Chairman, Chief Executive Officer and President, John W. Allison, and our executive officers, especially Brian S. Davis, J. Stephen Tipton and Kevin D. Hester plus Centennial Bank Chairman, Tracy M. French, as well as other key Centennial Bank personnel.
At December 31, 2023, our goodwill and other identifiable intangible assets were $1.45 billion. Under current accounting standards, if we determine goodwill or intangible assets are impaired because, for example, the acquired business does not meet projected revenue targets or certain key employees leave, we are required to write down the carrying value of these assets.
Under current accounting standards, if we determine goodwill or intangible assets are impaired because, for example, the acquired business does not meet projected revenue targets or certain key employees leave, we are required to write down the carrying value of these assets. We conduct a review at least annually to determine whether goodwill is impaired.
Our largest fraud risk, associated with the origination of loans, includes the intentional misstatement of information in property appraisals or other underwriting documentation provided to us by third parties. Compliance risk is the risk that loans are not originated in compliance with applicable laws and regulations and our standards.
We are most subject to fraud and compliance risk in connection with the origination of loans, ACH transactions, wire transactions, ATM transactions, and checking transactions. Our largest fraud risk, associated with the origination of loans, includes the intentional misstatement of information in property appraisals or other underwriting documentation provided to us by third parties.
In response to recent inflation and its affects on U.S. business and consumers, the Federal Reserve Board implemented eleven interest rate increases since March 2022. However, in response to slowing inflation, it is expected that the Federal Reserve Board will begin reducing interest rates sometime in 2024.
In response to inflation and its affects on U.S. business and consumers, the Federal Reserve Board implemented a series of eleven interest rate increases beginning in March 2022. However, in response to recent slowing inflation, the Federal Reserve Board reduced interest rates three times in 2024.
There can be no assurance that any future actions by the Federal Reserve Board involving monetary policies will not cause any of the adverse effects described above on our deposit levels, loan demand or business and earnings We may experience future adverse impacts from the recent transition from the use of the LIBOR interest rate index.
There can be no assurance that any future actions by the Federal Reserve Board involving monetary policies will not cause any of the adverse effects described above on our deposit levels, loan demand or business and earnings. The failure of other financial institutions could adversely affect us, and we may incur losses on investments in other financial institutions.
Frequent introductions of new technology-driven products and services, including innovative ways that customers can make payments or manage their accounts, such as through the use of digital wallets or digital currencies, are continually occurring. In addition to better serving customers, effective use of technology increases efficiency and enables financial institutions to reduce costs.
The financial services industry continues to undergo rapid technological changes, including the development and use of artificial intelligence ("AI"). Frequent introductions of new technology-driven products and services, including innovative ways that customers can make payments or manage their accounts, such as through the use of digital wallets or digital currencies, are continually occurring.
One or more of these factors might cause us to have additional losses or liabilities, additional loan charge-offs, or increases in our allowance for credit losses, which would have a negative impact upon our financial condition and results of operations. 30 Table of Contents If the goodwill that we may record or have recorded in connection with a business acquisition becomes impaired, it could require charges to earnings.
One or more of these factors might cause us to have additional losses or liabilities, additional loan charge-offs, or increases in our allowance for credit losses, which would have a negative impact upon our financial condition and results of operations.
Any reduced availability of commercial credit or periods of sustained higher unemployment can further negatively impact the credit performance of commercial and consumer credit, resulting in additional write-downs.
Any reduced availability of commercial credit or periods of sustained higher unemployment can further negatively impact the credit performance of commercial and consumer credit, resulting in additional write-downs. Any such market conditions could cause commercial and consumer deficiencies, low customer confidence, market volatility and generally sluggish business activity in our industry.
We cannot assure that we will be successful in overcoming these risks or any other problems encountered in connection with acquisitions (including FDIC-assisted transactions) and de novo branching. Our inability to overcome these risks could have an adverse effect on our ability to achieve our business strategy and maintain our market value and profitability.
We cannot assure that we will be successful in overcoming these risks or any other problems encountered in connection with acquisitions (including FDIC-assisted transactions) and de novo branching.
Financial institutions are inherently exposed to fraud risk. A fraud can be perpetrated by a customer of our bank subsidiary, an employee, a vendor, or members of the general public. We are most subject to fraud and compliance risk in connection with the origination of loans, ACH transactions, wire transactions, ATM transactions, and checking transactions.
Our earnings could be adversely impacted by incidences of fraud and compliance failure. Financial institutions are inherently exposed to fraud risk. A fraud can be perpetrated by a customer of our bank subsidiary, an employee, a vendor, or members of the general public.
If we acquire additional banks or bank assets in the future, there may be undiscovered risks or losses associated with such acquisitions which would have a negative impact upon our future income. Our growth strategy includes strategic acquisitions of banks or bank assets.
Our inability to overcome these risks could have an adverse effect on our ability to achieve our business strategy and maintain our market value and profitability. 29 Table of Contents If we acquire additional banks or bank assets in the future, there may be undiscovered risks or losses associated with such acquisitions which would have a negative impact upon our future income.
In determining the size of the allowance, we analyze our loan portfolio based on our historical loss experience, volume and classification of loans, volume and trends in delinquencies and non-accruals, national and local economic conditions, and other pertinent information. 26 Table of Contents If our assumptions are incorrect, our current allowance may be insufficient to absorb future loan losses, and increased loan loss reserves may be needed to respond to different economic conditions or adverse developments in our loan portfolio.
In determining the size of the allowance, we analyze our loan portfolio based on our historical loss experience, volume and classification of loans, volume and trends in delinquencies and non-accruals, national and local economic conditions, and other pertinent information.
We may not be able to effectively implement new technology-driven products and services or be successful in marketing these products and services to our clients, which may adversely affect our results of operations and future prospects. 31 Table of Contents A failure in or breach of our operational or security systems, or those of our third-party service providers, including as a result of cyber-attacks, could disrupt our business, result in unintentional disclosure or misuse of confidential or proprietary information, damage our reputation, increase our costs and cause losses.
A failure in or breach of our operational or security systems, or those of our third-party service providers, including as a result of cyber-attacks, could disrupt our business, result in unintentional disclosure or misuse of confidential or proprietary information, damage our reputation, increase our costs and cause losses.
When we acquire a business, a portion of the purchase price of the acquisition is generally allocated to goodwill and other identifiable intangible assets. The amount of the purchase price that is allocated to goodwill and other intangible assets is determined by the excess of the purchase price over the net identifiable assets acquired.
The amount of the purchase price that is allocated to goodwill and other intangible assets is determined by the excess of the purchase price over the net identifiable assets acquired. At December 31, 2024, our goodwill and other identifiable intangible assets were $1.44 billion.
This includes commercial real estate loans (excluding construction/land development) of $5.88 billion, or 40.8% of total loans, construction/land development loans of $2.29 billion, or 15.9% of total loans, and residential real estate loans of $2.28 billion, or 15.8% of total loans.
This includes commercial real estate loans (excluding construction/land development) of $5.76 billion, or 39.1% of total loans, construction/land development loans of $2.74 billion, or 18.5% of total loans, and residential real estate loans of $2.45 billion, or 16.6% of total loans.
There can be no assurance that we can prevent or detect acts of fraud or violation of law or our compliance standards by the third parties that we deal with. Repeated incidences of fraud or compliance failures would adversely impact the performance of our loan portfolio.
Compliance risk is the risk that loans are not originated in compliance with applicable laws and regulations and our standards. There can be no assurance that we can prevent or detect acts of fraud or violation of law or our compliance standards by the third parties that we deal with.
Engelkes, or our director Richard H. Ashley. As of December 31, 2023, we had a total of $6.93 billion, or 48.1% of our total loans, committed to the aggregate group of borrowers whose total debt exceeds the established in-house lending limit of $40.0 million.
As of December 31, 2024, we had a total of $7.54 billion, or 51.1% of our total loans, committed to the aggregate group of borrowers whose total debt exceeds the established in-house lending limit of $40.0 million. Our cost of funds may increase as a result of general economic conditions, interest rates and competitive pressures.
In addition to the risks associated with the high concentration of real estate-secured loans, the commercial real estate and construction/land development loans, which comprised 56.7% of our total loan portfolio as of December 31, 2023, expose us to a greater risk of loss than our residential real estate loans, which comprised 15.8% of our total loan portfolio as of December 31, 2023.
Also, in any such event, our ability to recover on defaulted loans by foreclosing and selling real estate collateral would be diminished, and we would be more likely to suffer losses on defaulted loans. 26 Table of Contents In addition to the risks associated with the high concentration of real estate-secured loans, the commercial real estate and construction/land development loans, which comprised 57.6% of our total loan portfolio as of December 31, 2024, expose us to a greater risk of loss than our residential real estate loans, which comprised 16.6% of our total loan portfolio as of December 31, 2024.
In addition, our competitors may seek to gain market share by pricing below the current market rates for loans and paying higher rates for deposits. The banking business in our primary market areas is very competitive, and the level of competition facing us may increase further, which may limit our asset growth and financial results.
In addition, our competitors may seek to gain market share by pricing below the current market rates for loans and paying higher rates for deposits.
Any such market conditions could cause commercial and consumer deficiencies, low customer confidence, market volatility and generally sluggish business activity in our industry. 24 Table of Contents Unlike larger financial institutions that are more geographically diversified, our profitability depends primarily on the general economic conditions in our primary market areas.
Unlike larger financial institutions that are more geographically diversified, our profitability depends primarily on the general economic conditions in our primary market areas.
Such changes may require us to pay higher FDIC premiums than our current levels, or the FDIC may charge additional special assessments, either of which would increase our noninterest expense. 25 Table of Contents Our profitability is vulnerable to interest rate fluctuations and monetary policy and could be adversely affected by any future actions taken by the Federal Reserve Board to address rising inflation.
Such changes may require us to pay higher FDIC premiums than our current levels, or the FDIC may charge additional special assessments, either of which would increase our noninterest expense.
On January 18, 2022, we issued $300.0 million of 3.125% fixed-to-floating rate subordinated notes, which mature in 2032, and o n April 1, 2022, the Company acquired $140.0 million of subordinated notes from Happy, which mature in 2030 and carry a fixed rate of 5.500% for the first five years.
We currently have outstanding $300.0 million of 3.125% fixed-to-floating rate subordinated notes, which mature in 2032, and $140.0 million of subordinated notes, which mature in 2030 and carry a fixed rate of 5.500% for the first five years. Thereafter, the notes bear interest at 3-month Secured Overnight Funding Rate (SOFR) plus 5.345%, resetting quarterly.
The impacts of national or international pandemics could materially and adversely affect our business, financial condition and results of operations. Our operations and those of our customers and third-party service providers may be adversely affected by the widespread outbreak of contagious disease, including the COVID-19 virus.
Our operations and those of our customers and third-party service providers may be adversely affected by the widespread outbreak of contagious disease, such as the COVID-19 virus. The COVID-19 pandemic disrupted U.S. and global supply chains and altered business and economic conditions throughout the U.S. and globally.
While the Economic Growth, Regulatory Relief, and Consumer Protection Act enacted in 2018 reduced certain regulatory burdens on community and regional financial institutions resulting from the Dodd-Frank Act, we cannot assure that future legislation will not significantly increase our compliance or operating costs or otherwise have a significant impact on our business.
