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YoY shift: Neutral
Year-over-year tone shift - average net-tone change across Risk Factors and MD&A vs the prior 10-K. This filing is 0.02pp more bullish than last year's.
Why YoY instead of absolute: the LM lexicon has ~6.6× more negative words than positive (legal/risk-disclosure language is heavy on hedging), so every 10-K reads bearish on raw tone. Year-over-year change strips that bias and surfaces the actual shift in management's framing.
Tone shift by section
The two components the gauge averages: how Risk Factors and MD&A each shifted in net tone versus last year's 10-K. The headline above is their average, so a green needle over a soft section just means the other section carried it.
Risk Factors
+0.10pp
Flat
Net-tone change vs last year's 10-K.
MD&A
-0.05pp
Flat
Net-tone change vs last year's 10-K.
Per-snippet highlights
Sentence-level sentiment highlighting with category and subcategory filters is coming once the snippet-scoring pipeline lands. For now, dig into the actual section text on the Sections tab.
Language change vs prior 10-K
Risk Factors (Item 1A) - words with the biggest YoY frequency increase
Negative rising
adverse+4
crises+3
adversely+2
loss+1
against+1
Positive rising
able+2
achieve+2
success+1
successfully+1
best+1
Risk Factors (Item 1A)
8,925 words
Item 1A. RISK FACTORS
Our business exposes us to certain risks. Risks and uncertainties that management is not aware of or focused on may also adversely affect our business and operation. The following is a discussion of the most significant risks and uncertainties that may affect our business, financial condition and future results.
Risks Related to Our Industry
We are subject to extensive regulation that could limit or restrict our activities and impose financial requirements or limitations on the conduct of our business, and changes in the laws and regulations to which we are subject could adversely affect our profitability.
We and our bank subsidiary are subject to extensive federal and state regulation and supervision. As a registered bank holding company, we are primarily regulated by the Federal Reserve Board. Our bank subsidiary is also primarily regulated by the Federal Reserve Board and the Arkansas State Bank Department.
Banking industry regulations are primarily intended to protect depositors’ funds, federal deposit insurance funds and the banking system as a whole, not security holders. Complying with such regulations is costly and may limit our growth and restrict certain of our activities, including payment of dividends, mergers and acquisitions, investments, loans and interest rates charged, interest rates paid on deposits and locations of offices. We are also subject to capital requirements by our regulators. of various laws, even if , may result in significant or other , including restrictions on branching or bank acquisitions.
Language change vs prior 10-K
MD&A (Item 7) - words with the biggest YoY frequency increase
Negative rising
claims+5
uninsured+2
loss+1
unfunded+1
unpaid+1
Positive rising
gain+9
gains+1
strong+1
improvements+1
MD&A (Item 7)
27,133 words
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, 2025, 2024 and 2023. This discussion should be read together with the “Summary Consolidated Financial Data,” our consolidated financial statements and the notes thereto, and other financial data included in this document. In addition to the historical information provided below, we have made certain estimates and forward-looking statements that involve risks and uncertainties. Our actual results could differ significantly from those anticipated in these estimates and in the forward-looking statements as a result of certain factors, including those discussed in the section of this document captioned “Risk Factors,” and elsewhere in this document. 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"). As of December 31, 2025, we had, on a consolidated basis, total assets of $22.88 billion, loans receivable, net, of $15.39 billion, total deposits of $17.48 billion, and stockholders’ equity of $4.30 billion.
We generate most of our revenue from interest on loans and investments, service charges, and mortgage banking income. 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. We also measure our performance by our ratio and ratio, as adjusted (non-GAAP). The ratio is calculated by dividing non-interest expense less amortization of core deposit intangibles by the sum of net interest income on a tax equivalent basis and non-interest income. The ratio, as adjusted, is a meaningful non-GAAP measure for management, as it excludes certain items and is calculated by dividing non-interest expense less amortization of core deposit intangibles by the sum of net interest income on a tax equivalent basis and non-interest income excluding certain items such as merger expenses, hurricane expenses and/or and .
Congress and federal regulatory agencies continually review banking laws, regulations and policies for possible changes. 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. 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. 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.
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. 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. 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. 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.
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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. 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. Previously, our bank subsidiary had been subject to regulations adopted by the CFPB, but the Federal Reserve was primarily responsible for examining our bank subsidiary’s compliance with consumer protection laws and those CFPB regulations. 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.
Banks with assets in excess of $10 billion are subject to a deposit assessment based on a scorecard issued by the FDIC that considers, among other things, the bank’s CAMELS rating, results of asset-related stress testing and funding-related stress, as well as our use of core deposits, among other things. Depending on the results of the bank’s performance under that scorecard, the total base assessment rate is between 2.5 to 42 basis points. Any increase in our bank subsidiary’s deposit insurance assessments may result in an increased expense related to our use of deposits as a funding source. Additionally, banks with over $10 billion in total assets are no longer exempt from the requirements of the Federal Reserve’s rules on interchange transaction fees for debit cards. Our bank subsidiary is limited to receiving only a “reasonable” interchange transaction fee for any debit card transactions processed using debit cards issued by our bank subsidiary to our customers. The Federal Reserve has determined that it is unreasonable for a bank with more than $10 billion in total assets to receive more than $0.21 plus 5 basis points of the transaction plus a $0.01 fraud adjustment for an interchange transaction fee for debit card transactions. This limit in the amount of interchange fees we receive for electronic debit interchange has the effect of reducing our revenues.
Prior to becoming subject to the heightened regulatory requirements, we hired additional compliance personnel and implemented structural initiatives to address these requirements. 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. Our regulators may also consider our compliance with these regulatory requirements when examining our operations generally or considering any request for regulatory approval we may make, even requests for approvals on unrelated matters.
Difficult market and economic conditions may adversely affect our industry and our business.
Economic downturns historically have had a significant adverse impact on the banking industry, and particularly community banks. Declines in the housing market, with falling home prices and increased delinquencies and foreclosures, can negatively impact the credit performance of mortgage and construction loans and result in significant write-downs of assets by financial institutions. 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.
Unlike larger financial institutions that are more geographically diversified, our profitability depends primarily on the general economic conditions in our primary market areas. Local economic conditions have a significant impact on our residential real estate, commercial real estate, construction, commercial and industrial and consumer lending, including, the ability of borrowers to repay these loans and the value of the collateral securing these loans. Certain economic indicators, such as real estate asset values, rents and unemployment, may vary between geographic markets and may lag behind the overall economy. These economic indicators typically affect certain industries, such as real estate and financial services, more significantly than other economic sectors. Additionally, our success significantly depends upon the growth in population, income levels, deposits and housing starts in our markets. If the communities in which we operate do not grow or if prevailing economic conditions deteriorate locally or nationally, our business may be adversely affected. We are less able than a larger institution to spread the risks of unfavorable local economic conditions across a large number of diversified economies. 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.
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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 regular assessments are calculated under the large bank pricing rule using its average consolidated total assets minus average tangible equity as well as by risk classification, which includes regulatory capital levels.
We are generally unable to control the amount and timetable for payment of premiums that we are required to pay for FDIC insurance. There is no guarantee that our assessment rate will not increase in the future. Additionally, if there is an increase in bank or financial institution failures or there is a future need to strengthen the DIF reserve ratio, the FDIC may further revise the assessment rates or the risk-based assessment system. 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.
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. 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. Changes in market interest rates, changes in the relationships between short-term and long-term market interest rates, or changes in the relationship between different interest rate indices can affect the interest rates charged on interest-earning assets differently than the interest paid on interest-bearing liabilities. This difference could result in an increase in interest expense relative to interest income or a decrease in interest rate spread. In addition to affecting our profitability, changes in interest rates can impact the valuation of our assets and liabilities. Changes in interest rates can also affect our business and profitability in numerous other ways. For example, increases in interest rates can have a negative impact on our results of operations by reducing loan demand and the ability of borrowers to repay their current obligations, while decreases in interest rates may affect loan prepayments.
In response to inflation and its effects 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, beginning in September 2024, the Federal Reserve Board reduced interest rates six times through December 2025. Future economic developments and the Federal Reserve Board’s policies in response, however, cannot be predicted with certainty. At this time, it is unknown how future action by the Federal Reserve Board involving monetary policies will affect our business and the banking industry. 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.
The financial system is highly interrelated, including as a result of lending, trading, clearing, counterparty, and other relationships. We have exposure to and routinely execute transactions with a wide variety of financial institutions, including brokers, dealers, commercial banks, investment banks and other substantial participants. In addition, we currently hold and may in the future acquire additional investments in the debt or equity securities of other financial institutions. Some of the institutions or other participants with whom we transact business or in which we hold investments may experience instability due to financial challenges in the banking industry or may be perceived to be unstable. If any of these institutions or participants were to fail in meeting its obligations in full and on time, or were to enter bankruptcy, conservatorship, or receivership, the consequences could ripple throughout the financial system and may adversely affect our business, results of operations, financial condition, or prospects. Our investments in any such institutions could decline in value or become valueless, which could result in us incurring losses in our investment portfolio that may have a materially adverse effect our operating results. 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.
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The impacts of public health crises, including 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 and other public health emergencies. Such events can disrupt U.S. and global supply chains and alter business and economic conditions; lower equity market valuations; create significant volatility and disruption in financial markets; influence interest-rate and yields on U.S. Treasury securities; result in ratings downgrades, credit deterioration, and defaults in many industries; increase demands on capital and liquidity; elevate unemployment levels; and weaken consumer confidence. Public health crises may also result in credit losses in our loan portfolios and require increases in our allowance for credit losses.
The extent to which any future outbreaks of contagious disease or other public health emergencies may impact general economic and business conditions is highly uncertain and unpredictable. As part of these uncertainties, we could be subject to a number of risks, any of which could have a material, adverse effect on our business, financial condition, liquidity, results of operations, and ability to execute our growth strategy. These risks include, but are not limited to, increased loan losses or other impairments in our loan portfolios and increases in our allowance for loan losses; further volatility in the valuation of real estate and other collateral supporting loans; impairment of our goodwill and our financial assets; increased cost of capital; inability to satisfy our minimum regulatory capital ratios and other supervisory requirements; or a downgrade in our credit ratings. We could also face an increased risk of governmental and regulatory scrutiny as a result of the effects of a public health crises on market and economic conditions and actions governmental authorities take in response to those conditions. Any such occurrence could have a significant adverse impact on our business, financial condition, liquidity or results of operations.
Risks Related to Our Business
Our decisions regarding credit risk could be inaccurate and our allowance for credit losses may be inadequate, which would materially and adversely affect us.
Management makes various assumptions and judgments about the collectability of our loan portfolio, including the creditworthiness of our borrowers and the value of the real estate and other assets serving as collateral for the repayment of our secured 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, 2025, our allowance for credit losses was approximately $297.6 million, or 1.90% of our total loans. 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.
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. When there is an economic downturn, it is more difficult for us to estimate the losses that we will experience in our loan portfolio. In addition, federal and state regulators periodically review our allowance for credit losses and may require us to increase our allowance for credit losses or recognize further loan charge-offs based on judgments different than those of our management. Any increase in our allowance for credit losses or loan charge-offs could have a negative effect on our operating results.
Our high concentration of real estate loans and especially commercial real estate loans exposes us to increased lending risk.
As of December 31, 2025, approximately 74.1% of our total loan portfolio was comprised of loans with real estate as a primary or secondary component of collateral. This includes commercial real estate loans (excluding construction/land development) of $5.62 billion, or 35.8% of total loans, construction/land development loans of $2.73 billion, or 17.4% of total loans, and residential real estate loans of $3.28 billion, or 20.9% of total loans. This high concentration of real estate loans could subject us to increased credit risk in the event of a decrease in real estate values in our markets, a real estate recession or a natural disaster. 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 sufferlosses on defaulted loans.
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 53.2% of our total loan portfolio as of December 31, 2025, expose us to a greater risk of loss than our residential real estate loans, which comprised 20.9% of our total loan portfolio as of December 31, 2025. Commercial real estate and land development loans typically involve larger loan balances to single borrowers or groups of related borrowers compared to residential loans. Consequently, an adverse development with respect to one commercial loan or one credit relationship exposes us to a significantly greater risk of loss compared to an adverse development with respect to one residential mortgage loan.
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The repayment of loans secured by commercial real estate is typically dependent upon the successful operation of the related real estate or commercial project. If the cash flows from the project are reduced, a borrower’s ability to repay the loan may be impaired. This cash flow shortage may result in the failure to make loan payments. In such cases, we may be compelled to modify the terms of the loan, or in the most extreme cases, we may have to foreclose.
If a decline in economic conditions or other issues cause difficulties for our borrowers of these types of loans, if we fail to evaluate the credit of these loans accurately when we underwrite them or if we do not continue to adequately monitor the performance of these loans, our lending portfolio could experience delinquencies, defaults and credit losses that could have a material adverse effect on our business, financial condition or results of operations.
Our geographic concentration of banking activities and loan portfolio makes us more vulnerable to adverse conditions in our local markets.
Our bank subsidiary operates through branch locations in Arkansas, Florida, Texas, Alabama and New York City and loan production offices in Los Angeles, California, Dallas, Texas, Miami, Florida, Chesapeake, Virginia and Baltimore, Maryland. However, approximately 79.3% of our total loans and 83.6% of our real estate loans as of December 31, 2025, 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. An adverse development with respect to the market conditions of any of these specific market areas or a decrease in real estate values in those market areas could expose us to a greater risk of loss than a portfolio that is spread among a larger geographic base.
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, 2025, approximately 74.1% of our total loans were secured by real estate. In prior years, difficult local economic conditions have adversely affected the values of our real estate collateral, and they could do so again if the economic conditions markets were to deteriorate in the future. The real estate collateral in each case provides an alternate source of repayment on our loans in the event of default by the borrower but may deteriorate in value during the time credit is extended. 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.
We have a concentration of exposure to a number of individual borrowers. Under applicable law, our bank subsidiary is generally permitted to make loans to one borrowing relationship up to 20% of its Tier 1 capital plus the allowance for credit losses. As of December 31, 2025, the legal lending limit of our bank subsidiary for secured loans was approximately $606.1 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. As of December 31, 2025, we had a total of $8.1 billion, or 51.6% 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.
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. Generally, we believe local deposits are a more stable source of funds than other borrowings because interest rates paid for local deposits are typically lower than interest rates charged for borrowings from other institutional lenders. In addition, local deposits reflect a mix of transaction and time deposits, whereas brokered deposits typically are less stable time deposits, which may need to be replaced with higher cost funds. 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.
The loss of key employees may materially and adversely affect us.
Our success depends significantly on our Chairman and Chief Executive Officer, John W. Allison, and our executive officers, especially Brian S. Davis, J. Stephen Tipton, Kevin D. Hester and Donna J. Townsell, 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.
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The value of securities in our investment portfolio may decline in the future.
As of December 31, 2025, we owned $2.87 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. We evaluate all securities quarterly to determine if any securities in a loss position requires a provision for credit losses in accordance with ASC 326, Measurement of Credit Losses on Financial Instruments . The Company first assesses whether it intends to sell or is more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through income. For securities that do not meet these criteria, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, the Company considers the extent to which fair value is less than amortized cost, and changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis. Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income. Changes in the allowance for credit losses are recorded as provision for (or recovery of) credit loss expense. Losses are charged against the allowance when management believes the uncollectability of a security is confirmed or when either of the criteria regarding intent or requirement to sell is met. 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, 2025, we owned $1.26 billion of held-to-maturity investment securities. Securities held-to-maturity ("HTM"), which include any security for which we have the positive intent and ability to hold until maturity, are reported at historical cost adjusted for amortization of premiums and accretion of discounts. Premiums and discounts are amortized/accreted to the call date to interest income using the constant effective yield method over the estimated life of the security. The Company evaluates all securities quarterly to determine if any securities in a loss position require a provision for credit losses in accordance with ASC 326. The Company measures expected credit losses on HTM securities on a collective basis by major security type, with each type sharing similar risk characteristics. The estimate of expected credit losses considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts. The Company has made the election to exclude accrued interest receivable on HTM securities from the estimate of credit losses and report accrued interest separately on the consolidated balance sheets. Changes in the allowance for credit losses are recorded as provision for (or recovery of) credit loss expense. Losses are charged against the allowance when management believes the uncollectability of a security is confirmed. 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.
Our recent results do not indicate our future results and may not provide guidance to assess the risk of an investment in our common stock.
We are unlikely to sustain our historical rate of growth and may not even be able to expand our business at all. Further, our growth in prior years may distort some of our historical financial ratios and statistics. Various factors, such as economic conditions, regulatory and legislative considerations and competition, may also impede or prohibit our ability to expand our market presence. If we are not able to successfully grow our business, our financial condition and results of operations could be adversely affected.
We may not be able to raise the additional capital we need to grow and, as a result, our ability to expand our operations could be materially impaired.
Federal and state regulatory authorities require us and our bank subsidiary to maintain adequate levels of capital to support our operations. 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.
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. If we need additional capital but cannot raise it on terms acceptable to us, our ability to expand our operations could be materially impaired, our business, financial condition, results of operations and prospects may be adversely affected, and our stock price may decline.
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Our growth and expansion strategy may not be successful, and our market value and profitability may suffer.
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. Any future acquisitions we might make will also be accompanied by other risks commonly encountered in acquisitions. 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.
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.
We may continue to have opportunities from time to time to acquire the assets and liabilities of failed banks in FDIC-assisted transactions. These acquisitions involve risks similar to acquiring existing banks even though the FDIC might provide assistance to mitigate certain risks such as sharing in exposure to loan losses and providing indemnification against certain liabilities of the failed institution. However, because these acquisitions are structured in a manner that would not allow us the time normally associated with preparing for integration of an acquired institution, we may face additional risks in FDIC-assisted transactions. 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. De novo branching, and any acquisition carry with them numerous risks, including the following:
• the inability to obtain all required regulatory approvals;
• the significant upfront costs and anticipated operating losses associated with establishing a de novo branch or a new bank;
• the inability to secure the services of qualified senior management;
• the local market receptivity for branches established or banks acquired outside of those markets in which we currently maintain a material presence;
• the local economic conditions within the market to be served by the de novo branch or new bank;
• the inability to obtain attractive locations within a new market at a reasonable cost; and
• the additional strain on management resources and internal systems and controls.
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.
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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. We have acquired 23 banks since we started our first subsidiary bank in 1999, including a total of 18 banks since 2010. We currently anticipate completing our proposed acquisition of Mountain Commerce Bancorp, Inc., headquartered in Knoxville, Tennessee, during the second quarter of 2026. We will continue to consider future strategic acquisitions, with a primary focus on Tennessee, Texas, Arkansas, Florida, Alabama and other nearby markets. In most cases, our acquisition of a bank includes the acquisition of all or a substantial portion of the target bank’s assets and liabilities, including all or a substantial portion of its loan portfolio, although we have in the past acquired and may in the future acquire specific lending divisions or loan portfolios. There may be instances when we, under our normal operating procedures, may find after the acquisition that there may be additional losses or undisclosed liabilities with respect to the assets and liabilities of the target bank, and, with respect to its loan portfolio, that the ability of a borrower to repay a loan may have become impaired, the quality of the value of the collateral securing a loan may fall below our standards, or our determination of the fair value of any such loan may be inadequate. 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.
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. 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, 2025, our goodwill and other identifiable intangible assets were $1.43 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. We conduct a review at least annually to determine whether goodwill is impaired. Our annual goodwill impairment evaluation performed during the fourth quarter of 2025 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. Any impairment charge would have an adverse effect on our shareholders’ equity and financial results and could cause a decline in our stock price.
Competition from other financial institutions and financial service providers may adversely affect our profitability.
We face substantial competition in all phases of our operations from a variety of different competitors. We experience strong competition, not only from commercial banks, savings and loan associations and credit unions, but also from mortgage banking firms, consumer finance companies, securities brokerage firms, insurance companies, money market funds and other financial services providers operating in or near our market areas. We compete with these institutions both in attracting deposits and in making loans.
Many of our competitors are much larger national and regional financial institutions. We may face a competitive disadvantageagainst them as a result of our smaller size and resources and our lack of geographic diversification. Due to their size, larger competitors can achieve economies of scale and may offer a broader range of products and services or more attractive pricing than us. If we are unable to offer competitive products and services, our business may be negatively affected. Many of our competitors are not subject to the same degree of regulation that we are as an FDIC-insured institution, which gives them greater operating flexibility and reduces their expenses relative to ours. As a result, these non-bank competitors have certain advantages over us in accessing funding and in providing various services.
We also compete against community banks that have strong local ties. These smaller institutions are likely to cater to the same small and mid-sized businesses that we target and to use a relationship-based approach similar to ours. 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.
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We continually encounter technological change, and we may not be able to keep pace with rapid technological change in the financial services industry.
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. In addition to better serving customers, effective use of technology increases efficiency and enables financial institutions to reduce costs. Our future success will depend, in part, upon our ability to address the needs of our customers by using technology to provide products and services that will satisfy customer demands for convenience, as well as to create additional efficiencies in our operations. New and evolving AI use, including generative AI, may make us susceptible to uncertain risks and may require additional investment to develop responsible use frameworks. Many of our competitors have substantially greater resources to invest in technological improvements. 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.
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.
As a financial institution, our operations rely heavily on the secure processing, storage and transmission of confidential and other information on our computer systems and networks. Any failure, interruption or breach in security or operational integrity of these systems could result in failures or disruptions in our online banking system, customer relationship management, general ledger, deposit and loan servicing and other systems. 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 breachesdespite our best efforts to prevent them. We cannot assure you that any future failures, interruption or security breaches will not occur, or if they do occur that they will be adequately addressed, or that any such events that have occurred or may occur in the future will not result in material harm to our business, operations, reputation or profitability. While we have certain protective policies and procedures in place, the nature and sophistication of the threats continue to evolve. We may be required to expend significant additional resources in the future to modify and enhance our protective measures.
Additionally, we face the risk of operational disruption, failure, termination or capacity constraints of any of the third parties that facilitate our business activities, including exchanges, clearing agents, clearing houses or other financial intermediaries. Such parties could also be the source of an attack on, or breach of, our operational systems. Any failures, interruptions or security breaches in our information systems could damage our reputation, result in a loss of customer business, result in a violation of privacy or other laws, or expose us to civil litigation, regulatory fines or losses not covered by insurance.
We may incur losses as a result of unforeseen or catastrophic events, including extreme weather events or other natural disasters.
Our markets in Alabama and Florida, like other coastal areas, are susceptible to hurricanes and tropical storms. Such weather events can disrupt our operations, result in damage to our properties and negatively affect the local economies in which we operate. We cannot predict whether or to what extent damage that may be caused by future unforeseencatastrophic events, including hurricanes, other extreme weather events and natural disasters, will affect our operations or the economies in our market areas, but such events could result in a decline in loan originations, a decline in the value or destruction of properties or other collateral securing our loans and an increase in the delinquencies, foreclosures and loan losses. Our business or results of operations may be adversely affected by these and other negative effects of such events.
We may incur environmental liabilities with respect to properties to which we take title.
A significant portion of our loan portfolio is secured by real property. In the course of our business, we may own or foreclose and take title to real estate and could become subject to environmental liabilities with respect to these properties. In addition, we acquire branches and real estate in connection with our acquisitions of banks. We may become responsible to a governmental agency or third parties for property damage, personal injury, investigation and clean-up costs incurred by those parties in connection with environmental contamination or may be required to investigate or clean-up hazardous or toxic substances, or chemical releases at a property. The costs associated with environmental investigation or remediation activities could be substantial. 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.
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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.
We depend to a significant extent on relationships with third party service providers. Specifically, we utilize third-party core banking services and receive credit card and debit card services, branch capture services, Internet banking services and services complementary to our banking products from various third-party service providers. If these third-party service providers experience difficulties or terminate their services and we are unable to replace them with other service providers, our operations could be interrupted. It may be difficult for us to replace some of our third-party vendors, particularly vendors providing our core banking, credit card and debit card services, in a timely manner if they were unwilling or unable to provide us with these services in the future for any reason. If an interruption were to continue for a significant period of time, it could have a material adverse effect on our business, financial condition or results of operations. Even if we are able to replace them, it may be at higher cost to us, which could have a material adverse effect on our business, financial condition or results of operations. 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.
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. 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 intentionalmisstatement 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. 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.
Risks Related to the Proposed Acquisition of Mountain Commerce Bancorp, Inc.
We may fail to realize all of the anticipated benefits of the merger.
The success of the merger of MCBI with and into us will depend, in part, on our ability to successfully combine our and MCBI’s organizations. If we are not able to achieve this objective, the anticipated benefits of the merger may not be realized fully or at all or may take longer than expected to be realized.