While the federal regulatory agencies under the Trump Administration and current Congressional leadership are expected to exhibit a more common sense regulatory posture and pursue initiatives to reduce regulatory burdens on community and regional financial institutions, we cannot assure that future legislation or regulation will not significantly increase our compliance or operating costs or otherwise have a significant impact on our business.
The COVID-19 pandemic disrupted U.S. and global supply chains and altered business and economic conditions throughout the U.S. and globally. Its economic impacts lowered equity market valuations; created significant volatility and disruption in financial markets; contributed to a decrease in the rates and yields on U.S.
Its economic impacts lowered equity market valuations; created significant volatility and disruption in financial markets; contributed to a decrease in the rates and yields on U.S. Treasury securities; resulted in ratings downgrades, credit deterioration, and defaults in many industries; increased demands on capital and liquidity; increased unemployment levels and decreased consumer confidence.
In addition, industry, legislative or regulatory developments may cause us to materially change our existing strategic direction, capital strategies, compensation or operating plans. If these developments negatively impact our ability to implement our business strategies, it may have a material adverse effect on our results of operations and future prospects.
As regulation of the banking industry continues to evolve, the costs of compliance may continue to increase and, in turn, adversely affect our ability to operate profitably. In addition, industry, legislative or regulatory developments may cause us to materially change our existing strategic direction, capital strategies, compensation or operating plans.
Additionally, financial institution regulatory agencies have intensified their response to concerns and trends identified in examinations, including through the issuance of formal enforcement actions.
New federal or state laws, regulations and policies may continue to be enacted and implemented that could affect lending and funding practices and liquidity standards. Additionally, financial institution regulatory agencies may continue to aggressively scrutinize and address any concerns and trends identified in examinations, including through the issuance of formal enforcement actions.
Removed
The Dodd-Frank Act, passed by Congress in 2010, instituted major changes to the banking and financial institutions regulatory regimes in light of the performance of and government intervention in the financial services sector during the economic recession leading up to its enactment.
Added
Further, any changes to or repeal of existing laws, regulations or policies relating to our business, as well as changes in interpretation, implementation or enforcement of such laws, regulations or policies, could affect us in substantial and unpredictable ways.
Removed
The act required the issuance of a substantial number of new regulations by federal regulatory agencies affecting financial institutions, some of which still have yet to be issued or implemented.
Added
Among other impacts, the repeal or revision of laws and regulations could necessitate that we implement new processes and procedures, which could divert management time and attention from initiatives designed to grow the Company or enhance our profitability.
Removed
Certain provisions of the Dodd-Frank Act and regulations promulgated under the act may continue to be implemented, and there could be additional new federal or state laws, regulations and policies regarding lending and funding practices and liquidity standards.
Added
If any such developments negatively impact our ability to implement our business strategies, it may have a material adverse effect on our results of operations and future prospects. 23 Table of Contents We are subject to heightened regulatory requirements as our total assets exceed $10 billion.
Removed
Treasury securities; resulted in ratings downgrades, credit deterioration, and defaults in many industries; increased demands on capital and liquidity; increased unemployment levels and decreased consumer confidence. In addition, the pandemic resulted in temporary or permanent closures of many businesses, the institution of social distancing, face covering requirements and other health directives, and in some cases, self-isolation requirements.
Added
Any such negative events may have an adverse effect on our business, financial condition, results of operations and stock price. 24 Table of Contents Our FDIC insurance premiums and assessments could increase and result in higher noninterest expense.
Removed
We have certain loans that were originally indexed to LIBOR to calculate the interest rate. The U.S. dollar LIBOR index has not been published since June 2023, which necessitated the refinancing of the existing loans which were indexed to LIBOR. While these loans have been transitioned to a LIBOR alternative, a residual risk remains for transition issues.
Added
Our profitability is vulnerable to interest rate fluctuations and monetary policy and could be adversely affected by any future actions taken by the Federal Reserve Board to address inflation or other economic developments. Our results of operations are affected by the monetary policies of the Federal Reserve Board.
Removed
The transition impacted our market risk profiles and required changes to our risk and pricing models, valuation tools, and product design. Additionally, the new index rates and payments differ from LIBOR, which may lead to increased volatility.
Added
During the fourth quarter of 2024, we completed a company-wide asset quality cleanup project, which resulted in net charge-offs for the quarter of $53.4 million and a reduction in our allowance for credit losses of $36.7 million from $312.6 million, or 2.11% of total loans, at September 30, 2024.
Removed
Residual issues that may remain from this transition are not certain and any failure to adequately manage this transition process with our customers may adversely impact our reputation. The failure of other financial institutions could adversely affect us, and we may incur losses on investments in other financial institutions.
Added
The reduction resulting from charge-offs was partially offset by a $16.7 million provision for credit losses during the fourth quarter related to Hurricanes Helene and Milton. However, no additional provision for credit losses on loans was recorded for the quarter ended December 31, 2024, as the current level of reserves was considered adequate for the loan portfolio.
Removed
Also, in any such event, our ability to recover on defaulted loans by foreclosing and selling real estate collateral would be diminished, and we would be more likely to suffer losses on defaulted loans.
Added
If our assumptions are incorrect, our current allowance may be insufficient to absorb future loan losses, and we may determine that increased loan loss reserves may be needed to respond to different economic conditions or adverse developments in our loan portfolio.
Removed
The value of securities in our investment portfolio may decline in the future. As of December 31, 2023, we owned $3.51 billion of available-for-sale investment securities.
Added
If the goodwill that we may record or have recorded in connection with a business acquisition becomes impaired, it could require charges to earnings. When we acquire a business, a portion of the purchase price of the acquisition is generally allocated to goodwill and other identifiable intangible assets.
Removed
Our ability to raise additional capital, if needed, will depend on our financial performance and on conditions in the capital markets at that time, which are outside our control.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe CISO provides periodic reports to directors that permit them to measure management’s compliance with the defined risk limits and to gauge the changing nature of risk inherent in the Company’s chosen lines of business and operations and as a result of changing factors within the Company, such as management and personnel changes, and technology changes.
Biggest changeThe Company's Information Technology/Security Committee and the CISO provide periodic reports to directors that permit them to understand the cybersecurity risk landscape, assess the Company's strategies and resources for addressing cybersecurity threats, measure management’s compliance with the defined risk limits and gauge the changing nature of risk inherent in the Company’s chosen lines of business and operations and as a result of changing factors within the Company, such as management and personnel changes, and technology changes.
The CISO has over 24 years of experience in the fields of information technology and cybersecurity, most at a Fortune 500 global technology company, and maintains multiple professional cybersecurity certifications. Our Information Security Program consists of several elements including: • Incident Monitoring and Response .
The CISO has over 25 years of experience in the fields of information technology and cybersecurity, most at a Fortune 500 global technology company, and maintains multiple professional cybersecurity certifications. Our Information Security Program consists of several elements including: • Incident Monitoring and Response .
This includes performing due diligence and assessment of each provider’s cybersecurity posture as well as periodic re-assessments. 34 Table of Contents • Security Training and Awareness . We provide ongoing education and training to employees regarding cybersecurity threats and the role they play in helping prevent and detect these threats.
This includes performing due diligence and assessment of each provider’s cybersecurity posture as well as periodic re-assessments. • Security Training and Awareness . We provide ongoing education and training to employees regarding cybersecurity threats and the role they play in helping prevent and detect these threats.
Cybersecurity reports and issues are presented at least quarterly to the ERC. 35 Table of Contents Information Technology/Security Committee . The Information Technology/Security Committee (“ITSC”) is a management level committee that serves at the direction of the Board and provides oversight of the Company’s information technology and information security programs.
Cybersecurity reports and issues are presented at least quarterly to the ERC. Information Technology/Security Committee . The Information Technology/Security Committee (“ITSC”) is a management level committee that serves at the direction of the Board and provides oversight of the Company’s information technology and information security programs.
We also share and receive threat intelligence with government agencies, the Financial Services Information Sharing and Analysis Center ("FS-ISAC") and cybersecurity vendors and leaders in the cybersecurity industry. • Infrastructure and Data Protection .
We also share and receive threat intelligence with government agencies, the Financial Services Information Sharing and Analysis Center ("FS-ISAC") and cybersecurity vendors and leaders in the cybersecurity industry. 33 Table of Contents • Infrastructure and Data Protection .
Board Oversight and Governance Our Board of Directors (the “Board”), in conjunction with management, is responsible for assessing which risks are warranted and acceptable, based on management’s ability to: • identify and understand such risks; • measure the degree of exposure to such risks; • monitor the changing nature of the risk and related exposure; and • develop and implement processes and procedures to control such risks.
Board Oversight and Governance Our Board of Directors (the “Board”), in conjunction with management, is responsible for assessing which risks are warranted and acceptable, based on management’s ability to: • identify and understand such risks; • measure the degree of exposure to such risks; • monitor the changing nature of the risk and related exposure; and • develop and implement processes and procedures to control such risks. 34 Table of Contents The Board and management define risk tolerances in the policies of the Company.
These audits help ensure our program is appropriate to address the changing threat landscape and aligns to industry standards such as the National Institute of Standards and Technology Cybersecurity Framework, as well as other legal and regulatory guidance including the Federal Financial Institutions Examination Council Cybersecurity Assessment Tool, Conference of State Bank Supervisors Ransomware Self-Assessment Tool, the Gramm-Leach-Bliley Act and the Sarbanes-Oxley Act.
These audits help ensure our program is appropriate to address the changing threat landscape and aligns to industry standards such as the National Institute of Standards and Technology Cybersecurity Framework, Conference of State Bank Supervisors Ransomware Self-Assessment Tool, the Gramm-Leach-Bliley Act and the Sarbanes-Oxley Act.
The Board and management define risk tolerances in the policies of the Company. The Board maintains oversight of risks from cybersecurity related threats, through various committees including the Audit and Risk Committee and the bank's Executive Risk Committee. The CISO reports to the Executive Risk Committee.
The Board maintains oversight of risks from cybersecurity related threats, primarily through the Audit and Risk Committee and the directors that serve on the bank's Executive Risk Committee. The CISO reports to the Executive Risk Committee.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeAs of December 31, 2023, our bank subsidiary owned or leased a total of 76 branches in Arkansas, 78 branches in Florida, 63 branches in Texas, five branches in Alabama and one branch in New York City. The Company also owns or leases other buildings that provide space for operations, mortgage lending and other general purposes.
Biggest changeAs of December 31, 2024, our bank subsidiary owned or leased a total of 76 branches in Arkansas, 78 branches in Florida, 53 branches in Texas, five branches in Alabama and one branch in New York City. The Company also owns or leases other buildings that provide space for operations, mortgage lending and other general purposes.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 4. MINE SAFETY DISCLOSURE Not applicable. PART II
Biggest changeItem 4. MINE SAFETY DISCLOSURE Not applicable. 35 Table of Contents PART II

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. Mine Safety Disclosure 36 PART II: Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 36 -3 7 Item 6. Selected Financial Data 38 - 39 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation 40 - 88 Item 7A.
Biggest changeItem 4. Mine Safety Disclosure 35 PART II: Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 3 6 -37 Item 6. Selected Financial Data 38 -39 I tem 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation 40 -87 Item 7A.