We and MCBI have operated and, until the completion of the merger, will continue to operate, independently. It is possible that the integration process or other factors could result in the loss or departure of key employees, the disruption of the ongoing business of MCBI or inconsistencies in standards, controls, procedures and policies. It is also possible that clients, customers, depositors and counterparties of MCBI could choose to discontinue their relationships with the combined company post-merger because they prefer doing business with MCBI or for any other reason, which would adversely affect the future performance of the combined company. These transition matters could have an adverse effect on each of us and MCBI during the pre-merger period and for an undetermined time after the completion of the merger.
The completion of the merger is subject to the consent and approval of various governmental authorities, which may impose conditions that could have an adverse effect on the combined company following the merger.
Before the merger may be completed, we and MCBI must obtain approval of the merger from the Federal Reserve Board, Arkansas State Bank Department, FDIC, and Tennessee Department of Financial Institutions. These governmental authorities may impose conditions on its granting of such approval. Although we and MCBI do not currently expect that any such material conditions or changes would be imposed, there can be no assurance that they will not be, and such conditions or changes could have the effect of delaying completion of the merger or imposing additional costs or limiting the revenues of the combined company following the merger, any of which might have an adverse effect on the combined company following the merger. In addition, if there is an adverse development in either company’s regulatory standing, we may be required to withdraw our application for approval of the proposed merger and, if possible, resubmit it after the applicable supervisory concerns have been resolved. Finally, we and MCBI have each agreed to use its commercially reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable under applicable law to consummate the merger. Such actions may entail costs and may adversely affect us, MCBI, or the combined company following the merger.
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The combined company expects to incur substantial expenses related to the merger.
The combined company expects to incur substantial expenses in connection with completing the merger and combining the business, operations, networks, systems, technologies, policies and procedures of the two companies. Although we and MCBI have assumed that a certain level of transaction and combination expenses would be incurred, there are a number of factors beyond their control that could affect the total amount or the timing of their combination expenses. Many of the expenses that will be incurred, by their nature, are difficult to estimate accurately at the present time. Due to these factors, the transaction and combination expenses associated with the merger could, particularly in the near term, exceed the savings that the combined company expects to achieve from the elimination of duplicative expenses and the realization of economies of scale and cost savings related to the combination of the businesses following the completion of the merger. In addition, many of these expenses will be incurred regardless of whether the merger is completed. As a result of these expenses, both we and MCBI expect to take charges against our respective earnings before and after the completion of the merger. The charges taken in connection with the merger are expected to be significant, although the aggregate amount and timing of such charges are uncertain at present.
Risks Related to Owning Our Stock
The rights of our common shareholders are subordinate to the holders of any debt securities that we may issue from time to time and may be subordinate to the holders of any series of preferred stock that may issue in the future.
We currently have outstanding $300.0 million of 3.125% fixed-to-floating rate subordinated notes, which mature in 2032 and carry a fixed rate for the first five years. Thereafter, the notes bear interest at 3-month Secured Overnight Funding Rate (SOFR) plus 182 basis points, resetting quarterly. Because these subordinated notes are senior to our shares of common stock, in the event of our bankruptcy, dissolution or liquidation, the holders of any such subordinated notes then outstanding must be satisfied before any distributions can be made to the holders of our common stock.
Our board of directors has the authority to issue in the aggregate up to 5,500,000 shares of preferred stock, and to incur senior or subordinated indebtedness, generally without shareholder approval. Our preferred stock could be issued with voting, liquidation, dividend and other rights that may be superior to the rights of our common stock. In addition, like our outstanding subordinated debentures, any future indebtedness that we incur would be expected to be senior to our common stock with respect to payment upon liquidation, dissolution or winding up. Accordingly, common shareholders bear the risk that our future issuances of debt or equity securities or our incurrence of other borrowings will negatively affect the market price of our common stock.
We may be unable to, or choose not to, pay dividends on our common stock.
Although we have paid a quarterly dividend on our common stock since 2003 and expect to continue this practice, we cannot assure you of our ability to continue. 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.
If we fail to pay dividends, capital appreciation, if any, of our common stock may be the sole opportunity for gains on an investment in our common stock. In addition, in the event our bank subsidiary becomes unable, due to regulatory restrictions, capital planning needs or otherwise, to pay dividends to us, we may not be able to service our debt, pay our other obligations or pay dividends on 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.
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Table 1: Key Financial Measures
As of or for the Years Ended December 31,
(Dollars in thousands, except per share data)
Total assets
Loans receivable
Allowance for credit losses
Total deposits
Total stockholders’ equity
Net income
Basic earnings per share
Diluted earnings per share
Book value per share
Tangible book value per share (non-GAAP) (1)
Net interest margin (2)
Efficiency ratio
Efficiency ratio, as adjusted (non-GAAP) (3)
Return on average assets
Return on average common equity
(1) See Table 31 for the non-GAAP tabular reconciliation.
(2) Fully taxable equivalent (assuming an income tax rate of 24.989% for 2023, 24.433% for 2024 and 24.359% for 2025).
(3) See Table 35 for the non-GAAP tabular reconciliation.
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2025 Overview
Results of Operations for the Years Ended December 31, 2025 and 2024
Our net income increased $73.2 million, or 18.2%, to $475.4 million for the year ended December 31, 2025, from $402.2 million for the same period in 2024. On a diluted earnings per share basis, our earnings were $2.41 per share for the year ended December 31, 2025 and $2.01 per share for the year ended December 31, 2024. The Company recorded $20.9 million in credit loss expense for the year ended December 31, 2025. This consisted of a $24.1 million provision for credit losses on loans, which was partially offset by a $2.2 million recovery of credit losses on available-for-sale investments and a $1.0 million recovery of credit losses on unfunded commitments. For the year ended December 31, 2025, the Company recorded $7.4 million in special income from equity investments, a $2.4 million increase in the fair value of marketable securities, $2.0 million in recoveries on historic losses, a $1.9 million gain on the retirement of subordinated debentures, $1.5 million in income from a Federal Deposit Insurance Corporation ("FDIC") assessment reduction, $1.4 million in bank owned life insurance ("BOLI") death benefits, a $983,000 gain on sale of a building from our Texas market and $885,000 in legal fee reimbursements, which were partially offset by $3.3 million in legal claims expense and $580,000 in merger expense.
Interest expense decreased by $64.5 million, or 14.3%, and non-interest income increased by $29.9 million, or 17.8%. This was partially offset by a $21.0 million, or 1.6%, decrease in interest income and an $11.2 million, or 2.5%, increase in non-interest expense. The decrease in interest expense was primarily due to a $30.7 million, or 58.4%, decrease in interest on FHLB and other borrowed funds, a $29.7 million, or 7.9%, decrease in interest on deposits, a $2.8 million, or 17.3%, decrease in interest on subordinated debentures and a $1.4 million, or 25.3%, decrease in interest on securities sold under agreements to repurchase. The increase in non-interest income was primarily due to a $21.7 million, or 72.6%, increase in other income, a $3.6 million, or 8.4% increase, in other service charges and fees, a $2.1 million, or 92.9% decrease, in the loss on OREO, a $2.0 million, or 12.4%, increase in mortgage lending income, and a $1.2 million, or 25.0%, increase in cash value of life insurance, which were partially offset by a $1.3 million, or 64.1%, decrease in gain on branches, equipment and other assets, a $751,000, or 6.6%, decrease in dividends from FHLB, FRB, FNBB and other and a $574,000, or 19.3%, decrease in income from the fair value adjustment for marketable securities. Included within other income was the $7.4 million in special income from equity investments, $2.0 million in recoveries on historic losses, $1.9 million gain on retirement of subordinated debt, $1.4 million in BOLI death benefits and $885,000 in legal fee reimbursements. The decrease in interest income resulted from a $19.8 million, or 12.7%, decrease in investment income and a $16.6 million, or 38.7%, decrease in interest income on deposits at other banks, which was partially offset by a $15.5 million, or 1.4%, increase in loan interest income. The increase in non-interest expense was due to an $11.8 million, or 4.9%, increase in salaries and employee benefits and a $1.2 million, or 1.1%, increase in other operating expenses, which was partially offset by a $2.0 million, or 5.6%, decrease in data processing expense.
Our net interest margin on a fully taxable equivalent basis increased from 4.27% for the year ended December 31, 2024 to 4.51% for the year ended December 31, 2025. The yield on interest earning assets was 6.45% and 6.51% for the year ended December 31, 2025 and 2024, respectively, as average interest earning assets decreased from $20.09 billion to $20.00 billion. The decrease in average interest earning assets is primarily due to a $379.3 million decrease in average investment securities and a $209.1 million decrease in average interest-bearing balances due from banks, which was partially offset by a $494.9 million increase in average loans receivable. For the years ended December 31, 2025 and 2024, we recognized $5.1 million and $8.1 million, respectively, in total net accretion for acquired loans and deposits. The reduction in accretion was dilutive to the net interest margin by approximately 2 basis points. We recognized $6.0 million in event income for the year ended December 31, 2025, compared to $4.9 million for the year ended December 31, 2024. The cost of interest-bearing liabilities decreased from 3.08% for the year ended December 31, 2024 to 2.68% for the year ended December 31, 2025, and average interest-bearing liabilities decreased from $14.63 billion to $14.44 billion. The decrease in average-interest bearing liabilities is primarily due to a $638.8 million decrease in FHLB & other borrowed funds, a $66.0 million decrease in subordinated debentures and a $17.4 million decrease in securities sold under agreement to repurchase, which was partially offset by a $531.3 million increase in average interest-bearing deposits. The reduction in FHLB & other borrowed funds was due to the Company paying off its Bank Term Funding Program ("BTFP") advance in November 2024. Prior to paying off the advance, the Company held approximately $500 million in excess liquidity, which was dilutive to the net interest margin by approximately 8 basis points. The reduction in subordinated debentures was due to the Company completing the payoff of its $140.0 million 5.50% Fixed-to-Floating Rate Subordinated Notes due 2030 and the Company also repurchasing $20.0 million of its $300.0 million Fixed-to-Floating Rate Subordinated Notes due 2032 during the third quarter of 2025. The two payoff events were accretive to the net interest margin by approximately one basis point. The overall increase in the net interest margin was due to a decrease in interest expense resulting from a decrease in interest rates paid on interest-bearing liabilities, a decrease in interest expense resulting from a reduction in the average balance of interest-bearing liabilities and an increase in interest income resulting from the increase in the average balance of interest-earning assets which was partially offset by a decrease in interest income due to a reduction in asset yields.
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Our efficiency ratio was 40.88% for the year ended December 31, 2025, compared to 42.74% for the same period in 2024. For the year ended December 31, 2025, our efficiency ratio, as adjusted (non-GAAP), was 41.29%, compared to 42.65% reported for the year ended December 31, 2024. (See Table 35 for the non-GAAP tabular reconciliation.)
Our return on average assets was 2.10% for the year ended December 31, 2025, compared to 1.77% for the same period in 2024, and our return on average assets, as adjusted (non-GAAP), was 2.05% for the year ended December 31, 2025, compared to 1.77% for the same period in 2024. (See Table 32 for the non-GAAP tabular reconciliation.) Our return on average common equity was 11.61% for the year ended December 31, 2025, compared to 10.43% for the same period in 2024.
Financial Condition as of and for the Years Ended December 31, 2025 and 2024
Our total assets as of December 31, 2025 increased $391.1 million to $22.88 billion from the $22.49 billion reported as of December 31, 2024. The increase in total assets is primarily due to a $921.7 million increase in loans receivable, which was partially offset by a $243.0 million decrease in cash and cash equivalents and a $216.7 million decrease in investment securities resulting from paydowns and maturities. Our loan portfolio balance increased $921.7 million to $15.69 billion as of December 31, 2025, from $14.76 billion as of December 31, 2024. The increase in loans was due to $727.5 million in organic loan growth within our legacy footprint and $194.2 million of organic loan growth from our Centennial Commercial Finance Group ("CFG") franchise during 2025. Total deposits increased $333.7 million to $17.48 billion as of December 31, 2025 compared to $17.15 billion as of December 31, 2024. Subordinated debentures decreased by $160.0 million due to the Company completing the payoff of its $140.0 million 5.50% Fixed-to-Floating Rate Subordinated Notes due 2030 and the Company also repurchasing $20.0 million of its $300.0 million Fixed-to-Floating Rate Subordinated Notes due 2032 during the third quarter of 2025. FHLB and other borrowed funds decreased by $100.5 million, due to maturities of FHLB borrowings. Stockholders’ equity increased $335.8 million to $4.30 billion as of December 31, 2025, compared to $3.96 billion as of December 31, 2024. The increase in stockholders’ equity is primarily associated with the $475.4 million in net income and the $90.2 million in accumulated other comprehensive income, which were partially offset by the $158.9 million of shareholder dividends paid and the repurchase of $81.4 million of our common stock during 2025. The improvement in stockholders’ equity was 8.5% for the year ended December 31, 2025 compared to December 31, 2024.
As of December 31, 2025, our non-performing loans decreased to $85.0 million, or 0.54%, of total loans from $98.9 million, or 0.67%, of total loans as of December 31, 2024. The allowance for credit losses as a percentage of non-performing loans increased to 350.17% as of December 31, 2025, compared to 278.99% as of December 31, 2024. As of December 31, 2025, our non-performing assets decreased to $124.8 million, or 0.55%, of total assets from $142.4 million, or 0.63%, of total assets as of December 31, 2024.
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. 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. This consisted of a $48.4 million provision for credit losses on loans, which was partially offset by a $330,000 recovery of credit losses on available-for-sale investments due to an improvement in the unrealized loss position for one of our subordinated debt investments. Of the $48.4 million provision for credit losses on loans recorded, $33.4 million was used to establish a hurricane reserve for loans located in the Federal Emergency Management Agency ("FEMA") disaster areas impacted by Hurricanes Helene and Milton, which made landfall during the third and fourth quarters of 2024. The hurricane related reserve had a $0.13 impact to diluted earnings per share. The remaining portion of the provision was related to loan growth. For the year ended December 31, 2024, the Company recorded a $3.0 million increase in the fair value of marketable securities, a $2.1 million gain on sale of a building from our Texas market, $257,000 in BOLI death benefits and $2.3 million in Federal Deposit Insurance Corporation ("FDIC") special assessment expense.
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Total interest income increased by $124.7 million, or 10.6%, and non-interest expense decreased by $25.9 million, or 5.5%. This was partially offset by a $102.9 million, or 29.6%, increase in interest expense and a $1.4 million, or 0.8%, decrease in non-interest income. The increase in interest income resulted from a $110.4 million, or 11.2%, increase in loan interest income and a $27.8 million, or 184.7%, increase in interest income on deposits at other banks, which was partially offset by a $13.4 million, or 7.9%, decrease in investment income. The decrease in non-interest expense was due to a $15.9 million, or 6.2%, decrease in salaries and employee benefits, a $7.9 million, or 6.6%, decrease in other operating expenses and a $2.3 million, or 3.8%, decrease in occupancy and equipment expense. The increase in interest expense was primarily due to an $80.7 million, or 27.3%, increase in interest on deposits, a $21.6 million, or 70.2%, increase in interest on FHLB and other borrowed funds and a $635,000, or 13.2%, increase in interest on securities sold under agreements to repurchase. The decrease in non-interest income was primarily due to an $8.5 million, or 22.2%, decrease in other income, a $2.6 million, or 784.3% decrease, in the gain/loss on OREO and a $1.2 million, or 2.7% decrease, in other service charges and fees, which were partially offset by a $5.1 million, or 47.0%, increase in mortgage lending income and a $4.1 million, or 371.6%, increase in income from the fair value adjustment for marketable securities.
Our net interest margin on a fully taxable equivalent basis increased from 4.25% for the year ended December 31, 2023 to 4.27% for the year ended December 31, 2024. The yield on interest earning assets was 6.51% and 6.03% for the year ended December 31, 2024 and 2023, respectively, as average interest earning assets increased from $19.57 billion to $20.09 billion. The increase in average interest earning assets is primarily due to a $499.7 million increase in average interest-bearing balances due from banks and a $360.3 million increase in average loans receivable, which were partially offset by a $341.8 million decrease in average investment securities. For the years ended December 31, 2024 and 2023, we recognized $8.1 million and $10.6 million, respectively, in total net accretion for acquired loans and deposits. The reduction in accretion was dilutive to the net interest margin by approximately 1 basis point. We recognized $4.9 million in event income for the year ended December 31, 2024, compared to $3.0 million for the year ended December 31, 2023. This increase was accretive to the net interest margin by 1 basis point. During the year ended December 31, 2024, the Company held approximately $500 million in excess liquidity, which was dilutive to the net interest margin by 8 basis points. The overall increase in the net interest margin was due to an increase in interest income from higher yields on average interest-earning assets and an increase in interest income due to changes in interest earning assets, partially offset by an increase in interest expense due to changes in interest-bearing liabilities and a change in interest rates paid on interest-bearing liabilities.
Our efficiency ratio was 42.74% for the year ended December 31, 2024, compared to 46.21% for the same period in 2023. For the year ended December 31, 2024, our efficiency ratio, as adjusted (non-GAAP), was 42.65%, compared to 45.24% reported for the year ended December 31, 2023. (See Table 35 for the non-GAAP tabular reconciliation.)
Our return on average assets was 1.77% for the both the years ended December 31, 2024 and 2023, and our return on average assets, as adjusted (non-GAAP), was 1.77% for the year ended December 31, 2024, compared to 1.79% for the same period in 2023. (See Table 32 for the non-GAAP tabular reconciliation.) Our return on average common equity was 10.43% for the year ended December 31, 2024, compared to 10.82% for the same period in 2023.
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. The decrease in total assets is primarily due to a $442.0 million decrease in investment securities resulting from paydowns and maturities and a $89.9 million decrease in cash and cash equivalents during the year. Our loan portfolio balance increased $339.8 million to $14.76 billion as of December 31, 2024, from $14.42 billion as of December 31, 2023. The increase in loans was due to $471.4 million in organic loan growth within our legacy footprint, which was partially offset by $131.7 million of organic loan decline from our CFG franchise during 2024. Total deposits increased $358.6 million to $17.15 billion as of December 31, 2024 compared to $16.79 billion as of December 31, 2023. Stockholders’ equity increased $170.0 million to $3.96 billion as of December 31, 2024, compared to $3.79 billion as of December 31, 2023. The increase in stockholders’ equity is primarily associated with the $402.2 million in net income, which was partially offset by the $150.0 million of shareholder dividends paid, the repurchase of $86.1 million of our common stock during 2024 and the $7.0 million decrease in accumulated other comprehensive income. 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, our non-performing loans increased to $98.9 million, or 0.67%, of total loans from $64.1 million, or 0.44%, of total loans as of December 31, 2023. The allowance for credit losses as a percentage of non-performing loans decreased to 278.99% as of December 31, 2024, compared to 449.66% as of December 31, 2023. As of December 31, 2024, our non-performing assets increased to $142.4 million, or 0.63%, of total assets from $95.4 million, or 0.42%, of total assets as of December 31, 2023.
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Critical Accounting Policies and Estimates
Overview . We prepare our consolidated financial statements based on the selection of certain accounting policies, generally accepted accounting principles and customary practices in the banking industry. These policies, in certain areas, require us to make significant estimates and assumptions. Our accounting policies are described in detail in the notes to our consolidated financial statements included as part of this document.
We consider a policy critical if (i) the accounting estimate requires assumptions about matters that are highly uncertain at the time of the accounting estimate; and (ii) different estimates that could reasonably have been used in the current period, or changes in the accounting estimate that are reasonably likely to occur from period to period, would have a material impact on our financial statements. Using these criteria, we believe that the accounting policies most critical to us are those associated with our lending practices, including the accounting for the allowance for credit losses, foreclosed assets, investments, intangible assets, income taxes and stock options.
Revenue Recognition . Accounting Standards Codification ("ASC") Topic 606, Revenue from Contracts with Customers ("ASC Topic 606"), establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity's contracts to provide goods or services to customers. The core principle requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration that it expects to be entitled to receive in exchange for those goods or services recognized as performance obligations are satisfied. The majority of our revenue-generating transactions are not subject to ASC Topic 606, including revenue generated from financial instruments, such as our loans, letters of credit, investment securities and mortgage lending income, as these activities are subject to other GAAP discussed elsewhere within our disclosures. Descriptions of our revenue-generating activities that are within the scope of ASC Topic 606, which are presented in our income statements as components of non-interest income are as follows:
• Service charges on deposit accounts – These represent general service fees for monthly account maintenance and activity or transaction-based fees and consist of transaction-based revenue, time-based revenue (service period), item-based revenue or some other individual attribute-based revenue. Revenue is recognized when our performance obligation is completed, which is generally monthly for account maintenance services or when a transaction has been completed (such as a wire transfer). Payment for such performance obligations are generally received at the time the performance obligations are satisfied.
• Other service charges and fees – These represent credit card interchange fees and Centennial CFG loan fees. The interchange fees are recorded in the period the performance obligation is satisfied which is generally the cash basis based on agreed upon contracts. 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 $21.4 million and $21.8 million for the years ended December 31, 2025 and December 31, 2024, respectively. Centennial CFG loan fees were $13.8 million and $9.5 million for the years ended December 31, 2025 and December 31, 2024, 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 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 . We account for credit losses in accordance with ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("ASC 326" or "CECL"). The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including loan receivables and held-to-maturity debt securities. 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.
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Investments – Available-for-sale . Securities available-for-sale ("AFS") are reported at fair value with unrealized holding gains and losses reported as a separate component of stockholders’ equity and other comprehensive income (loss), net of taxes. Securities that are held as available-for-sale are used as a part of our asset/liability management strategy. Securities that may be sold in response to interest rate changes, changes in prepayment risk, the need to increase regulatory capital, and other similar factors are classified as available-for-sale. The Company evaluates all securities quarterly to determine if any securities in a loss position require a provision for credit losses in accordance with ASC 326. The Company first assesses whether it intends to sell or whether it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through income. For securities that do not meet this criteria, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, the Company considers the extent to which fair value is less than amortized cost, and changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis. Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income. The Company has made the election to exclude accrued interest receivable on AFS securities from the estimate of credit losses and report accrued interest separately on the consolidated balance sheets. Changes in the allowance for credit losses are recorded as provision for (or recovery of) credit loss expense. Losses are charged against the allowance when management believes the uncollectability of a security is confirmed or when either of the criteria regarding intent or requirement to sell is met.
Investments – Held-to-Maturity. Debt securities held-to-maturity ("HTM"), which include any security for which we have the positive intent and ability to hold until maturity, are reported at historical cost adjusted for amortization of premiums and accretion of discounts. Premiums and discounts are amortized/accreted to the call date to interest income using the constant effective yield method over the estimated life of the security. The Company evaluates all securities quarterly to determine if any securities in a loss position require a provision for credit losses in accordance with ASC 326. The Company measures expected credit losses on HTM securities on a collective basis by major security type, with each type sharing similar risk characteristics. The estimate of expected credit losses considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts. The Company has made the election to exclude accrued interest receivable on HTM securities from the estimate of credit losses and report accrued interest separately on the consolidated balance sheets. Changes in the allowance for credit losses are recorded as provision for (or recovery of) credit loss expense. Losses are charged against the allowance when management believes the uncollectability of a security is confirmed.
Loans Receivable and Allowance for Credit Losses . Loans receivable that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at their outstanding principal balance adjusted for any charge-offs, deferred fees or costs on originated loans. Interest income on loans is accrued over the term of the loans based on the principal balance outstanding. Loan origination fees and direct origination costs are capitalized and recognized as adjustments to yield on the related loans.
The allowance for credit losses on loans receivable is a valuation account that is deducted from the loans’ amortized cost basis to present the net amount expected to be collected on the loans. Loans are charged off against the allowance when management believes the uncollectability of a loan balance is confirmed and expected recoveries do not exceed the aggregate of amounts previously charged-off and expected to be charged-off.
The Company uses the discount cash flow ("DCF") method to estimate expected losses for all of Company’s loan pools. These pools are as follows: construction & land development; other commercial real estate; residential real estate; commercial & industrial; and consumer & other. The loan portfolio pools were selected in order to generally align with the loan categories specified in the quarterly call reports required to be filed with the Federal Financial Institutions Examination Council. For each of these loan pools, the Company generates cash flow projections at the instrument level wherein payment expectations are adjusted for estimated prepayment speed, curtailments, time to recovery, probability of default, and loss given default. The modeling of expected prepayment speeds, curtailment rates, and time to recovery are based on historical internal data. The Company uses regression analysis of historical internal and peer data to determine suitable loss drivers to utilize when modeling lifetime probability of default and loss given default. This analysis also determines how expected probability of default and loss given default will react to forecasted levels of the loss drivers.
For all DCF models, management has determined that four quarters represents a reasonable and supportable forecast period and reverts to a historical loss rate over four quarters on a straight-line basis. Management leverages economic projections from a reputable and independent third party to inform its loss driver forecasts over the four-quarter forecast period. Other internal and external indicators of economic forecasts are also considered by management when developing the forecast metrics.