Quantitative and Qualitative Disclosures About Market Risk 89 - 90 Item 8. Consolidated Financial Statements and Supplementary Data 90 - 152
Quantitative and Qualitative Disclosures About Market Risk 88 -89 Item 8. Consolidated Financial Statements and Supplementary Data 89 -152

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

5 edited+2 added−1 removed2 unchanged
Biggest changePerformance Graph Below is a graph which summarizes the cumulative return earned by the Company’s stockholders since December 31, 2018, compared with the cumulative total return on the Russell 2000 Index and S&P U.S. BMI Banks Index.
Biggest changeAs 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. 36 Table of Contents Performance Graph Below is a graph which summarizes the cumulative return earned by the Company’s stockholders since December 31, 2019, compared with the cumulative total return on the Russell 2000 Index and S&P U.S.
Information regarding regulatory restrictions on our ability to pay dividends is discussed in “Supervision and Regulation – Payment of Dividends.” During the three months ended December 31, 2023, the Company utilized a portion of its stock repurchase program most recently amended and approved by the Board of Directors on January 22, 2021.
Information regarding regulatory restrictions on our ability to pay dividends is discussed in “Supervision and Regulation – Payment of Dividends.” During the three months ended December 31, 2024, the Company utilized a portion of its stock repurchase program most recently amended and approved by the Board of Directors on January 22, 2021.
Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is listed on the New York Stock Exchange under the symbol “HOMB.” As of February 16, 2024, there were approximately 1,626 stockholders of record of the Company’s common stock.
Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is listed on the New York Stock Exchange under the symbol “HOMB.” As of February 7, 2025, there were approximately 1,506 stockholders of record of the Company’s common stock.
The following table sets forth information with respect to purchases made by or on behalf of the Company of shares of the Company’s common stock during the periods indicated: 36 Table of Contents Issuer Purchases of Equity Securities Period Number of Shares Purchased Average Price Paid Per Share Purchased Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number of Shares That May Yet Be Purchased Under the Plans or Programs (1) October 1 through October 31, 2023 530,000 $ 21.00 530,000 17,051,285 November 1 through November 30, 2023 220,000 21.31 220,000 16,831,285 December 1 through December 31, 2023 65,000 23.03 65,000 16,766,285 Total 815,000 815,000 (1) The above described stock repurchase program has no expiration date .
The following table sets forth information with respect to purchases made by or on behalf of the Company of shares of the Company’s common stock during the periods indicated: Issuer Purchases of Equity Securities Period Number of Shares Purchased Average Price Paid Per Share Purchased Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number of Shares That May Yet Be Purchased Under the Plans or Programs (1) October 1 through October 31, 2024 95,764 $ 26.38 95,764 13,244,493 November 1 through November 30, 2024 — — — 13,244,493 December 1 through December 31, 2024 — — — 13,244,493 Total 95,764 95,764 (1) The above described stock repurchase program has no expiration date .
This presentation assumes that the fair value of the investment in the Company's common stock and each index was $100.00 on December 31, 2018 and that the subsequent dividends were reinvested. Period Ending Index 12/31/18 12/31/19 12/31/20 12/31/21 12/31/22 12/31/23 Home BancShares, Inc. 100.00 123.70 126.54 161.83 155.79 178.88 Russell 2000 Index 100.00 125.53 150.58 172.90 137.56 160.85 S&P U.S.
BMI Banks Index. This presentation assumes that the fair value of the investment in the Company's common stock and each index was $100.00 on December 31, 2019 and that the subsequent dividends were reinvested.
Removed
BMI Banks Index 100.00 137.36 119.83 162.92 135.13 147.41 37 Table of Contents
Added
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.
Added
Period Ending Index 12/31/19 12/31/20 12/31/21 12/31/22 12/31/23 12/31/24 Home BancShares, Inc. 100.00 102.30 130.83 125.94 144.61 166.26 Russell 2000 Index 100.00 119.96 137.74 109.59 128.14 142.93 S&P U.S. BMI Banks Index 100.00 87.24 118.61 98.38 107.32 143.68 37 Table of Contents

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Biggest changeSummary Consolidated Financial Data As of or for the Years Ended December 31, 2023 2022 2021 (Dollars and shares in thousands, except per share data) Income statement data: Total interest income $ 1,175,053 $ 877,766 $ 625,171 Total interest expense 348,108 119,090 52,200 Net interest income 826,945 758,676 572,971 Provision for (recovery of) credit losses 12,133 63,585 (4,752) Net interest income after provision for credit losses 814,812 695,091 577,723 Non-interest income 169,934 175,111 137,569 Non-interest expense 472,863 475,627 298,517 Income before income taxes 511,883 394,575 416,775 Income tax expense 118,954 89,313 97,754 Net income $ 392,929 $ 305,262 $ 319,021 Per share data: Basic earnings per common share $ 1.94 $ 1.57 $ 1.94 Diluted earnings per common share 1.94 1.57 1.94 Book value per common share 18.81 17.33 16.90 Tangible book value per common share (non-GAAP) (1)(2) 11.63 10.17 10.80 Dividends – common 0.72 0.66 0.56 Average common shares outstanding 202,627 194,694 164,501 Average diluted shares outstanding 202,773 195,019 164,858 Performance ratios: Return on average assets 1.77 % 1.35 % 1.83 % Return on average assets excluding intangible Amortization (non-GAAP) (3) 1.93 1.47 1.96 Return on average common equity 10.82 9.17 11.89 Return on average tangible common equity excluding intangible amortization (non-GAAP) (1)(4) 18.36 15.63 19.20 Net interest margin (5) 4.25 3.81 3.66 Efficiency ratio 46.21 49.53 40.81 Efficiency ratio, as adjusted (non-GAAP) (6) 45.24 44.55 42.12 Asset quality: Non-performing assets to total assets 0.42 0.27 0.29 Non-performing loans to total loans 0.44 0.42 0.51 Allowance for credit losses to non-performing loans 449.66 475.99 471.61 Allowance for credit losses to total loans 2.00 2.01 2.41 Net charge-offs to average total loans 0.09 0.11 0.08 38 Table of Contents Summary Consolidated Financial Data – Continued As of the Years Ended December 31, 2023 2022 (Dollars and shares in thousands, except per share data) Balance sheet data (period end): Total assets $ 22,656,658 $ 22,883,588 Investment securities – available-for-sale 3,507,841 4,041,590 Investment securities – held-to-maturity 1,281,982 1,287,705 Loans receivable 14,424,728 14,409,480 Allowance for credit losses (288,234) (289,669) Intangible assets 1,447,023 1,456,708 Non-interest-bearing deposits 4,085,501 5,164,997 Total deposits 16,787,711 17,938,783 Subordinated debentures 439,834 440,420 Stockholders' equity 3,791,075 3,526,362 Capital ratios: Common equity to assets 16.73 % 15.41 % Tangible common equity to tangible assets (non-GAAP) (1)(7) 11.05 9.66 Common equity Tier 1 capital 14.15 12.91 Tier 1 leverage ratio (8) 12.44 10.86 Tier 1 risk-based capital ratio 14.15 12.91 Total risk-based capital ratio 17.79 16.54 Dividend payout - common 37.13 42.07 __________________________ (1) Tangible calculations eliminate the effect of goodwill and acquisition-related intangible assets and the corresponding amortization expense on a tax-effected basis.
Biggest changeSummary Consolidated Financial Data As of or for the Years Ended December 31, 2024 2023 2022 (Dollars and shares in thousands, except per share data) Income statement data: Total interest income $ 1,299,777 $ 1,175,053 $ 877,766 Total interest expense 451,003 348,108 119,090 Net interest income 848,774 826,945 758,676 Provision for (recovery of) credit losses 48,070 12,133 63,585 Net interest income after provision for credit losses 800,704 814,812 695,091 Non-interest income 168,574 169,934 175,111 Non-interest expense 446,936 472,863 475,627 Income before income taxes 522,342 511,883 394,575 Income tax expense 120,101 118,954 89,313 Net income $ 402,241 $ 392,929 $ 305,262 Per share data: Basic earnings per common share $ 2.01 $ 1.94 $ 1.57 Diluted earnings per common share 2.01 1.94 1.57 Book value per common share 19.92 18.81 17.33 Tangible book value per common share (non-GAAP) (1)(2) 12.68 11.63 10.17 Dividends – common 0.75 0.72 0.66 Average common shares outstanding 199,939 202,627 194,694 Average diluted shares outstanding 200,069 202,773 195,019 Performance ratios: Return on average assets 1.77 % 1.77 % 1.35 % Return on average assets excluding intangible Amortization (non-GAAP) (3) 1.92 1.93 1.47 Return on average common equity 10.43 10.82 9.17 Return on average tangible common equity excluding intangible amortization (non-GAAP) (1)(4) 16.92 18.36 15.63 Net interest margin (5) 4.27 4.25 3.81 Efficiency ratio 42.74 46.21 49.53 Efficiency ratio, as adjusted (non-GAAP) (6) 42.65 45.24 44.55 Asset quality: Non-performing assets to total assets 0.63 0.42 0.27 Non-performing loans to total loans 0.67 0.44 0.42 Allowance for credit losses to non-performing loans 278.99 449.66 475.99 Allowance for credit losses to total loans 1.87 2.00 2.01 Net charge-offs to average total loans 0.41 0.09 0.11 38 Table of Contents Summary Consolidated Financial Data – Continued As of the Years Ended December 31, 2024 2023 (Dollars and shares in thousands, except per share data) Balance sheet data (period end): Total assets $ 22,490,748 $ 22,656,658 Investment securities – available-for-sale 3,072,639 3,507,841 Investment securities – held-to-maturity 1,275,204 1,281,982 Loans receivable 14,764,500 14,424,728 Allowance for credit losses (275,880) (288,234) Intangible assets 1,438,580 1,447,023 Non-interest-bearing deposits 4,006,115 4,085,501 Total deposits 17,146,297 16,787,711 Subordinated debentures 439,246 439,834 Stockholders' equity 3,961,025 3,791,075 Capital ratios: Common equity to assets 17.61 % 16.73 % Tangible common equity to tangible assets (non-GAAP) (1)(7) 11.98 11.05 Common equity Tier 1 capital 15.11 14.15 Tier 1 leverage ratio (8) 13.05 12.44 Tier 1 risk-based capital ratio 15.11 14.15 Total risk-based capital ratio 18.74 17.79 Dividend payout - common 37.29 37.13 __________________________ (1) Tangible calculations eliminate the effect of goodwill and acquisition-related intangible assets and the corresponding amortization expense on a tax-effected basis.
(2) See “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Table 25,” for the non-GAAP tabular reconciliation. (3) See “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Table 26,” for the non-GAAP tabular reconciliation.
(2) See “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Table 27,” for the non-GAAP tabular reconciliation. (3) See “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Table 28,” for the non-GAAP tabular reconciliation.
(6) See “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Table 29,” for the non-GAAP tabular reconciliation. (7) See “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Table 28,” for the non-GAAP tabular reconciliation.
(6) See “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Table 31,” for the non-GAAP tabular reconciliation. (7) See “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Table 30,” for the non-GAAP tabular reconciliation.
(4) See “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Table 27,” for the non-GAAP tabular reconciliation. (5) Fully taxable equivalent (assuming an income tax rate of 25.740% for 2021, 24.6735% for 2022 and 24.989% for 2023).
(4) See “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Table 29,” for the non-GAAP tabular reconciliation. (5) Fully taxable equivalent (assuming an income tax rate of 24.6735% for 2022, 24.989% for 2023 and 24.433% for 2024).