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Management estimates the allowance balance using relevant available information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. Historical credit loss experience provides the basis for the estimation of expected credit losses. Adjustments to historical loss information are made for differences in current loan-specific risk characteristics such as differences in underwriting standards, portfolio mix, delinquency level, or term as well as for changes in environmental conditions, such as changes in the national unemployment rate, gross domestic product, national retail sales index, the Federal Housing Finance Agency ("FHFA") housing price index and rental vacancy rate index.
The allowance for credit losses is measured based on call report segment as these types of loans exhibit similar risk characteristics. The identified loan segments are as follows:
• 1-4 family residential construction loans
• Other construction loans and all land development and other land loans
• Loans secured by farmland (including farm residential and other improvements)
• Revolving, open-end loans secured by 1-4 family residential properties and extended under lines
• Secured by first liens
• Secured by junior liens
• Secured by multifamily (5 or more) residential properties
• Loans secured by owner-occupied, nonfarm nonresidential properties
• Loans secured by other nonfarm nonresidential properties
• Loans to finance agricultural production and other loans to farmers
• Commercial and industrial loans
• Other revolving credit plans
• Automobile loans
• Other consumer loans
• Other consumer loans - Shore Premier Finance
• Obligations (other than securities and leases) of states and political subdivisions in the US
• Loans to nondepository financial institutions
• Loans for purchasing or carrying securities
• All other loans
• Leases
Loans considered to be collateral dependent, according to ASC 326, are loans for which repayment is expected to be provided substantially through the operation or sale of the collateral when the borrower is experiencing financial difficulty based on the Company's assessment as of the reporting date. The aggregate amount of collateral shortfall on such loans is utilized in evaluating the adequacy of the allowance for credit losses and amount of provisions thereto. Losses on collateral dependent loans are charged against the allowance for credit losses when in the process of collection, it appears likely that such losses will be realized. The accrual of interest on collateral dependent loans is discontinued when, in management’s opinion the collection of interest is doubtful or generally when loans are 90 days or more past due. When accrual of interest is discontinued, all unpaid accrued interest is reversed. Interest income is subsequently recognized only to the extent cash payments are received in excess of principal due. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.
Loans evaluated individually that are considered to be collateral dependent are not included in the collective evaluation. For these loans, where the Company has determined that foreclosure of the collateral is probable, or where the borrower is experiencing financial difficulty and the Company expects repayment of the loan to be provided substantially through the operation or sale of the collateral, the allowance for credit losses is measured based on the difference between the fair value of the collateral, net of estimated costs to sell, and the amortized cost basis of the loan as of the measurement date. When repayment is expected to be from the operation of the collateral, expected credit losses are calculated as the amount by which the amortized cost basis of the loan exceeds the present value of expected cash flows from the operation of the collateral. The allowance for credit losses may be zero if the fair value of the collateral at the measurement date exceeds the amortized cost basis of the loan, net of estimated costs to sell. For individually analyzed loans which are not considered to be collateral dependent, an allowance is recorded based on the loss rate for the respective pool within the collective evaluation.
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Expected credit losses are estimated over the contractual term of the loans, adjusted for expected prepayments and curtailments when appropriate. The contractual term excludes expected extensions, renewals, and modifications unless either of the following applies:
• Management has a reasonable expectation at the reporting date that restructured loans made to borrowers experiencing financial difficulty will be executed with an individual borrower.
• The extension or renewal options are included in the original or modified contract at the reporting date and are not unconditionally cancellable by the Company.
Management qualitatively adjusts model results for risk factors that are not considered within our modeling processes but are nonetheless relevant in assessing the expected credit losses within our loan pools. These qualitative factors ("Q-Factors") and other qualitative adjustments may increase or decrease management's estimate of expected credit losses by a calculated percentage or amount based upon the estimated level of risk. The various risks that may be considered in making Q-Factor and other qualitative adjustments include, among other things, the impact of (i) changes in lending policies, procedures and strategies; (ii) changes in nature and volume of the portfolio; (iii) staff experience; (iv) changes in volume and trends in classified loans, delinquencies and nonaccruals; (v) concentration risk; (vi) trends in underlying collateral values; (vii) external factors such as competition, legal and regulatory environment; (viii) changes in the quality of the loan review system and (ix) economic conditions.
Loans are placed on non-accrual status when management believes that the borrower’s financial condition, after giving consideration to economic and business conditions and collection efforts, is such that collection of interest is doubtful, or generally when loans are 90 days or more past due. Loans are charged against the allowance for credit losses when management believes that the collectability of the principal is unlikely. Accrued interest related to non-accrual loans is generally charged against the allowance for credit losses when accrued in prior years and reversed from interest income if accrued in the current year. Interest income on non-accrual loans may be recognized to the extent cash payments are received, although the majority of payments received are usually applied to principal. Non-accrual loans are generally returned to accrual status when principal and interest payments are less than 90 days past due, the customer has made the required payments for at least six months, and we reasonably expect to collect all principal and interest.
Allowance for Credit Losses on Off-Balance Sheet Credit Exposures : The Company estimates expected credit losses over the contractual period in which the Company is exposed to credit risk via a contractual obligation to extend credit unless that obligation is unconditionally cancellable by the Company. The allowance for credit losses on off-balance sheet credit exposures is adjusted as a provision for or recovery of credit loss expense. The estimate includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded over its estimated life.
Foreclosed Assets Held for Sale . Real estate and personal properties acquired through or in lieu of loan foreclosure are to be sold and are initially recorded at fair value at the date of foreclosure, establishing a new cost basis. Valuations are periodically performed by management, and the real estate and personal properties are carried at fair value less costs to sell. Gains and losses from the sale of other real estate and personal properties are recorded in non-interest income, and expenses used to maintain the properties are included in non-interest expenses.
Intangible Assets . Intangible assets consist of goodwill and core deposit intangibles. Goodwill represents the excess purchase price over the fair value of net assets acquired in business acquisitions. The core deposit intangible represents the excess intangible value of acquired deposit customer relationships as determined by valuation specialists. The core deposit intangibles are being amortized over 48 months to 121 months on a straight-line basis. Goodwill is not amortized but rather is evaluated for impairment on at least an annual basis. We perform an annual impairment test of goodwill and core deposit intangibles as required by FASB ASC 350, Intangibles - Goodwill and Other , in the fourth quarter or more often if events and circumstances indicate there may be an impairment.
Income Taxes . We account for income taxes in accordance with income tax accounting guidance (ASC 740, Income Taxes ). The income tax accounting guidance results in two components of income tax expense: current and deferred. Current income tax expense reflects taxes to be paid or refunded for the current period by applying the provisions of the enacted tax law to the taxable income or excess of deductions over revenues. We determine deferred income taxes using the liability (or balance sheet) method. Under this method, the net deferred tax asset or liability is based on the tax effects of the differences between the book and tax basis of assets and liabilities, and enacted changes in tax rates and laws are recognized in the period in which they occur.
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Deferred income tax expense results from changes in deferred tax assets and liabilities between periods. Deferred tax assets are recognized if it is more likely than not, based on the technical merits, that the tax position will be realized or sustained upon examination. The term “more likely than not” means a likelihood of more than 50 percent; the terms “examined” and “upon examination” also include resolution of the related appeals or litigation processes, if any. A tax position that meets the more-likely-than-not recognition threshold is initially and subsequently measured as the largest amount of tax benefit that has a greater than 50 percent likelihood of being realized upon settlement with a taxing authority that has full knowledge of all relevant information. The determination of whether or not a tax position has met the more-likely-than-not recognition threshold considers the facts, circumstances and information available at the reporting date and is subject to the management’s judgment. Deferred tax assets are reduced by a valuation allowance if, based on the weight of evidence available, it is more likely than not that some portion or all of a deferred tax asset will not be realized.
Both we and our subsidiary file consolidated tax returns. Our subsidiary provides for income taxes on a separate return basis, and remits to us amounts determined to be currently payable.
Stock Compensation . In accordance with FASB ASC 718, Compensation - Stock Compensation , and FASB ASC 505-50, Equity-Based Payments to Non-Employees , the fair value of each option award is estimated on the date of grant. We recognize compensation expense for the grant-date fair value of the option award over the vesting period of the award.
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.
During the year ended December 31, 2025, we closed one branch in Jacksonville, Arkansas, and we opened a new branch in San Antonio, Texas.
As of December 31, 2025, we had 218 branch locations. There were 75 branches in Arkansas, 78 branches in Florida, 59 branches in Texas, five branches in Alabama and one branch in New York City.
Results of Operations for the Years Ended December 31, 2025, 2024 and 2023
Our net income increased $73.2 million, or 18.2%, to $475.4 million for the year ended December 31, 2025, from $402.2 million for the same period in 2024. On a diluted earnings per share basis, our earnings were $2.41 per share for the year ended December 31, 2025 and $2.01 per share for the year ended December 31, 2024. The Company recorded $20.9 million in credit loss expense for the year ended December 31, 2025. This consisted of a $24.1 million provision for credit losses on loans, which was partially offset by a $2.2 million recovery of credit losses on available-for-sale investments and a $1.0 million recovery of credit losses on unfunded commitments. For the year ended December 31, 2025, the Company recorded $7.4 million in special income from equity investments, a $2.4 million increase in the fair value of marketable securities, $2.0 million in recoveries on historic losses, a $1.9 million gain on the retirement of subordinated debentures, $1.5 million in income from an FDIC assessment reduction, $1.4 million in BOLI death benefits, a $983,000 gain on sale of a building from our Texas market and $885,000 in legal fee reimbursements, which were partially offset by $3.3 million in legal claims expense and $580,000 in merger expense.
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. 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. This consisted of a $48.4 million provision for credit losses on loans, which was partially offset by a $330,000 recovery of credit losses on available-for-sale investments due to an improvement in the unrealized loss position for one of our subordinated debt investments. Of the $48.4 million provision for credit losses on loans recorded, $33.4 million was used to establish a hurricane reserve for loans located in the FEMA disaster areas impacted by Hurricanes Helene and Milton, which made landfall during the third and fourth quarters of 2024. The hurricane related reserve had a $0.13 impact to diluted earnings per share. The remaining portion of the provision was related to loan growth. For the year ended December 31, 2024, the Company recorded a $3.0 million increase in the fair value of marketable securities, a $2.1 million gain on sale of a building from our Texas market, $257,000 in BOLI death benefits and $2.3 million in FDIC special assessment expense.
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Net Interest Income
Net interest income, our principal source of earnings, is the difference between the interest income generated by earning assets and the total interest cost of the deposits and borrowings obtained to fund those assets. Factors affecting the level of net interest income include the volume of earning assets and interest-bearing liabilities, yields earned on loans and investments and rates paid on deposits and other borrowings, the level of non-performing loans and the amount of non-interest-bearing liabilities supporting earning assets. Net interest income is analyzed in the discussion and tables below on a fully taxable equivalent basis. 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 (24.359% for the year ended December 31, 2025, 24.433% for the year ended December 31, 2024 and 24.989% for year ended December 31, 2023).
The Federal Reserve Board sets various benchmark rates, including the Federal Funds rate, and thereby influences the general market rates of interest, including the deposit and loan rates offered by financial institutions. The Federal Reserve reduced the target rate three times during 2024. First, on September 18, 2024, the Federal Reserve reduced the target rate to 4.75% to 5.00%, second, on November 7, 2024, the target rate was reduced to 4.50% to 4.75% and third, on December 18, 2024, the target rate was reduced to 4.25% to 4.50%. The Federal Reserve reduced the target rate three times during 2025. First, on September 17, 2025, the Federal Reserve reduced the target rate to 4.00% to 4.25%, second, on October 29, 2025, the target rate was reduced to 3.75% to 4.00% and third, on December 10, 2025, the target rate was reduced to 3.50% to 3.75%.
Our net interest margin on a fully taxable equivalent basis increased from 4.27% for the year ended December 31, 2024 to 4.51% for the year ended December 31, 2025. The yield on interest earning assets was 6.45% and 6.51% for the year ended December 31, 2025 and 2024, respectively, as average interest earning assets decreased from $20.09 billion to $20.00 billion. The decrease in average interest earning assets is primarily due to a $379.3 million decrease in average investment securities and a $209.1 million decrease in average interest-bearing balances due from banks, which was partially offset by a $494.9 million increase in average loans receivable. For the years ended December 31, 2025 and 2024, we recognized $5.1 million and $8.1 million, respectively, in total net accretion for acquired loans and deposits. The reduction in accretion was dilutive to the net interest margin by approximately 2 basis points. We recognized $6.0 million in event income for the year ended December 31, 2025, compared to $4.9 million for the year ended December 31, 2024. The cost of interest-bearing liabilities decreased from 3.08% for the year ended December 31, 2024 to 2.68% for the year ended December 31, 2025, and average interest-bearing liabilities decreased from $14.63 billion to $14.44 billion. The decrease in average-interest bearing liabilities is primarily due to a $638.8 million decrease in FHLB & other borrowed funds, a $66.0 million decrease in subordinated debentures and a $17.4 million decrease in securities sold under agreement to repurchase, which was partially offset by a $531.3 million increase in average interest-bearing deposits. The reduction in FHLB & other borrowed funds was due to the Company paying off its BTFP advance in November 2024. Prior to paying off the advance, the Company held approximately $500 million in excess liquidity, which was dilutive to the net interest margin by approximately 8 basis points. The reduction in subordinated debentures was due to the Company completing the payoff of its $140.0 million 5.50% Fixed-to-Floating Rate Subordinated Notes due 2030 and the Company also repurchasing $20.0 million of its $300.0 million Fixed-to-Floating Rate Subordinated Notes due 2032 during the third quarter of 2025. The two payoff events were accretive to the net interest margin by approximately one basis point. The overall increase in the net interest margin was due to a decrease in interest expense resulting from a decrease in interest rates paid on interest-bearing liabilities, a decrease in interest expense resulting from a reduction in the average balance of interest-bearing liabilities and an increase in interest income resulting from the increase in the average balance of interest-earning assets which was partially offset by a decrease in interest income due to a reduction in asset yields.
Net interest income on a fully taxable equivalent basis increased $45.3 million, or 5.3%, to $902.6 million for the year ended December 31, 2025, from $857.3 million for the same period in 2024. This increase in net interest income was the result of a $64.5 million decrease in interest expense, partially offset by a $19.3 million decrease in interest income on a fully taxable equivalent basis. The $64.5 million decrease in interest expense is primarily the result of a lower interest rate environment. The lower rates on interest bearing liabilities resulted in a decrease in interest expense of approximately $51.8 million, and the change in interest bearing liabilities resulted in a decrease in interest expense of approximately $12.7 million. The $19.3 million decrease in interest income was also primarily the result of the lower interest rate environment. The lower yield on earning assets resulted in a decrease in interest income of approximately $32.8 million, while the change in earning assets resulted in an increase in interest income of approximately $13.5 million.
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Our net interest margin on a fully taxable equivalent basis increased from 4.25% for the year ended December 31, 2023 to 4.27% for the year ended December 31, 2024. The yield on interest earning assets was 6.51% and 6.03% for the year ended December 31, 2024 and 2023, respectively, as average interest earning assets increased from $19.57 billion to $20.09 billion. The increase in average interest earning assets is primarily due to a $499.7 million increase in average interest-bearing balances due from banks and a $360.3 million increase in average loans receivable, which were partially offset by a $341.8 million decrease in average investment securities. For the years ended December 31, 2024 and 2023, we recognized $8.1 million and $10.6 million, respectively, in total net accretion for acquired loans and deposits. The reduction in accretion was dilutive to the net interest margin by approximately 1 basis point. We recognized $4.9 million in event income for the year ended December 31, 2024, compared to $3.0 million for the year ended December 31, 2023. This increase was accretive to the net interest margin by 1 basis point. During the year ended December 31, 2024, the Company held approximately $500 million in excess liquidity, which was dilutive to the net interest margin by 8 basis points. The overall increase in the net interest margin was due to an increase in interest income from higher yields on average interest-earning assets and an increase in interest income due to changes in interest earning assets, partially offset by an increase in interest expense due to changes in interest-bearing liabilities and a change in interest rates paid on interest-bearing liabilities.
Net interest income on a fully taxable equivalent basis increased $24.9 million, or 3.0%, to $857.3 million for the year ended December 31, 2024, from $832.5 million for the same period in 2023. This increase in net interest income was the result of a $127.8 million increase in interest income, partially offset by a $102.9 million increase in interest expense on a fully taxable equivalent basis. The $127.8 million increase in interest income was primarily the result of the high interest rate environment. The higher yield on earning assets resulted in an increase in interest income of approximately $88.5 million, and the change in earning assets resulted in an increase in interest income of approximately $39.3 million. The $102.9 million increase in interest expense was also primarily the result of the high interest rate environment. The higher rates on interest bearing liabilities resulted in an increase in interest expense of approximately $68.9 million, and the change in interest bearing liabilities resulted in an increase in interest expense of approximately $34.0 million.
Tables 2 and 3 reflect an analysis of net interest income on a fully taxable equivalent basis for the years ended December 31, 2025, 2024 and 2023, as well as changes in fully taxable equivalent net interest margin for the years 2025 compared to 2024 and 2024 compared to 2023.
Table 2: Analysis of Net Interest Income
Years Ended December 31,
(Dollars in thousands)
Interest income
Fully taxable equivalent adjustment
Interest income – fully taxable equivalent
Interest expense
Net interest income – fully taxable equivalent
Yield on earning assets – fully taxable equivalent
Cost of interest-bearing liabilities
Net interest spread – fully taxable equivalent
Net interest margin – fully taxable equivalent
Table 3: Changes in Fully Taxable Equivalent Net Interest Margin
December 31,
(In thousands)
Increase in interest income due to change in earning assets
(Decrease) increase in interest income due to change in earning asset yields
Decrease (increase) in interest expense due to change in interest-bearing liabilities
Decrease (increase) in interest expense due to change in interest rates paid on interest-bearing liabilities
Increase in net interest income
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Table 4 shows, for each major category of earning assets and interest-bearing liabilities, the average amount outstanding, the interest income or expense on that amount and the average rate earned or expensed for the years ended December 31, 2025, 2024 and 2023. The table also shows the average rate earned on all earning assets, the average rate expensed on all interest-bearing liabilities, the net interest spread and the net interest margin for the same periods. The analysis is presented on a fully taxable equivalent basis. Non-accrual loans were included in average loans for the purpose of calculating the rate earned on total loans.
Table 4: Average Balance Sheets and Net Interest Income Analysis
Years Ended December 31,
Average
Balance
Income /
Expense
Yield /
Rate
Average
Balance
Income /
Expense
Yield /
Rate
Average
Balance
Income /
Expense
Yield /
Rate
(Dollars in thousands)
ASSETS
Earnings assets
Interest-bearing balances due from banks
Federal funds sold
Investment securities – taxable
Investment securities – non-taxable
Loans receivable
Total interest-earning assets
Non-earning assets
Total assets
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Interest-bearing liabilities
Savings and interest-bearing transaction accounts
Time deposits
Total interest-bearing deposits
Federal funds purchased
Securities sold under agreement to repurchase
FHLB & other borrowed funds
Subordinated debentures
Total interest-bearing liabilities
Non-interest-bearing liabilities
Non-interest-bearing deposits
Other liabilities
Total liabilities
Stockholders’ equity
Total liabilities and stockholders’ equity
Net interest spread
Net interest income and margin
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Table 5 shows changes in interest income and interest expense resulting from changes in volume and changes in interest rates for the year ended December 31, 2025 compared to 2024 and 2024 compared to 2023 on a fully taxable equivalent basis. The changes in interest rate and volume have been allocated to changes in average volume and changes in average rates, in proportion to the relationship of absolute dollar amounts of the changes in rates and volume.
Table 5: Volume/Rate Analysis
Years Ended December 31,
2025 over 2024
2024 over 2023
Volume
Yield /
Rate
Total
Volume
Yield /
Rate
Total
(In thousands)
Increase (decrease) in:
Interest income:
Interest-bearing balances due from banks
Federal funds sold
Investment securities – taxable
Investment securities – non-taxable
Loans receivable
Total interest income
Interest expense:
Interest-bearing transaction and savings deposits
Time deposits
Federal funds purchased
Securities sold under agreement to repurchase
FHLB & other borrowed funds
Subordinated debentures
Total interest expense
Increase in net interest income
Provision for Credit Losses
Credit Loss Expense : During the year ended December 31, 2025, the Company recorded $20.9 million in credit loss expense. This consisted of a $24.1 million provision for credit losses on loans, which was partially offset by a $2.2 million recovery of credit losses on available-for-sale investments and a $1.0 million recovery of credit losses on unfunded commitments. The Company determined the $2.0 million allowance for credit losses on the held-to-maturity portfolio was adequate. Therefore, no additional provision was considered necessary for the held-to-maturity portfolio. During the year ended December 31, 2024, the Company recorded $48.1 million in credit loss expense. This consisted of a $48.4 million provision for credit losses on loans, which was partially offset by a $330,000 recovery of credit losses on available-for-sale investments due to an improvement in the unrealized loss position for one of our subordinated debt investments. Of the $48.4 million provision for credit losses on loans recorded, $33.4 million was used to establish a hurricane reserve for loans located in the FEMA disaster areas impacted by Hurricanes Helene and Milton, which made landfall during the third and fourth quarters of 2024. The Company determined the $2.0 million allowance for credit losses on the held-to-maturity portfolio was adequate. Therefore, no additional provision was considered necessary for the held-to-maturity portfolio.
Net charge-offs to average total loans decreased to 0.02% for the year ended December 31, 2025 from 0.41% for the year ended December 31, 2024. Net charge-offs decreased by $58.4 million for the year ended December 31, 2025 compared to December 31, 2024. During the fourth quarter of 2024, the Company completed an asset quality cleanup project which drove the increase in the level of charge-offs during the year ended December 31, 2024. Non-performing loans to total loans decreased from 0.67% as of December 31, 2024 to 0.54% as of December 31, 2025.
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Non-Interest Income
Total non-interest income was $198.5 million in 2025, compared to $168.6 million in 2024 and $169.9 million in 2023. Our recurring non-interest income includes service charges on deposit accounts, other service charges and fees, trust fees, mortgage lending, insurance commissions, increase in cash value of life insurance, fair value adjustment for marketable securities and dividends.
Table 6 measures the various components of our non-interest income for the years ended December 31, 2025, 2024, and 2023, respectively, as well as changes for the years 2025 compared to 2024 and 2024 compared to 2023.
Table 6: Non-Interest Income
Years Ended December 31,
2025 Change
from 2024
2024 Change
from 2023
(Dollars in thousands)
Service charges on deposit accounts
Other service charges and fees
Trust fees
Mortgage lending income
Insurance commissions
Increase in cash value of life insurance
Dividends from FHLB, FRB, FNBB & other
Gain on sale of SBA loans
Gain on sale of branches, equipment and other assets, net
(Loss) gain on OREO, net
Fair value adjustment for marketable securities
Other income
Total non-interest income
Non-interest income increased $29.9 million, or 17.8%, to $198.5 million for the year ended December 31, 2025 from $168.6 million for the same period in 2024. The primary factors that resulted in this increase were the increases in other income, other service charges and fees, gain on OREO, net, mortgage lending income and cash value of life insurance, partially offset by the decrease in gain on sale of branches, equipment and other assets, net. Other factors were changes related to service charges on deposit accounts, trust fees, dividends from FHLB, FRB, FNBB & other and fair value adjustment for marketable securities.
Additional details for the year ended December 31, 2025 on some of the more significant changes are as follows:
• The $945,000 increase in service charges on deposit accounts is primarily related to an increase in overdraft fees.
• The $3.6 million increase in other service charges and fees is primarily due to increases in Centennial CFG property finance loan fees.
• The $998,000 increase in trust fees is primarily related to an increase in personal trust and IRA fees.
• The $2.0 million increase in mortgage lending income is primarily related to an increase in volume of secondary market loans.
• The $1.2 million increase in cash value of life insurance is primarily related to gains recognized in connection with a tax-free exchange of BOLI policies under Section 1035 of the Internal Revenue Code.
• The $751,000 decrease in dividends from FHLB, FRB, Bankers' Bank and other was primarily due to a lower volume of dividends from the FHLB and equity investments.
• The $1.3 million decrease in the level of gain on sale of branches, equipment and other assets, net, is primarily due to the sale of a building from our Texas region during 2024.
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• The $2.1 million decrease in loss on OREO is primarily due to revaluation of two OREO properties during 2024, partially offset by a loss on the sale of a building from our Florida region during 2025.
• The $574,000 decrease in the fair value adjustment for marketable securities is due to the changes in the fair value of marketable securities held by the Company.
• The $21.7 million increase in other income is primarily due to a $7.8 million increase in income for equity method investments, which includes a $7.4 million in special income from equity investments, a $6.6 million increase in income from a lawsuit settlement, a $2.0 million increase in recoveries on historic losses, a $1.9 million gain on redemption of subordinated debt, a $1.9 million increase in investment brokerage fee income, a $1.2 million increase in BOLI death benefit income, an $828,000 increase in building rental income and a $670,000 increase in miscellaneous income.