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

233 edited+58 added−145 removed152 unchanged
Biggest changeExpected maturities could differ from contractual maturities because borrowers may have the right to call or prepay obligations, with or without call or prepayment penalties. 73 Table of Contents Table 17: Maturity and Yield Distribution of Investment Securities December 31, 2023 1 Year or Less 1 Year Through 5 Years 5 Years Through 10 Years Over 10 Years Monthly Amortizing Securities Total Amortized Cost Total Fair Value (Dollars in thousands) Available-for-sale U.S. government-sponsored enterprises $ 16,787 $ 131,363 $ 117,199 $ 96,145 $ — $ 361,494 $ 346,648 U.S. government-sponsored mortgage-backed securities — — — — 1,711,668 1,711,668 1,520,421 Private mortgage-backed securities — — — — 191,522 191,522 175,405 Non-government-sponsored asset backed securities — — — — 370,203 370,203 363,473 State and political subdivisions 2,540 41,095 130,784 815,899 — 990,318 916,325 Other securities — 52,328 153,020 10,374 — 215,722 185,569 Total $ 19,327 $ 224,786 $ 401,003 $ 922,418 $ 2,273,393 $ 3,840,927 $ 3,507,841 Percentage of total amortized cost 0.5 % 5.9 % 10.4 % 24.0 % 59.2 % 100.0 % December 31, 2023 1 Year or Less 1 Year Through 5 Years 5 Years Through 10 Years Over 10 Years Monthly Amortizing Securities Total Amortized Cost Total Fair Value (Dollars in thousands) Held-to-maturity U.S. government-sponsored enterprises $ — $ 9,510 $ 33,775 $ — $ — $ 43,285 $ 40,678 U.S. government-sponsored mortgage-backed securities — — — — 130,278 130,278 126,022 State and political subdivisions — 17,988 272,169 820,267 — 1,110,424 1,003,781 Total $ — $ 27,498 $ 305,944 $ 820,267 $ 130,278 $ 1,283,987 $ 1,170,481 Percentage of total amortized cost — % 2.1 % 23.8 % 63.9 % 10.2 % 100.0 % December 31, 2023 1 Year or Less 1 Year Through 5 Years 5 Years Through 10 Years Over 10 Years Monthly Amortizing Securities Tax Equivalent Yield (Dollars in thousands) Available-for-sale U.S. government-sponsored enterprises 1.79 % 2.53 % 3.65 % 6.04 % — % 3.79 % U.S. government-sponsored mortgage-backed securities — — — — 2.63 2.63 Private mortgage-backed securities — — — — 3.87 3.87 Non-government-sponsored asset backed securities — — — — 6.41 6.41 State and political subdivisions 3.88 3.00 3.14 2.83 — 2.88 Other securities — 3.99 4.19 4.75 — 4.17 Held-to-maturity U.S. government-sponsored enterprises — % 2.45 % 3.20 % — % — % 3.04 % U.S. government-sponsored mortgage-backed securities — — — — 4.22 4.22 State and political subdivisions — 3.04 3.22 3.51 — 3.43 74 Table of Contents December 31, 2022 1 Year or Less 1 Year Through 5 Years 5 Years Through 10 Years Over 10 Years Monthly Amortizing Securities Total Amortized Cost Total Fair Value (Dollars in thousands) Available-for-sale U.S. government-sponsored enterprises $ 257,082 $ 96,882 $ 198,889 $ 129,463 $ — $ 682,316 $ 661,820 U.S. government-sponsored mortgage-backed securities — — — — 1,900,796 1,900,796 1,685,462 Private mortgage-backed securities — — — — 197,435 197,435 179,133 Non-government-sponsored asset backed securities — — — — 428,933 428,933 414,374 State and political subdivisions 3,808 25,231 108,082 884,067 — 1,021,188 906,297 Other securities 8,500 41,248 149,848 15,356 — 214,952 194,504 Total $ 269,390 $ 163,361 $ 456,819 $ 1,028,886 $ 2,527,164 $ 4,445,620 $ 4,041,590 Percentage of total amortized cost 6.1 % 3.7 % 10.3 % 23.1 % 56.8 % 100.0 % December 31, 2022 1 Year or Less 1 Year Through 5 Years 5 Years Through 10 Years Over 10 Years Monthly Amortizing Securities Total Amortized Cost Total Fair Value (Dollars in thousands) Held-to-maturity U.S. government-sponsored enterprises $ — $ — $ 43,017 $ — $ — $ 43,017 $ 39,668 U.S. government-sponsored mortgage-backed securities — — — — 135,000 135,000 131,375 State and political subdivisions — 4,782 173,165 933,746 — 1,111,693 955,103 Other securities — — — — — — — Total $ — $ 4,782 $ 216,182 $ 933,746 $ 135,000 $ 1,289,710 $ 1,126,146 Percentage of total amortized cost — % 0.4 % 16.8 % 72.4 % 10.4 % 100.0 % December 31, 2022 1 Year or Less 1 Year Through 5 Years 5 Years Through 10 Years Over 10 Years Monthly Amortizing Securities Tax Equivalent Yield (Dollars in thousands) Available-for-sale U.S. government-sponsored enterprises 2.97 % 2.03 % 2.69 % 3.64 % — % 2.88 % U.S. government-sponsored mortgage-backed securities — — — — 2.45 2.45 Private mortgage-backed securities — — — — 3.73 3.73 Non-government-sponsored asset backed securities — — — — 4.98 4.98 State and political subdivisions 4.35 3.46 2.99 2.84 — 2.88 Other securities — 4.58 3.81 5.34 — 4.13 Held-to-maturity U.S. government-sponsored enterprises — % — % 3.04 % — % — % 3.04 % U.S. government-sponsored mortgage-backed securities — — — — 4.24 4.24 State and political subdivisions — 3.17 3.25 3.58 — 3.53 75 Table of Contents The weighted average tax-equivalent yield is calculated by multiplying the carried book value by the tax-equivalent yield for each security and is then grouped by investment type and maturity.
Biggest changeTable 19: Maturity and Yield Distribution of Investment Securities December 31, 2024 1 Year or Less 1 Year Through 5 Years 5 Years Through 10 Years Over 10 Years Monthly Amortizing Securities Total Amortized Cost Total Fair Value (Dollars in thousands) Available-for-sale U.S. government-sponsored enterprises $ 9,034 $ 167,797 $ 50,608 $ 70,259 $ — $ 297,698 $ 284,790 U.S. government-sponsored mortgage-backed securities — — — — 1,527,463 1,527,463 1,324,684 Private mortgage-backed securities — — — — 184,643 184,643 171,394 Non-government-sponsored asset backed securities — — — — 228,751 228,751 225,648 State and political subdivisions 5,687 51,211 167,514 731,643 — 956,055 870,361 Other securities 3,011 55,940 146,321 10,390 — 215,662 195,762 Total $ 17,732 $ 274,948 $ 364,443 $ 812,292 $ 1,940,857 $ 3,410,272 $ 3,072,639 Percentage of total amortized cost 0.5 % 8.1 % 10.7 % 23.8 % 56.9 % 100.0 % 73 Table of Contents December 31, 2024 1 Year or Less 1 Year Through 5 Years 5 Years Through 10 Years Over 10 Years Monthly Amortizing Securities Total Amortized Cost Total Fair Value (Dollars in thousands) Held-to-maturity U.S. government-sponsored enterprises $ — $ 14,455 $ 29,105 $ — $ — $ 43,560 $ 40,539 U.S. government-sponsored mortgage-backed securities — — — — 124,169 124,169 117,474 State and political subdivisions — 41,372 336,948 731,160 — 1,109,480 984,927 Total $ — $ 55,827 $ 366,053 $ 731,160 $ 124,169 $ 1,277,209 $ 1,142,940 Percentage of total amortized cost — % 4.4 % 28.7 % 57.2 % 9.8 % 100.1 % December 31, 2024 1 Year or Less 1 Year Through 5 Years 5 Years Through 10 Years Over 10 Years Monthly Amortizing Securities Tax Equivalent Yield (Dollars in thousands) Available-for-sale U.S. government-sponsored enterprises 0.76 % 2.40 % 4.10 % 5.87 % — % 3.49 % U.S. government-sponsored mortgage-backed securities — — — — 2.70 2.70 Private mortgage-backed securities — — — — 3.81 3.81 Non-government-sponsored asset backed securities — — — — 5.02 5.02 State and political subdivisions 3.34 3.03 3.74 2.88 — 3.04 Other securities — 4.18 4.32 4.97 — 4.31 Held-to-maturity U.S. government-sponsored enterprises — % 2.42 % 3.34 % — % — % 3.03 % U.S. government-sponsored mortgage-backed securities — — — — 4.30 4.30 State and political subdivisions — 3.19 3.38 3.72 — 3.60 December 31, 2023 1 Year or Less 1 Year Through 5 Years 5 Years Through 10 Years Over 10 Years Monthly Amortizing Securities Total Amortized Cost Total Fair Value (Dollars in thousands) Available-for-sale U.S. government-sponsored enterprises $ 16,787 $ 131,363 $ 117,199 $ 96,145 $ — $ 361,494 $ 346,648 U.S. government-sponsored mortgage-backed securities — — — — 1,711,668 1,711,668 1,520,421 Private mortgage-backed securities — — — — 191,522 191,522 175,405 Non-government-sponsored asset backed securities — — — — 370,203 370,203 363,473 State and political subdivisions 2,540 41,095 130,784 815,899 — 990,318 916,325 Other securities — 52,328 153,020 10,374 — 215,722 185,569 Total $ 19,327 $ 224,786 $ 401,003 $ 922,418 $ 2,273,393 $ 3,840,927 $ 3,507,841 Percentage of total amortized cost 0.5 % 5.9 % 10.4 % 24.0 % 59.2 % 100.0 % 74 Table of Contents December 31, 2023 1 Year or Less 1 Year Through 5 Years 5 Years Through 10 Years Over 10 Years Monthly Amortizing Securities Total Amortized Cost Total Fair Value (Dollars in thousands) Held-to-maturity U.S. government-sponsored enterprises $ — $ 9,510 $ 33,775 $ — $ — $ 43,285 $ 40,678 U.S. government-sponsored mortgage-backed securities — — — — 130,278 130,278 126,022 State and political subdivisions — 17,988 272,169 820,267 — 1,110,424 1,003,781 Other securities — — — — — — — Total $ — $ 27,498 $ 305,944 $ 820,267 $ 130,278 $ 1,283,987 $ 1,170,481 Percentage of total amortized cost — % 2.1 % 23.8 % 63.9 % 10.2 % 100.0 % December 31, 2023 1 Year or Less 1 Year Through 5 Years 5 Years Through 10 Years Over 10 Years Monthly Amortizing Securities Tax Equivalent Yield (Dollars in thousands) Available-for-sale U.S. government-sponsored enterprises 1.79 % 2.53 % 3.65 % 6.04 % — % 3.79 % U.S. government-sponsored mortgage-backed securities — — — — 2.63 2.63 Private mortgage-backed securities — — — — 3.87 3.87 Non-government-sponsored asset backed securities — — — — 6.41 6.41 State and political subdivisions 3.88 3.00 3.14 2.83 — 2.88 Other securities — 3.99 4.19 4.75 — 4.17 Held-to-maturity U.S. government-sponsored enterprises — % 2.45 % 3.20 % — % — % 3.04 % U.S. government-sponsored mortgage-backed securities — — — — 4.22 4.22 State and political subdivisions — 3.04 3.22 3.51 — 3.43 The weighted average tax-equivalent yield is calculated by multiplying the carried book value by the tax-equivalent yield for each security and is then grouped by investment type and maturity.