Non-interest income decreased $1.4 million, or 0.8%, to $168.6 million for the year ended December 31, 2024 from $169.9 million for the same period in 2023. The primary factors that resulted in this decrease were the decreases in other income and gain on OREO, net partially offset by the increases in mortgage lending income and the fair value adjustment for marketable securities. Other factors were changes related to service charges on deposit accounts, trust fees, and gain on sale of branches, equipment and other assets.
Additional details for the year ended December 31, 2024 on some of the more significant changes are as follows:
• The $1.2 million decrease in other service charges and fees is primarily due to decreases in Centennial CFG property finance loan fees and Mastercard income.
• The $825,000 increase in trust fees is primarily related to an increase in personal trust fees, employee trust fees, IRA fees and retirement fees.
• The $5.1 million increase in mortgage lending income is primarily related to an increase in volume of secondary market loans from the lower volume of loans during 2023.
• The $595,000 increase in gain on sale of branches, equipment and other assets, net, is primarily due to the sale of a building from our Texas region during 2024.
• The $2.6 million decrease in gain on OREO is primarily due to revaluation of two OREO properties during 2024.
• The $4.1 million increase in the fair value adjustment for marketable securities is due to the changes in the fair value of marketable securities held by the Company.
• The $8.5 million decrease in other income is primarily due to a $7.4 million reduction in income for equity method investments, a $2.9 million reduction in BOLI death benefit income and a $3.0 million decrease in recoveries on historic losses, partially offset by a $2.2 million increase in rental income from OREO and a $2.1 million increase in investment brokerage fee income.
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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.
Table 7 below sets forth a summary of non-interest expense for the years ended December 31, 2025, 2024, and 2023, as well as changes for the years ended 2025 compared to 2024 and 2024 compared to 2023.
Table 7: Non-Interest Expense
Years Ended December 31,
2025 Change
from 2024
2024 Change
from 2023
(Dollars in thousands)
Salaries and employee benefits
Occupancy and equipment
Data processing expense
Merger expense
Other operating expenses:
Advertising
Amortization of intangibles
Electronic banking expense
Directors' fees
Due from bank service charges
FDIC and state assessment
Insurance
Legal and accounting
Other professional fees
Operating supplies
Postage
Telephone
Other expense
Total non-interest expense
Non-interest expense increased $11.2 million, or 2.5%, to $458.2 million for the year ended December 31, 2025, from $446.9 million for the same period in 2024. The primary factors that resulted in this increase was the increase in salaries and employee benefits expense, advertising expense and other expenses, partially offset by the decrease in FDIC and state assessment expense and data processing expense. Other factors were changes related to merger expense and electronic banking expense.
Additional details for the year ended December 31, 2025 on some of the more significant changes are as follows:
• The $11.8 million increase in salaries and employee benefits expense is primarily due to an increase in incentive compensation as a result of an increase in revenue for the Company combined with the additional costs of doing business.
• The $2.0 million decrease in data processing expense is primarily due relationship credits received as a result of a new contract.
• The $580,000 increase in merger expense is due to costs associated with the anticipated acquisition of Mountain Commerce Bancorp.
• The $1.1 million increase in advertising expense is primarily due to an increase in the volume of advertising.
• The $572,000 decrease in electronic banking expense is primarily due to a decrease in consulting expenses, partially offset by an increase in interchange network expenses.
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• The $4.2 million decrease in FDIC and state assessment expense is primarily due to a reversal adjustment from restating call report uninsured deposits from December 2022 through December 2024, which lowered assessment expense by $1.5 million, as well as the FDIC special assessment being incurred during the second quarter of 2024. The 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 $4.6 million increase in other expenses is primarily due to $3.3 million in legal claims expense being recorded during the second quarter of 2025 and a $1.6 million increase in loan fee expenses.
Non-interest expense decreased $25.9 million, or 5.5%, to $446.9 million for the year ended December 31, 2024, from $472.9 million for the same period in 2023. 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.
Additional details for the year ended December 31, 2024 on some of the more significant changes are as follows:
• The $15.9 million decrease in salaries and employee benefits expense is primarily due to the Company's project to reduce the size of its workforce and a decrease in deferred loan costs.
• The $2.3 million decrease in occupancy and equipment expense is primarily due to decreases in lease, utility, maintenance and other occupancy expenses.
• The $1.8 million decrease in advertising expense is primarily due to a decrease in the volume of advertising.
• The $1.2 million decrease in amortization of intangibles is primarily due to the core deposit intangible from the Company's 2013 acquisition of Liberty Bank being fully amortized in 2023.
• The $869,000 decrease in electronic banking expense is primarily due to a decrease in debit card processing fees and interchange network expenses.
• The $10.1 million decrease in FDIC and state assessment expense is primarily due to the $13.0 million FDIC special assessment levied during the fourth quarter of 2023 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, partially offset by the remaining portion of the FDIC special assessment being incurred during the second quarter of 2024.
• The $3.7 million increase in legal and accounting expense is primarily due to ongoing legal matters.
• The $673,000 decrease in other professional fees is primarily due to cost saving measures following the acquisition of Happy.
• The $4.0 million increase in other expenses is primarily related to an increase in OREO expense and miscellaneous costs, partially offset by decreases in travel expenses, reimbursable loan fees and other losses.
Income Taxes
During 2025, the Company lowered its marginal tax rate from 24.433% to 24.359%. In an effort to more accurately reflect legislative and current state income apportionment, the state tax rate was lowered to 4.252%. This lowered the blended rate to 24.359%. During 2024, the Company lowered its marginal tax rate from 24.989% to 24.433%. In an effort to more accurately reflect legislative and current state income apportionment, the state tax rate was lowered to 4.346%. This lowered the blended rate to 24.433%. During 2023, the Company increased its marginal tax rate from 24.6735% to 24.989%. 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%.
Income tax expense increased $16.3 million, or 13.5%, to $136.4 million for the year ended December 31, 2025, from $120.1 million for 2024. Income tax expense increased $1.1 million, or 1.0%, to $120.1 million for the year ended December 31, 2024, from $119.0 million for 2023. The effective tax rates for the years ended December 31, 2025, 2024 and 2023 were 22.29%, 22.99% and 23.24%, respectively. The Company’s marginal tax rate was 24.359%, 24.433% and 24.989% for years ended December 31, 2025, 2024 and 2023, respectively.
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Financial Condition as of and for the Years Ended December 31, 2025 and 2024
Our total assets as of December 31, 2025 increased $391.1 million to $22.88 billion from the $22.49 billion reported as of December 31, 2024. The increase in total assets is primarily due to a $921.7 million increase in loans receivable, which was partially offset by a $243.0 million decrease in cash and cash equivalents and a $216.7 million decrease in investment securities resulting from paydowns and maturities. Our loan portfolio balance increased $921.7 million to $15.69 billion as of December 31, 2025, from $14.76 billion as of December 31, 2024. The increase in loans was due to $727.5 million in organic loan growth within our legacy footprint and $194.2 million of organic loan growth from our CFG franchise during 2025. Total deposits increased $333.7 million to $17.48 billion as of December 31, 2025 compared to $17.15 billion as of December 31, 2024. Subordinated debentures decreased by $160.0 million due to the Company completing the payoff of its $140.0 million 5.50% Fixed-to-Floating Rate Subordinated Notes due 2030 and the Company also repurchasing $20.0 million of its $300.0 million Fixed-to-Floating Rate Subordinated Notes due 2032 during the third quarter of 2025. FHLB and other borrowed funds decreased by $100.5 million, due to maturities of FHLB borrowings. Stockholders’ equity increased $335.8 million to $4.30 billion as of December 31, 2025, compared to $3.96 billion as of December 31, 2024. The increase in stockholders’ equity is primarily associated with the $475.4 million in net income and the $90.2 million in accumulated other comprehensive income, which were partially offset by the $158.9 million of shareholder dividends paid and the repurchase of $81.4 million of our common stock during 2025. The improvement in stockholders’ equity was 8.5% for the year ended December 31, 2025 compared to December 31, 2024.
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. The decrease in total assets is primarily due to a $442.0 million decrease in investment securities resulting from paydowns and maturities and a $89.9 million decrease in cash and cash equivalents during the year. Our loan portfolio balance increased $339.8 million to $14.76 billion as of December 31, 2024, from $14.42 billion as of December 31, 2023. The increase in loans was due to $471.4 million in organic loan growth within our legacy footprint, which was partially offset by $131.7 million of organic loan decline from our CFG franchise during 2024. Total deposits increased $358.6 million to $17.15 billion as of December 31, 2024 compared to $16.79 billion as of December 31, 2023. Stockholders’ equity increased $170.0 million to $3.96 billion as of December 31, 2024, compared to $3.79 billion as of December 31, 2023. The increase in stockholders’ equity is primarily associated with the $402.2 million in net income, which was partially offset by the $150.0 million of shareholder dividends paid, the repurchase of $86.1 million of our common stock during 2024 and the $7.0 million decrease in accumulated other comprehensive income. The improvement in stockholders’ equity was 4.5% for the year ended December 31, 2024 compared to December 31, 2023.
Loan Portfolio
Our loan portfolio averaged $15.17 billion and $14.68 billion during the years ended December 31, 2025 and 2024, respectively. Loans receivable were $15.69 billion as of December 31, 2025 compared to $14.76 billion as of December 31, 2024, an increase of $921.7 million, or 6.2%.
During 2025, the Company experienced $921.7 million in organic loan growth. The $921.7 million in organic loan growth included $727.5 million in organic loan growth for our legacy footprint and $194.2 million of organic loan growth for Centennial CFG during 2025.
During 2024, the Company experienced $339.8 million in organic loan growth. The $339.8 million in organic loan growth included $471.4 million in organic loan growth for our legacy footprint, which was partially offset by $131.7 million of organic loan decline for Centennial CFG during 2024.
The most significant components of the loan portfolio were commercial real estate, residential real estate, consumer and commercial and industrial loans. These loans are generally secured by residential or commercial real estate or business or personal property. Although these loans are primarily originated within our franchises in Arkansas, Florida, Texas, South Alabama and Centennial CFG, the property securing these loans may not physically be located within our market areas of Arkansas, Florida, Texas, Alabama and New York. Loans receivable were approximately $3.70 billion, $4.55 billion, $3.94 billion, $105.9 million, $1.38 billion and $2.01 billion as of December 31, 2025 in Arkansas, Florida, Texas, Alabama, SPF and Centennial CFG, respectively.
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Table 8 presents our loans receivable balances by category as of December 31, 2025 and 2024.
Table 8: Loans Receivable
As of December 31,
(In thousands)
Real estate:
Commercial real estate loans:
Non-farm/non-residential
Construction/land development
Agricultural
Residential real estate loans:
Residential 1-4 family
Multifamily residential
Total real estate
Consumer
Commercial and industrial
Agricultural
Other
Total loans receivable
Commercial Real Estate Loans . We originate non-farm and non-residential loans (primarily secured by commercial real estate), construction/land development loans, and agricultural loans, which are generally secured by real estate located in our market areas. Our commercial mortgage loans are generally collateralized by first liens on real estate and amortized (where defined) over a 15 to 30-year period with balloon payments due at the end of one to five years. These loans are generally underwritten by assessing cash flow (debt service coverage), primary and secondary source of repayment, the financial strength of any guarantor, the strength of the tenant (if any), the borrower’s liquidity and leverage, management experience, ownership structure, economic conditions and industry specific trends and collateral. Generally, we will loan up to 85% of the value of improved property, 65% of the value of raw land and 75% of the value of land to be acquired and developed. A first lien on the property and assignment of lease is required if the collateral is rental property, with second lien positions considered on a case-by-case basis.
As of December 31, 2025, commercial real estate loans totaled $8.35 billion, or 53.2% of loans receivable, as compared to $8.50 billion, or 57.6% of loans receivable, as of December 31, 2024. Commercial real estate loans originated in our Arkansas, Florida, Texas, Alabama, SPF and Centennial CFG markets were $2.20 billion, $2.73 billion, $1.97 billion, $48.4 million, zero and $1.40 billion, respectively, at December 31, 2025.
As of December 31, 2025, we had $1.21 billion of construction/land development loans which were collateralized by land. This consisted of $41.8 million for raw land and $1.17 billion for land with commercial and/or residential lots.
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Table 9 presents the composition of the funded and unfunded balances of our CRE portfolio by loan type, as of December 31, 2025 and December 31, 2024, and their respective percentages of our total CRE portfolio.