This consisted of a $12.0 million provision for credit losses on loans, a $1.7 million provision for credit losses on investment securities and a reversal of $1.5 million provision for unfunded commitments.
This consisted of a $12.0 million provision for credit losses on loans, a $1.7 million provision for credit losses on investment securities and a reversal of a $1.5 million provision for unfunded commitments.
Our net interest margin on a fully taxable equivalent basis increased from 3.81% for the year ended December 31, 2022 to 4.25% for the year ended December 31, 2023.
Our net interest margin on a fully taxable equivalent basis increased from 3.81% for the year ended December 31, 2022 to 4.25% for the year ended December 31, 2023.
The decrease in average interest earning assets is primarily due to a $2.12 billion decrease in average interest-bearing balances due from banks, which was partially offset by a $1.37 billion increase in average loans receivable and a $171.0 million increase in average investment securities.
The decrease in average interest earning assets is primarily due to a $2.12 billion decrease in average interest-bearing balances due from banks, which was partially offset by a $1.37 billion increase in average loans receivable and a $171.0 million increase in average investment securities.
For the years ended December 31, 2023 and 2022, we recognized $10.6 million and $16.3 million, respectively, in total net accretion for acquired loans and deposits. The reduction in accretion was dilutive to the net interest margin by approximately 3 basis points.
For the years ended December 31, 2023 and 2022, we recognized $10.6 million and $16.3 million, respectively, in total net accretion for acquired loans and deposits. The reduction in accretion was dilutive to the net interest margin by approximately 3 basis points.
The decrease in total assets is primarily due to a $539.5 million decrease in investment securities resulting from paydowns and maturities, which was partially offset by a $275.4 million increase in cash and cash equivalents during the year.
The decrease in total assets is primarily due to a $539.5 million decrease in investment securities resulting from paydowns and maturities, which was partially offset by a $275.4 million increase in cash and cash equivalents during the year.
The increase in stockholders’ equity is primarily associated with the $392.9 million in net income and the $56.4 million increase in accumulated other comprehensive income, which were partially offset by the $145.9 million of shareholder dividends paid and the repurchase of $48.3 million of our common stock during 2023.
The increase in stockholders’ equity is primarily associated with the $392.9 million in net income and the $56.4 million increase in accumulated other comprehensive income, which were partially offset by the $145.9 million of shareholder dividends paid and the repurchase of $48.3 million of our common stock during 2023.
The loans are not current on either principal or interest, and we have reversed any interest that had accrued subsequent to the non-accrual date designated by the Federal Reserve. Any interest payments that are received will be applied to the principal balance.
The loans are not current on either principal or interest, and we have reversed any interest that had accrued subsequent to the non-accrual date designated by the Federal Reserve. Any interest payments that are received will be applied to the principal balance.
Unless the context requires otherwise, the terms “Company,” “HBI,” “us,” “we” and “our” refer to Home BancShares, Inc. on a consolidated basis. General We are a bank holding company headquartered in Conway, Arkansas, offering a broad array of financial services through our wholly owned bank subsidiary, Centennial Bank (“Centennial”).
Unless the context requires otherwise, the terms “Company,” “HBI,” “us,” “we” and “our” refer to Home BancShares, Inc. on a consolidated basis. General We are a bank holding company headquartered in Conway, Arkansas, offering a broad array of financial services through our wholly owned bank subsidiary, Centennial Bank (“Centennial” or the "Bank").
Our loan portfolio balance increased $15.2 million to $14.42 billion as of December 31, 2023, from $14.41 billion as of December 31, 2022. The increase in loans was due to $340.4 million in organic loan growth within our legacy footprint, which was partially offset by $325.2 million of organic loan decline from our Centennial CFG franchise during 2023.
Our loan portfolio balance increased $15.2 million to $14.42 billion as of December 31, 2023, from $14.41 billion as of December 31, 2022. The increase in loans was due to $340.4 million in organic loan growth within our legacy footprint, which was partially offset by $325.2 million of organic loan decline from our CFG franchise during 2023.
Our capital amounts and classifications are also subject to qualitative judgments by the regulators as to components, risk weightings and other factors. 80 Table of Contents In July 2013, the Federal Reserve Board and the other federal bank regulatory agencies issued a final rule to revise their risk-based and leverage capital requirements and their method for calculating risk-weighted assets to make them consistent with the agreements that were reached by the Basel Committee on Banking Supervision in “Basel III: A Global Regulatory Framework for More Resilient Banks and Banking Systems” and certain provisions of the Dodd-Frank Act (“Basel III”).
Our capital amounts and classifications are also subject to qualitative judgments by the regulators as to components, risk weightings and other factors. 79 Table of Contents In July 2013, the Federal Reserve Board and the other federal bank regulatory agencies issued a final rule to revise their risk-based and leverage capital requirements and their method for calculating risk-weighted assets to make them consistent with the agreements that were reached by the Basel Committee on Banking Supervision in “Basel III: A Global Regulatory Framework for More Resilient Banks and Banking Systems” and certain provisions of the Dodd-Frank Act (“Basel III”).
Additional details for the year ended December 31, 2023 on some of the more significant changes are as follows: • The $18.1 million increase in salaries and employee benefits expense is primarily due to the acquisition of Happy. • The $6.9 million increase in occupancy and equipment expense is primarily due to increases in depreciation on buildings, machinery and equipment; utility expenses; lease expense; equipment maintenance and repairs; janitorial expenses; property taxes and other occupancy expenses related to the acquisition of Happy. • The $1.4 million increase in data processing expense is primarily due to increases in telecommunication fees, depreciation of equipment and software, software licensing subscriptions, core processing expenses and computer expenses related to the acquisition of Happy. • The $49.6 million decrease in merger and acquisition expense is due to costs associated with the acquisition of Happy. 57 Table of Contents • The $876,000 increase in advertising expense is primarily related to the acquisition of Happy. • The $832,000 increase in amortization of intangibles is due to the acquisition of Happy. • The $17.1 million increase in FDIC and state assessment expense is primarily due to the FDIC special assessment during the fourth quarter of 2023 and the acquisition of Happy during the second quarter of 2022.
Additional details for the year ended December 31, 2023 on some of the more significant changes are as follows: • The $18.1 million increase in salaries and employee benefits expense is primarily due to the acquisition of Happy. • The $6.9 million increase in occupancy and equipment expense is primarily due to increases in depreciation on buildings, machinery and equipment; utility expenses; lease expense; equipment maintenance and repairs; janitorial expenses; property taxes and other occupancy expenses related to the acquisition of Happy. • The $1.4 million increase in data processing expense is primarily due to increases in telecommunication fees, depreciation of equipment and software, software licensing subscriptions, core processing expenses and computer expenses related to the acquisition of Happy. • The $49.6 million decrease in merger and acquisition expense is due to costs associated with the acquisition of Happy. • The $876,000 increase in advertising expense is primarily related to the acquisition of Happy. • The $832,000 increase in amortization of intangibles is due to the acquisition of Happy. • The $17.1 million increase in FDIC and state assessment expense is primarily due to the FDIC special assessment during the fourth quarter of 2023 and the acquisition of Happy during the second quarter of 2022.
Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. 67 Table of Contents Loans are placed on non-accrual status when management believes that the borrower’s financial condition, after giving consideration to economic and business conditions and collection efforts, is such that collection of interest is doubtful, or generally when loans are 90 days or more past due.
Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. 47 Table of Contents 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.
On April 1, 2022, the Company acquired $140.0 million in aggregate principal amount of 5.500% Fixed-to-Floating Rate Subordinated Notes due 2030 from Happy, and the Company recorded approximately $144.4 million which included fair value adjustments. The 2030 Notes are unsecured, subordinated debt obligations of the Company and will mature on July 31, 2030.
On April 1, 2022, the Company acquired $140.0 million in aggregate principal amount of 5.500% Fixed-to-Floating Rate Subordinated Notes due 2030 (the “2030 Notes”) from Happy, and the Company recorded approximately $144.4 million which included fair value adjustments.. The 2030 Notes are unsecured, subordinated debt obligations of the Company and will mature on July 31, 2030.
Therefore, the total commitment does not necessarily represent future requirements. 83 Table of Contents Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to support public and private borrowing arrangements, including commercial paper, bond financing and similar transactions.
Therefore, the total commitment does not necessarily represent future requirements. 82 Table of Contents Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to support public and private borrowing arrangements, including commercial paper, bond financing and similar transactions.
Our return on average common equity was 10.82% for the year ended December 31, 2023, compared to 9.17% for the same period in 2022. 41 Table of Contents Financial Condition as of and for the Years Ended December 31, 2023 and 2022 Our total assets as of December 31, 2023 decreased $226.9 million to $22.66 billion from the $22.88 billion reported as of December 31, 2022.
Our return on average common equity was 10.82% for the year ended December 31, 2023, compared to 9.17% for the same period in 2022. 43 Table of Contents Financial Condition as of and for the Years Ended December 31, 2023 and 2022 Our total assets as of December 31, 2023 decreased $226.9 million to $22.66 billion from the $22.88 billion reported as of December 31, 2022.
The improvement in stockholders’ equity was 7.5% for the year ended December 31, 2023 compared to December 31, 2022. As of December 31, 2023, our non-performing loans increased to $64.1 million, or 0.44%, of total loans from $60.9 million, or 0.42%, of total loans as of December 31, 2022.
The improvement in stockholders’ equity was 7.5% for the year ended D ecember 31, 2023 compared to December 31, 2022. As of December 31, 2023, our non-performing loans increased to $64.1 million, or 0.44%, of total loans from $60.9 million, or 0.42%, of total loans as of December 31, 2022.
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 noncredit discount or premium, which is amortized into interest income over the life of the loan.
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.
Tables 2 and 3 reflect an analysis of net interest income on a fully taxable equivalent basis for the years ended December 31, 2023, 2022 and 2021, as well as changes in fully taxable equivalent net interest margin for the years 2023 compared to 2022 and 2022 compared to 2021.
Tables 2 and 3 reflect an analysis of net interest income on a fully taxable equivalent basis for the years ended December 31, 2024, 2023 and 2022, as well as changes in fully taxable equivalent net interest margin for the years 2024 compared to 2023 and 2023 compared to 2022.
The $13.0 million FDIC special assessment was levied in order to recover the losses to the Deposit Insurance Fund associated with protecting uninsured depositors following the closures of Silicon Valley Bank and Signature Bank. • The $4.2 million decrease in legal and accounting expense is primarily due to expenses related to a lawsuit brought by the Company which were incurred in 2022. • The $5.1 million increase in other expenses is primarily related to the acquisition of Happy, partially offset by the reduction of $2.1 million in TRUPS redemption fees which were incurred in 2022.
The $13.0 million FDIC special assessment was levied in order to recover the losses to the Deposit Insurance Fund associated with protecting uninsured depositors following the closures of Silicon Valley Bank and Signature Bank. • The $4.2 million decrease in legal and accounting expense is primarily due to expenses related to a lawsuit brought by the Company which were incurred in 2022. • The $5.1 million increase in other expenses is primarily related to the acquisition of Happy, partially offset by the reduction of $2.1 million in trust preferred securities redemption fees which were incurred in 2022.
The yield on interest earning assets was 6.03% and 4.40% for the years ended December 31, 2023 and 2022, respectively, as average interest earning assets decreased from $20.15 billion to $19.57 billion.
The yield on interest earning assets was 6.03% and 4.40% for the year ended December 31, 2023 and 2022, respectively, as average interest earning assets decreased from $20.15 billion to $19.57 billion.
It also applies to off-balance sheet credit exposures not accounted for as insurance (loan commitments, standby letters of credits, financial guarantees, and other similar instruments) and net investments in leases recognized by a lessor in accordance with Topic 842 on leases. Investments – Available-for-sale .
It also applies to off-balance sheet credit exposures not accounted for as insurance (loan commitments, standby letters of credits, financial guarantees, and other similar instruments) and net investments in leases recognized by a lessor in accordance with Topic 842 on leases. 45 Table of Contents Investments – Available-for-sale .
Government and other depository institutions. Our policy also permits the acceptance of brokered deposits. From time to time, when appropriate in order to fund strong loan demand, we accept brokered time deposits, generally in denominations of less than $250,000, from a regional brokerage firm, and other national brokerage networks.
Government and other depository institutions. 75 Table of Contents Our policy also permits the acceptance of brokered deposits. From time to time, when appropriate in order to fund strong loan demand, we accept brokered time deposits, generally in denominations of less than $250,000, from a regional brokerage firm, and other national brokerage networks.
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 DCF method to estimate expected losses for all of Company’s loan pools.
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 Company’s loan pools.
Table 7 below sets forth a summary of non-interest expense for the years ended December 31, 2023, 2022, and 2021, as well as changes for the years ended 2023 compared to 2022 and 2022 compared to 2021.
Table 7 below sets forth a summary of non-interest expense for the years ended December 31, 2024, 2023, and 2022, as well as changes for the years ended 2024 compared to 2023 and 2023 compared to 2022.
Subsequent changes to the allowance for credit losses are recorded through the provision for credit loss.
Subsequent changes to the allowance for credit losses are recorded through the provision for credit losses.
Expected maturities could differ from contractual maturities because the FHLB has have the right to call or the Company has the right to prepay certain obligations. Other borrowed funds were $701.3 million as of December 31, 2023 and were classified as short-term advances.
Expected maturities could differ from contractual maturities because the FHLB has have the right to call or the Company has the right to prepay certain obligations. Other borrowed funds were $750,000 as of December 31, 2024 and were classified as short-term advances. Other borrowed funds were $701.3 million as of December 31, 2023 and were classified as short-term advances.
Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis presents our consolidated financial condition and results of operations for the years ended December 31, 2023, 2022 and 2021.
Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis presents our consolidated financial condition and results of operations for the years ended December 31, 2024, 2023 and 2022.
We recognize compensation expense for the grant-date fair value of the option award over the vesting period of the award. 48 Table of Contents Acquisitions Acquisition of Happy Bancshares, Inc. On April 1, 2022, the Company completed the acquisition of Happy Bancshares, Inc., and merged Happy State Bank into Centennial Bank.
We recognize compensation expense for the grant-date fair value of the option award over the vesting period of the award. Acquisitions Acquisition of Happy Bancshares, Inc. On April 1, 2022, the Company completed the acquisition of Happy Bancshares, Inc. ("Happy"), and merged Happy State Bank into Centennial Bank.
These non-GAAP financial measures are also used by management to assess the performance of our business, because management does not consider these items to be relevant to ongoing financial performance. 84 Table of Contents In Table 24 below, we have provided a reconciliation of the non-GAAP calculation of the financial measure for the periods indicated.
These non-GAAP financial measures are also used by management to assess the performance of our business, because management does not consider these items to be relevant to ongoing financial performance. 83 Table of Contents In Table 26 below, we have provided a reconciliation of the non-GAAP calculation of the financial measure for the periods indicated.
In addition, the $22.8 million balance of foreclosed assets held for sale for our Centennial CFG Property Finance Group consists of an office building located in California which was placed in foreclosed assets held for sale during the fourth quarter of 2023. This represents the largest component of the Company's $30.5 million in foreclosed assets held for sale.
In addition, the $22.8 million balance of foreclosed assets held for sale for our Centennial CFG Property Finance Group consists of an office building located in California which was placed in foreclosed assets held for sale during the fourth quarter of 2023. This represents the largest component of the Company's $43.4 million in foreclosed assets held for sale.
The management fees are percentage based, flat, percentage of income or a fixed percentage calculated upon the average balance of assets depending upon account type. Fees are collected on a monthly or annual basis. 45 Table of Contents Credit Losses .
The management fees are percentage based, flat, percentage of income or a fixed percentage calculated upon the average balance of assets depending upon account type. Fees are collected on a monthly or annual basis. Credit Losses .
In Table 29 below, we have provided a reconciliation of the non-GAAP calculation of the financial measure for the periods indicated.
In Table 31 below, we have provided a reconciliation of the non-GAAP calculation of the financial measure for the periods indicated.
In an effort to more accurately reflect legislative and current state income apportionment, the state tax rate was increased to 5.049%. This raised the blended rate to 24.989%. During 2022, the Company lowered its marginal tax rate from 25.740% to 24.6735%.
In an effort to more accurately reflect legislative and current state income apportionment, the state tax rate was increased to 5.049%. This raised the blended rate to 24.989%. 57 Table of Contents During 2022, the Company lowered its marginal tax rate from 25.740% to 24.6735%.
Deposits and FHLB borrowed funds are our primary source of funding. Our largest expenses are interest on our funding sources, salaries and related employee benefits and occupancy and equipment. We measure our performance by calculating our net interest margin, return on average assets and return on average common equity.
Deposits and Federal Home Loan Bank ("FHLB") borrowed funds are our primary source of funding. Our largest expenses are interest on our funding sources, salaries and related employee benefits and occupancy and equipment. We measure our performance by calculating our net interest margin, return on average assets and return on average common equity.
This is usually established over a period of 6-12 months of timely payment performance. 69 Table of Contents Table 14 shows the allowance for credit losses, charge-offs and recoveries for loans as of and for the years ended December 31, 2023 and 2022.
This is usually established over a period of 6-12 months of timely payment performance. 69 Table of Contents Table 16 shows the allowance for credit losses, charge-offs and recoveries for loans as of and for the years ended December 31, 2024 and 2023.
Centennial CFG loan fees were $9.9 million and $11.8 million for the years ended December 31, 2023 and December 31, 2022, respectively. • Trust fees - The Company enters into contracts with its customers to manage assets for investment, and/or transact on their accounts. The Company generally satisfies its performance obligations as services are rendered.
Centennial CFG loan fees were $9.5 million and $9.9 million for the years ended December 31, 2024 and December 31, 2023, respectively. • Trust fees - The Company enters into contracts with its customers to manage assets for investment, and/or transact on their accounts. The Company generally satisfies its performance obligations as services are rendered.
The overall increase in the net interest margin was due to a decrease in average interest-bearing cash balances as well as an increase in interest income from higher yields on average interest-earning assets, partially offset by an increase in interest expense due to an increase in average interest-bearing liabilities at higher interest rates primarily as a result of the Happy acquisition and the current rising interest rate environment.
The overall increase in the net interest margin was due to a decrease in average interest-bearing cash balances as well as an increase in interest income from higher yields on average interest-earning assets, partially offset by an increase in interest expense due to an increase in average interest-bearing liabilities at higher interest rates primarily as a result of the Happy Bancshares, Inc. acquisition and the increased interest rate environment.
Branches As opportunities arise, we will continue to open new (commonly referred to as de novo ) branches in our current markets and in other attractive market areas. As of December 31, 2023, we had 223 branch locations.
Branches As opportunities arise, we will continue to open new (commonly referred to as de novo ) branches in our current markets and in other attractive market areas. As of December 31, 2024, we had 218 branch locations.
We will continue to manage interest expense through deposit pricing. We may allow higher rate deposits to run off during periods of limited loan demand. We believe that additional funds can be attracted, and deposit growth can be realized through deposit pricing if we experience increased loan demand or other liquidity needs.
We may allow higher rate deposits to run off during periods of limited loan demand. We believe that additional funds can be attracted, and deposit growth can be realized through deposit pricing if we experience increased loan demand or other liquidity needs.
These calculations, which are similar to the GAAP calculation of diluted earnings per common share, book value, return on average assets, return on average equity, and equity to assets, are presented in Tables 25 through 28, respectively.
These calculations, which are similar to the GAAP calculation of diluted earnings per common share, book value, return on average assets, return on average equity, and equity to assets, are presented in Tables 27 through 30, respectively.
The adjustment to convert certain income to a fully taxable equivalent basis consists of dividing tax-exempt income by one minus the combined federal and state income tax rate (24.989% for the year ended December 31, 2023, 24.6735% for the year ended December 31, 2022 and 25.740% for year ended December 31, 2021).
The adjustment to convert certain income to a fully taxable equivalent basis consists of dividing tax-exempt income by one minus the combined federal and state income tax rate (24.433% for the year ended December 31, 2024, 24.989% for the year ended December 31, 2023 and 24.6735% for year ended December 31, 2022).
The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans to customers. The Company had total outstanding letters of credit amounting to $185.5 million and $184.6 million at December 31, 2023 and 2022, respectively, with the majority of maturities ranging from currently due to four years.
The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans to customers. The Company had total outstanding letters of credit amounting to $153.9 million and $185.5 million at December 31, 2024 and 2023, respectively, with the majority of maturities ranging from currently due to four years.
Centennial CFG loan fees are based on loan or other negotiated agreements with customers and are accounted for under ASC Topic 310. Interchange fees were $22.6 million and $22.1 million for the years ended December 31, 2023 and December 31, 2022, respectively.
Centennial CFG loan fees are based on loan or other negotiated agreements with customers and are accounted for under ASC Topic 310. Interchange fees were $21.8 million and $22.6 million for the years ended December 31, 2024 and December 31, 2023, respectively.
The first was a $3.1 million charge-off for a commercial and industrial loan in our Centennial CFG market, and the second was a $1.5 million charge-off for a commercial real estate loan in our Florida market. While the 2022 charge-offs and recoveries consisted of many relationships, there were three individual relationships consisting of charge-offs greater than $1.0 million.
While the 2023 charge-offs and recoveries consisted of many relationships, there were two individual relationships that consisted of charge-offs greater than $1.0 million. The first was a $3.1 million charge-off for a commercial and industrial loan in our Centennial CFG market, and the second was a $1.5 million charge-off for a commercial real estate loan in our Florida market.
During the year ended December 31, 2023, the Company recorded $13.0 million in Federal Deposit Insurance Corporation ("FDIC") special assessment expense and $1.1 million loss for the decrease in fair value of marketable securities, which were partially offset by $3.5 million in recoveries on historic losses from loans charged off prior to acquisition and $3.1 million in bank owned life insurance ("BOLI") death benefits.
During the year ended December 31, 2023, the Company recorded $13.0 million in FDIC special assessment expense and a $1.1 million loss for the decrease in fair value of marketable securities, which were partially offset by $3.5 million in recoveries on historic losses from loans charged off prior to acquisition and $3.1 million in BOLI death benefits.
Our efficiency ratio was 46.21% for the year ended December 31, 2023, compared to 49.53% for the same period in 2022. For the year ended December 31, 2023, our efficiency ratio, as adjusted (non-GAAP), was 45.24%, compared to 44.55% reported for the year ended December 31, 2022. (See Table 29 for the non-GAAP tabular reconciliation).
Our efficiency ratio was 46.21% for the year ended December 31, 2023, compared to 49.53% for the same period in 2022. For the year ended December 31, 2023, our efficiency ratio, as adjusted (non-GAAP), was 45.24%, compared to 44.55% reported for the year ended December 31, 2022.
Our return on average assets was 1.77% for the year ended December 31, 2023, compared to 1.35% for the same period in 2022, and our return on average assets, as adjusted (non-GAAP) was 1.79% or the year ended December 31, 2023, compared to 1.67% for the same period in 2022.
(See Table 29 for the non-GAAP tabular reconciliation.) Our return on average assets was 1.77% for the year ended December 31, 2023, compared to 1.35% for the same period in 2022, and our return on average assets, as adjusted (non-GAAP), was 1.79% or the year ended December 31, 2023, compared to 1.67% for the same period in 2022.
At December 31, 2023, we held $2.12 billion in assets that could be used for liquidity purposes, which we refer to as net available internal liquidity.
At December 31, 2024, we held $2.45 billion in assets that could be used for liquidity purposes, which we refer to as net available internal liquidity.
The primary factors that resulted in this decrease was the decrease in merger expense, partially offset by increases in salaries and employee benefits expense and FDIC and state assessment expense. Other factors were changes related to occupancy and equipment expenses, data processing expenses, advertising expenses, amortization of intangibles, legal and accounting expenses and other expense.
The primary factors that resulted in this decrease was the decrease in salaries and employee benefits expense and FDIC and state assessment expense, partially offset by the increases in legal and accounting fees and other expenses. Other factors were changes related to occupancy and equipment expenses, advertising expenses, amortization of intangibles, electronic banking expense and other professional fees.
We declared cash dividends on our common stock of $0.72, $0.66 and $0.56 per share for the years ended December 31, 2023, 2022 and 2021, respectively. The common stock dividend payout ratio for the year ended December 31, 2023, 2022 and 2021 was 37.13%, 42.07% and 28.88% respectively. Stock Repurchase Program.
We declared cash dividends on our common stock of $0.75, $0.72 and $0.66 per share for the years ended December 31, 2024, 2023 and 2022, respectively. The common stock dividend payout ratio for the year ended December 31, 2024, 2023 and 2022 was 37.29%, 37.13% and 42.07% respectively. Stock Repurchase Program.
Credit Loss Expense : During the year ended December 31, 2023, the Company recorded a $12.0 million provision for credit losses on loans, a $1.7 million provision for credit losses on investment securities and a recovery of $1.5 million provision for unfunded commitments.
The Company recorded $12.1 million in credit loss expense for the year ended December 31, 2023. This consisted of a $12.0 million provision for credit losses on loans, a $1.7 million provision for credit losses on investment securities and a reversal of a $1.5 million provision for unfunded commitments.
The percentage of the allowance for credit losses allocated to loans receivable collectively evaluated for credit loss to the total loans collectively evaluated for impairment increased from 1.82% at December 31, 2022 to 1.98% at December 31, 2023. Charge-offs and Recoveries.
The percentage of the allowance for credit losses allocated to loans receivable collectively evaluated for credit loss to the total loans collectively evaluated for impairment decreased from 1.98% at December 31, 2023 to 1.73% at December 31, 2024. Charge-offs and Recoveries.
Investment Securities Our securities portfolio is the second largest component of earning assets and provides a significant source of revenue. Securities within the portfolio are classified as held-to-maturity, available-for-sale, or trading based on the intent and objective of the investment and the ability to hold to maturity. Fair values of securities are based on quoted market prices where available.
Investment Securities Our securities portfolio is the second largest component of earning assets and provides a significant source of revenue. Securities within the portfolio are classified as held-to-maturity ("HTM"), available-for-sale ("AFS"), or trading based on the intent and objective of the investment and the ability to hold to maturity.
At December 31, 2022, $50.0 million and $600.0 million of the outstanding balance was 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% and are secured by loans and investments securities.
At December 31, 2023, the entire $600.0 million balance was classified as long-term advances. The FHLB advances mature from 2025 to 2037 with fixed interest rates ranging from 3.37% to 4.84% and are secured by loans and investments securities.
We had $1.45 billion, $1.46 billion and $998.1 million total goodwill, core deposit intangibles and other intangible assets as of December 31, 2023, 2022 and 2021, respectively.
We had $1.44 billion, $1.45 billion and $1.46 billion total goodwill, core deposit intangibles and other intangible assets as of December 31, 2024, 2023 and 2022, respectively.
From and including January 30, 2027 to, but excluding, the maturity date or earlier redemption, the 2032 Notes will bear interest at a floating rate equal to the Benchmark rate (which is expected to be Three-Month Term SOFR)), each as defined in and subject to the provisions of the applicable supplemental indenture for the 2032 Notes, plus 182 basis points, payable quarterly in arrears on January 30, April 30, July 30, and October 30 of each year, commencing on April 30, 2027. 78 Table of Contents The Company may, beginning with the interest payment date of January 30, 2027 , and on any interest payment date thereafter, redeem the 2032 Notes, in whole or in part, subject to prior approval of the Federal Reserve if then required, at a redemption price equal to 100% of the principal amount of the 2032 Notes to be redeemed plus accrued and unpaid interest to but excluding the date of redemption.
From and including July 31, 2025 to, but excluding, the maturity date or earlier redemption, the 2030 Notes will bear interest at a floating rate equal to the Benchmark rate (which is expected to be 3-month Secured Overnight Funding Rate (SOFR)), each as defined in and subject to the provisions of the applicable supplemental indenture for the 2030 Notes, plus 5.345%, payable quarterly in arrears on January 31, April 30, July 31, and October 31 of each year, commencing on October 31, 2025. 77 Table of Contents The Company may, beginning with the interest payment date of July 31, 2025, and on any interest payment date thereafter, redeem the 2030 Notes, in whole or in part, subject to prior approval of the Federal Reserve if then required, at a redemption price equal to 100% of the principal amount of the 2030 Notes to be redeemed plus accrued and unpaid interest to but excluding the date of redemption.
Table 22 presents actual capital amounts and ratios as of December 31, 2023 and 2022, for our bank subsidiary and us.
Table 24 presents actual capital amounts and ratios as of December 31, 2024 and 2023, for our bank subsidiary and us.
Table 23 presents the anticipated funding requirements of our most significant financial commitments, excluding interest, as of December 31, 2023.
Table 25 presents the anticipated funding requirements of our most significant financial commitments, excluding interest, as of December 31, 2024.
As result, the Company wrote down the value of the investment to its unrealized loss position, which required a $1.7 million provision. The remaining $842,000 allowance for credit losses on AFS investments is associated with certain securities in the subordinated debt portfolio within the banking sector. These investments are classified within the other securities category of the AFS portfolio.
As result, the Company wrote down the value of the investment to its unrealized loss position, which required a $1.7 million provision, but the remaining $842,000 allowance for credit losses on AFS investments associated with certain securities in the subordinated debt portfolio within the banking sector was considered adequate.
Under this method, the net deferred tax asset or liability is based on the tax effects of the differences between the book and tax basis of assets and liabilities, and enacted changes in tax rates and laws are recognized in the period in which they occur.
Under this method, the net deferred tax asset or liability is based on the tax effects of the differences between the book and tax basis of assets and liabilities, and enacted changes in tax rates and laws are recognized in the period in which they occur. 48 Table of Contents Deferred income tax expense results from changes in deferred tax assets and liabilities between periods.
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, housing price indices and rental vacancy rate index. 53 Table of Contents Acquired loans .
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.
Financial Condition as of and for the Years Ended December 31, 2023 and 2022 Our total assets as of December 31, 2023 decreased $226.9 million to $22.66 billion from the $22.88 billion reported as of December 31, 2022.
Financial Condition as of and for the Years Ended December 31, 2024 and 2023 Our total assets as of December 31, 2024 decreased $165.9 million to $22.49 billion from the $22.66 billion reported as of December 31, 2023.
As of December 31, 2023, $175.4 million, or 5.0%, of our available-for-sale securities were invested in private mortgage-backed securities, compared to $179.1 million, or 4.4%, of our available-for-sale securities as of December 31, 2022.
As of December 31, 2024, $171.4 million, or 5.6%, of our available-for-sale securities were invested in private mortgage-backed securities, compared to $175.4 million, or 5.0%, of our available-for-sale securities as of December 31, 2023.
To reduce our income tax burden, $916.3 million, or 26.1%, of our available-for-sale securities portfolio as of December 31, 2023, were primarily invested in tax-exempt obligations of state and political subdivisions, compared to $906.3 million, or 22.4%, of our available-for-sale securities as of December 31, 2022. We had $346.6 million, or 9.9%, invested in obligations of U.S.
To reduce our income tax burden, $870.4 million, or 28.3%, of our available-for-sale securities portfolio as of December 31, 2024, were primarily invested in tax-exempt obligations of state and political subdivisions, compared to $916.3 million, or 26.1%, of our available-for-sale securities as of December 31, 2023. We had $284.8 million, or 9.3%, invested in obligations of U.S.
As of December 31, 2023, we had, on a consolidated basis, total assets of $22.66 billion, loans receivable, net, of $14.14 billion, total deposits of $16.79 billion, and stockholders’ equity of $3.79 billion. We generate most of our revenue from interest on loans and investments, service charges, and mortgage banking income.
As of December 31, 2024, we had, on a consolidated basis, total assets of $22.49 billion, loans receivable, net, of $14.49 billion, total deposits of $17.15 billion, and stockholders’ equity of $3.96 billion. We generate most of our revenue from interest on loans and investments, service charges, and mortgage banking income.
Total charge-offs decreased to $16.1 million for the year ended December 31, 2023, compared to $17.3 million for the year ended December 31, 2022. Total recoveries decreased to $2.7 million for the year ended December 31, 2023, compared to $3.2 million for the same period in 2022.
Total charge-offs increased to $63.0 million for the year ended December 31, 2024, compared to $16.1 million for the year ended December 31, 2023. Total recoveries decreased to $2.3 million for the year ended December 31, 2024, compared to $2.7 million for the same period in 2023.
On a diluted earnings per share basis, our earnings were $1.94 per share for the year ended December 31, 2023 and $1.57 per share for the year ended December 31, 2022. The Company recorded $12.1 million in credit loss expense for the year ended December 31, 2023.
On a diluted earnings per share basis, our earnings were $2.01 per share for the year ended December 31, 2024 and $1.94 per share for the year ended December 31, 2023. The Company recorded $48.1 million in credit loss expense for the year ended December 31, 2024.
Available-for-sale securities were $3.51 billion and $4.04 billion as of December 31, 2023 and 2022, respectively. 71 Table of Contents As of December 31, 2023, $1.52 billion, or 43.3%, of our available-for-sale securities were invested in U.S. government-sponsored mortgage-backed securities, compared to $1.69 billion, or 41.7%, of our available-for-sale securities as of December 31, 2022.
Available-for-sale securities were $3.07 billion and $3.51 billion as of December 31, 2024 and 2023, respectively. 71 Table of Contents As of December 31, 2024, $1.32 billion, or 43.1%, of our available-for-sale securities were invested in U.S. government-sponsored mortgage-backed securities, compared to $1.52 billion, or 43.3%, of our available-for-sale securities as of December 31, 2023.
The amounts advanced under resale agreements and the amounts borrowed under repurchase agreements are carried on the balance sheet at the amount advanced. Interest incurred on repurchase agreements is reported as interest expense. Securities sold under agreements to repurchase increased $10.9 million, or 8.3%, from $131.1 million as of December 31, 2022 to $142.1 million as of December 31, 2023.
The amounts advanced under resale agreements and the amounts borrowed under repurchase agreements are carried on the balance sheet at the amount advanced. Interest incurred on repurchase agreements is reported as interest expense. Securities sold under agreements to repurchase increased $20.3 million, or 14.3%, from $142.1 million as of December 31, 2023 to $162.4 million as of December 31, 2024.
The improvement in stockholders’ equity was 7.5% for the year ended December 31, 2023 compared to December 31, 2022. As of December 31, 2023 and 2022, our equity to asset ratio was 16.73% and 15.41%, respectively. Book value per common share was $18.81 at December 31, 2023 compared to $17.33 at December 31, 2022. Common Stock Cash Dividends.
The improvement in stockholders’ equity was 4.5% for the year ended December 31, 2024 compared to December 31, 2023. As of December 31, 2024 and 2023, our equity to asset ratio was 17.61% and 16.73%, respectively. Book value per common share was $19.92 at December 31, 2024 compared to $18.81 at December 31, 2023. Common Stock Cash Dividends.
If quoted market prices are not available, estimated fair values are based on quoted market prices of comparable securities. The estimated effective duration of our securities portfolio was 5.07 years as of December 31, 2023.
Fair values of securities are based on quoted market prices where available. If quoted market prices are not available, estimated fair values are based on quoted market prices of comparable securities. The estimated effective duration of our securities portfolio was 4.8 years as of December 31, 2024.
The decrease in volume is due to the increase in interest rates. 55 Table of Contents • The $855,000 increase in cash value of life insurance is primarily related to the increase in bank owned life insurance resulting from the acquisition of Happy. • The $2.4 million increase in dividends from FHLB, FRB, FNBB & other is primarily due to an increase in dividend income from FHLB and FRB stock holdings related to the acquisition of Happy and an increase in dividends on marketable securities, partially offset by a lower volume of dividends from equity investments. • The $1.5 million increase in gain on sale of branches, equipment and other assets, net, is primarily due to the sales of buildings in Texas and Florida in 2023. • The $9.8 million decrease in other income is primarily due to the $15.0 million in income in 2022 from the settlement of a lawsuit brought by the Company and a $6.0 million decrease in income for items previously charged-off, which were partially offset by $4.9 million increase in income from equity method investments, $3.1 million in BOLI death benefit income and a $2.8 million increase in rental income primarily related to the acquisition of Happy.
The decrease in volume is due to the increase in interest rates. • The $855,000 increase in cash value of life insurance is primarily related to the increase in bank owned life insurance resulting from the acquisition of Happy. • The $2.4 million increase in dividends from FHLB, FRB, FNBB & other is primarily due to an increase in dividend income from FHLB and FRB stock holdings related to the acquisition of Happy and an increase in dividends on marketable securities, partially offset by a lower volume of dividends from equity investments. • The $1.5 million increase in gain on sale of branches, equipment and other assets, net, is primarily due to the sales of buildings in Texas and Florida in 2023. • The $9.8 million decrease in other income is primarily due to the $15.0 million in income in 2022 from the settlement of a lawsuit brought by the Company and a $6.0 million decrease in income for items previously charged-off, which were partially offset by $4.9 million increase in income from equity method investments, $3.1 million in BOLI death benefit income and a $2.8 million increase in rental income primarily related to the acquisition of Happy. 55 Table of Contents Non-Interest Expense Non-interest expense consists of salaries and employee benefits, occupancy and equipment, data processing, and other expenses such as advertising, merger and acquisition expenses, amortization of intangibles, electronic banking expense, FDIC and state assessment, insurance, legal and accounting fees and other professional fees.
(3) See Table 29 for the non-GAAP tabular reconciliation. 40 Table of Contents 2023 Overview Results of Operations for the Years Ended December 31, 2023 and 2022 Our net income increased $87.7 million, or 28.7%, to $392.9 million for the year ended December 31, 2023, from $305.3 million for the same period in 2022.
(3) See Table 31 for the non-GAAP tabular reconciliation. 40 Table of Contents 2024 Overview Results of Operations for the Years Ended December 31, 2024 and 2023 Our net income increased $9.3 million, or 2.4%, to $402.2 million for the year ended December 31, 2024, from $392.9 million for the same period in 2023.
Residential real estate loans generally have a loan-to-value ratio of up to 90%. These loans are underwritten by giving consideration to many factors including the borrower’s ability to pay, stability of employment or source of income, debt-to-income ratio, credit history and loan-to-value ratio.
These loans are underwritten by giving consideration to many factors including the borrower’s ability to pay, stability of employment or source of income, debt-to-income ratio, credit history and loan-to-value ratio.
The effective tax rates for the years ended December 31, 2023, 2022 and 2021 were 23.24%, 22.64% and 23.45%, respectively. The Company’s marginal tax rate was 24.989%, 24.6735% and 25.740% for years ended December 31, 2023, 2022 and 2021, respectively.
The effective tax rates for the years ended December 31, 2024, 2023 and 2022 were 22.99%, 23.24% and 22.64%, respectively. The Company’s marginal tax rate was 24.433%, 24.989% and 24.6735% for years ended December 31, 2024, 2023 and 2022, respectively.
Table 29: Efficiency Ratio, As Adjusted Years Ended December 31, 2023 2022 2021 (Dollars in thousands) Net interest income (A) $ 826,945 $ 758,676 $ 572,971 Non-interest income (B) 169,934 175,111 137,569 Non-interest expense (C) 472,863 475,627 298,517 FTE Adjustment (D) 5,506 8,663 7,079 Amortization of intangibles (E) 9,685 8,853 5,683 Adjustments: Non-interest income: Fair value adjustment for marketable securities $ (1,094) $ (1,272) $ 7,178 Special dividend from equity investment — 1,434 12,500 Gain on OREO, net 332 500 2,003 Gain (loss) on branches, equipment and other assets, net 1,507 15 (105) Gain on securities, net — — 219 BOLI death benefits 3,117 — — Special lawsuit settlement — 15,000 — Recoveries on historic losses 3,461 6,706 5,107 Total non-interest income adjustments (F) $ 7,323 $ 22,383 $ 26,902 Non-interest expense: FDIC special assessment $ 12,983 $ — $ — TRUPS redemption fees — 2,081 — Merger expenses — 49,594 1,886 Hurricane expense — 176 — Special lawsuit legal expense — 5,000 — Total non-core non-interest expense (G) $ 12,983 $ 56,851 $ 1,886 Efficiency ratio (reported): ((C-E)/(A+B+D)) 46.21 % 49.53 % 40.81 % Efficiency ratio, as adjusted (non-GAAP): ((C-E-G)/(A+B+D-F)) 45.24 44.55 42.12 87 Table of Contents Table 30 presents selected unaudited quarterly financial information for 2023 and 2022.
Table 31: Efficiency Ratio, As Adjusted Years Ended December 31, 2024 2023 2022 (Dollars in thousands) Net interest income (A) $ 848,774 $ 826,945 $ 758,676 Non-interest income (B) 168,574 169,934 175,111 Non-interest expense (C) 446,936 472,863 475,627 FTE Adjustment (D) 8,534 5,506 8,663 Amortization of intangibles (E) 8,443 9,685 8,853 Adjustments: Non-interest income: Fair value adjustment for marketable securities $ 2,971 $ (1,094) $ (1,272) Special dividend from equity investment — — 1,434 (Loss) gain on OREO, net (2,272) 332 500 Gain on branches, equipment and other assets, net 2,102 1,507 15 BOLI death benefits 257 3,117 — Special lawsuit settlement — — 15,000 Recoveries on historic losses — 3,461 6,706 Total non-interest income adjustments (F) $ 3,058 $ 7,323 $ 22,383 Non-interest expense: FDIC special assessment $ 2,260 $ 12,983 $ — TRUPS redemption fees — — 2,081 Merger expenses — — 49,594 Hurricane expense — — 176 Special lawsuit legal expense — — 5,000 Total non-interest expense adjustments (G) $ 2,260 $ 12,983 $ 56,851 Efficiency ratio (reported): ((C-E)/(A+B+D)) 42.74 % 46.21 % 49.53 % Efficiency ratio, as adjusted (non-GAAP): ((C-E-G)/(A+B+D-F)) 42.65 45.24 44.55 86 Table of Contents Table 32 presents selected unaudited quarterly financial information for 2024 and 2023.
(2) Fully taxable equivalent (assuming an income tax rate of 25.740% for 2021, 24.6735% for 2022 and 24.989% for 2023).
(2) Fully taxable equivalent (assuming an income tax rate of 24.6735% for 2022, 24.989% for 2023 and 24.433% for 2024).
In addition, it is common for the Bank to seek additional collateral or guarantor support when modifying a loan. At December 31, 2023, the amount of restructured loans was $24.6 million. As of December 31, 2023, 92.1% of all restructured loans were performing to the terms of the restructure.
In addition, it is common for the Bank to seek additional collateral or guarantor support when modifying a loan. At December 31, 2024, the amount of restructured loans was $122.7 million. As of December 31, 2024, 86.3% of all restructured loans were performing to the terms of the restructure.
Table 11: Total Foreclosed Assets Held for Sale December 31 2023 2022 (In thousands) Commercial real estate loans Non-farm/non-residential $ 29,894 $ 118 Construction/land development 47 47 Residential real estate loans Residential 1-4 family 545 260 Multifamily residential — 121 Total foreclosed assets held for sale $ 30,486 $ 546 64 Table of Contents The Company had $94.9 million and $221.1 million in 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) as of December 31, 2023 and December 31, 2022, respectively.
Table 13: Total Foreclosed Assets Held for Sale December 31 2024 2023 (In thousands) Commercial real estate loans Non-farm/non-residential $ 28,392 $ 29,894 Construction/land development 13,391 47 Residential real estate loans Residential 1-4 family 1,624 545 Total foreclosed assets held for sale $ 43,407 $ 30,486 The Company had $268.0 million and $94.9 million in 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) as of December 31, 2024 and December 31, 2023, respectively.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

2 edited+0 added−0 removed15 unchanged
Biggest changeTable 31: Sensitivity of Net Interest Income Interest Rate Scenario Percentage Change from Base Up 200 basis points 9.61 % Up 100 basis points 4.93 Down 100 basis points (5.70) Down 200 basis points (11.82)
Biggest changeTable 33: Sensitivity of Net Interest Income Interest Rate Scenario Percentage Change from Base December 31, 2024 Percentage Change from Base December 31, 2023 December 30, 2024 vs. 2024 Up 200 basis points 10.07 % 9.61 % 0.46 % Up 100 basis points 5.08 4.93 0.15 % Down 100 basis points (5.71) (5.70) (0.01) % Down 200 basis points (11.20) (11.82) 0.62 %
At December 31, 2023, our net interest margin exposure related to these hypothetical changes in market interest rates was within the current guidelines established by us. 89 Table of Contents Table 31 presents our sensitivity to net interest income as of December 31, 2023.
At December 31, 2024, our net interest margin exposure related to these hypothetical changes in market interest rates was within the current guidelines established by us. 88 Table of Contents Table 33 presents our sensitivity to net interest income as of December 31, 2024.

Other HOMB 10-K year-over-year comparisons