Table 9: CRE Loan Concentrations
December 31, 2025
Funded Balance
% of CRE Loans
Unfunded Balance
% of CRE Loans
(Dollars in thousands)
Non-Farm/Non-Residential:
Single Purpose Building
Office Building
Hotel
Industrial
Retail
Owner-Occupied (1)
Construction/Land Development:
Construction Residential-Spec
Residential Land Development
Construction Commercial
Construction Multi Family
Commercial Land Development
Construction Residential-Presold
Construction Hotel
Raw Land
Agricultural (1)
Total Commercial Real Estate (2)
December 31, 2024
Funded Balance
% of CRE Loans
Unfunded Balance
% of CRE Loans
(Dollars in thousands)
Non-Farm/Non-Residential:
Single Purpose Building
Office Building
Hotel
Industrial
Retail
Owner-Occupied (1)
Construction/Land Development:
Construction Residential-Spec
Residential Land Development
Construction Commercial
Construction Multi Family
Commercial Land Development
Construction Residential-Presold
Construction Hotel
Raw Land
Agricultural (1)
Total Commercial Real Estate (2)
(1) Agriculture real estate loans and owner-occupied non-farm non-residential loans are not included within CRE for regulatory reporting purposes.
(2) Excludes multi-family residential loans of $1.14 billion and $496.5 million as of December 31, 2025 and December 31, 2024, respectively, which are included in the residential real estate loans throughout the filing. Multi-family residential loans are included in CRE for regulatory purposes.
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Table 10 presents the composition of our CRE loan portfolio by the ten largest geographical locations of the collateral as of December 31, 2025 and December 31, 2024.
Table 10: Geographical Locations of CRE Loans
Top 10 Geographical States for CRE Loan Collateral Concentrations
Florida
Texas
Arkansas
New York
California
Georgia
Alabama
Utah
Pennsylvania
Tennessee
All Other Areas
Total
As of December 31, 2025
Non-Farm/Non-Residential:
Single Purpose Building
Office Building
Hotel
Industrial
Retail
Owner-Occupied (1)
Construction/Land Development:
Construction Residential -
Spec
Residential Land
Development
Construction Commercial
Construction Multi Family
Commercial Land
Development
Construction Residential -
Presold
Construction Hotel
Raw Land
Agricultural (1)
Total Commercial Real Estate (2)
Top 10 Geographical States for CRE Loan Collateral Concentrations
Florida
Texas
Arkansas
New York
Georgia
Utah
Alabama
California
Pennsylvania
Tennessee
All Other Areas
Total
As of December 31, 2024
Non-Farm/Non-Residential:
Single Purpose Building
Office Building
Hotel
Industrial
Retail
Owner-Occupied (1)
Construction/Land Development:
Construction Residential -
Spec
Residential Land
Development
Construction Commercial
Construction Multi Family
Commercial Land
Development
Construction Residential -
Presold
Construction Hotel
Raw Land
Agricultural (1)
Total Commercial Real Estate (2)
(1) Agriculture real estate loans and owner-occupied non-farm non-residential loans are not included within CRE for regulatory reporting purposes.
(2) Excludes multi-family residential loans of $1.14 billion and $496.5 million as of December 31, 2025 and December 31, 2024, respectively, which are included in the residential real estate loans throughout the filing. Multi-family residential loans are included in CRE for regulatory purposes.
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Our loan policy states that in order to achieve a well-balanced, diversified credit portfolio, concentrations containing inappropriate or excessive risk are to be avoided. It is the goal of the Company to maintain a prudent diversification of loans. We define a concentration of credit as direct or indirect obligations according to the following guidelines: (i) concentrations of 25% or more of total risk-based capital by individual borrower, small, interrelated group of individuals, single repayment source or individual project; (ii) concentrations of 100% or more of total risk-based capital by industry or product line. As of December 31, 2025, we have not met the threshold for the concentration limits. In addition, the Bank's board of directors monitors the CRE loan portfolio for concentrations related to geography, industry, and collateral type and determines applicable guidelines. The Chief Lending Officer also reviews the portfolio periodically to determine if any concentrations exist and makes recommendations with respect to setting internal guidelines.
The Company also monitors key risk indicators ("KRIs") on a quarterly basis for the overall loan portfolio as well as specific KRIs for the CRE portfolio. The KRIs are tied to the Bank's appetite for credit risk which is reflected in the Bank's credit policy and underwriting criteria. The KRIs related to underwriting include loan downgrades by loan review, loan downgrades to classified levels and loan policy exceptions (loan to value, debt coverage ratio and credit score). The KRIs related to CRE loans include concentrations of construction and land loans, concentrations of total CRE loans, CRE loans in excess of loan to value guidelines and total real estate loans in excess of loan to value guidelines. The results of the KRI analysis are presented to the Bank's Asset Quality Committee on a quarterly basis. Any exceptions to established limits and thresholds are monitored and addressed in a timely manner as required by the Asset Quality Committee.
The Company has a CRE strategy and contingency plan which outlines the principles required to adequately manage our CRE exposures. It discusses the inherent risks within CRE lending, as well as the risks unique to specific lending activities and property taxes. In addition, the plan outlines internal limits related to CRE lending, reasoning for operating outside those limits, and provides for a contingency plan to reduce the CRE exposures under adverse economic conditions or other situations where it is deemed necessary to do so. The responsibility for monitoring the Company’s CRE strategy and contingency plan, and subsequent reporting to management and the Bank’s board of directors, lies with the Chief Lending Officer and the Asset Quality Committee. Within the CRE strategy and contingency plan, we established four adverse economic triggers to measure on an ongoing basis to attempt to determine when a change in CRE strategy might be warranted, at least from an external economic perspective. If one or a combination of these triggers have exceeded board approved thresholds, the Bank’s Executive Risk Committee will determine which action or combination of actions to take based on the specific situation. The potential actions are likely to focus on tightening/loosening of underwriting criteria, potential capital raises or loan distribution actions such as selling or participating loans. However, other action steps may be considered depending upon the specific situation. Based on our evaluation of economic conditions as of December 31, 2025, the Company believes our current underwriting standards and capital position remain adequate for addressing the risks to our CRE portfolio.
Residential Real Estate Loans . We originate one to four family, residential mortgage loans generally secured by property located in our primary market areas. Approximately 57.7% and 34.9% of our residential mortgage loans consist of owner occupied 1-4 family properties and non-owner occupied 1-4 family properties (rental), respectively, as of December 31, 2025, with the remaining 7.4% relating to condos and mobile homes. 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.
As of December 31, 2025, residential real estate loans totaled $3.28 billion, or 20.9%, of loans receivable, compared to $2.45 billion, or 16.6% of loans receivable, as of December 31, 2024. Residential real estate loans originated in our franchises in our Arkansas, Florida, Texas, Alabama, SPF and Centennial CFG markets were $743.5 million, $1.18 billion, $847.0 million, $47.7 million, zero and $462.6 million, respectively, at December 31, 2025.
Consumer Loans . Our consumer loans are composed of secured and unsecured loans originated by our bank, the primary portion of which consists of loans to finance USCG registered high-end sail and power boats within our SPF division The performance of consumer loans will be affected by the local and regional economies as well as the rates of personal bankruptcies, job loss, divorce and other individual-specific characteristics.
As of December 31, 2025, consumer loans totaled $1.25 billion, or 8.0% of loans receivable, compared to $1.23 billion, or 8.4% of loans receivable, as of December 31, 2024. Consumer loans originated in our Arkansas, Florida, Texas, Alabama, SPF and Centennial CFG markets were $18.0 million, $6.2 million, $7.4 million, $421,000, $1.22 billion and zero, respectively, at December 31, 2025.
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Commercial and Industrial Loans . Commercial and industrial loans are made for a variety of business purposes, including working capital, inventory, equipment and capital expansion. The terms for commercial loans are generally one to seven years. Commercial loan applications must be supported by current financial information on the borrower and, where appropriate, by adequate collateral. Commercial loans are generally underwritten by addressing cash flow (debt service coverage), primary and secondary sources of repayment, the financial strength of any guarantor, the borrower’s liquidity and leverage, management experience, ownership structure, economic conditions and industry specific trends and collateral. The loan to value ratio depends on the type of collateral. Generally speaking, accounts receivable are financed at between 50% and 80% of accounts receivable less than 60 days past due. Inventory financing will range between 50% and 80% (with no work in process) depending on the borrower and nature of inventory. We require a first lien position for those loans.
As of December 31, 2025, commercial and industrial loans totaled $2.22 billion, or 14.2% of loans receivable, which compared to $2.02 billion, or 13.7% of loans receivable, as of December 31, 2024. Commercial and industrial loans originated in our Arkansas, Florida, Texas, Alabama, SPF and Centennial CFG markets were $507.9 million, $609.5 million, $805.1 million, $9.4 million, $163.2 million and $127.3 million, respectively, at December 31, 2025.
Agricultural Loans . Agricultural loans include loans for financing agricultural production, including loans to businesses or individuals engaged in the production of timber, poultry, livestock or crops and are not categorized as part of real estate loans. Our agricultural loans are generally secured by farm machinery, livestock, crops, vehicles or other agricultural-related collateral. A portion of our portfolio of agricultural loans is comprised of loans to individuals which would normally be characterized as consumer loans except for the fact that the individual borrowers are primarily engaged in the production of timber, poultry, livestock or crops.
As of December 31, 2025, agricultural loans totaled $359.9 million, or 2.3% of loans receivable, compared to the $367.3 million, or 2.5% of loans receivable as of December 31, 2024. Agricultural loans originated in our Arkansas, Florida and Texas markets were $59.5 million, $55,000 and $300.3 million, respectively, and zero in our Alabama, SPF and Centennial CFG markets at December 31, 2025.
Other Loans. Other loans include obligations (other than securities and leases) of states and political subdivisions in the United States; loans to nondepository financial institutions; loans for purchasing or carrying securities, including margin loans; leases and all other loans excluding consumer loans. The performance of other loans will be affected by the local, regional and national economies as well as the performance of the financial markets.
As of December 31, 2025, other loans totaled $225.4 million, or 1.4% of loans receivable, compared to the 187,153, or 1.2% of loans receivable as of December 31, 2024. Other loans originated in our Arkansas, Florida, Texas and Centennial CFG markets were $163.5 million, $31.7 million, $5.4 million and $24.8 million, respectively, and zero in our Alabama and SPF markets at December 31, 2025.
Table 11 presents the distribution of the maturity of our total loans as of December 31, 2025. The table also presents the portion of our loans that have fixed interest rates and interest rates that fluctuate over the life of the loans based on changes in the interest rate environment.
The loans acquired during our acquisitions accrete interest income through accretion of the difference between the carrying amount of the loans and the expected cash flows. Increases in the credit quality or cash flows of loans (reflected as an adjustment to yield and accreted into income over the weighted-average life of the loans).
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Table 11: Maturity Distribution of Loan Portfolio and Interest Rate Detail of Loans Due After One Year
Maturity Distribution of Loan Portfolio
One Year
or Less
Over One
Year
Through
Five Years
Over Five
Years
Through
Fifteen Years
Over Fifteen Years
Total Loans Receivable
(In thousands)
Real estate:
Commercial real estate loans
Non-farm/non-residential
Construction/land development
Agricultural
Residential real estate loans
Residential 1-4 family
Multifamily residential
Total real estate
Consumer
Commercial and industrial
Agricultural
Other
Total loans receivable
Loans Due After One Year
Predetermined Interest Rates
Floating or Adjustable Interest Rates
Total
(In thousands)
Real estate:
Commercial real estate loans
Non-farm/non-residential
Construction/land development
Agricultural
Residential real estate loans
Residential 1-4 family
Multifamily residential
Total real estate
Consumer
Commercial and industrial
Agricultural
Other
Total loans receivable
Non-Performing Assets
We classify our problem loans into three categories: past due loans, special mention loans and classified loans (accruing and non-accruing).
When management determines that a loan is no longer performing, and that collection of interest appears doubtful, the loan is placed on non-accrual status. Generally, loans that are 90 days past due are placed on non-accrual status unless they are adequately secured and there is reasonable assurance of full collection of both principal and interest. Our management closely monitors all loans that are contractually 90 days past due, treated as “special mention” or otherwise classified or on non-accrual status.
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Purchased loans that have experienced more than insignificant credit deterioration since origination are PCD loans. An allowance for credit losses is determined using the same methodology as other loans. For PCD loans not individually analyzed for impairment, the Company develops separate PCD models for each loan segment. The initial allowance for credit losses determined on a collective basis is allocated to individual loans. The sum of the loan’s purchase price and allowance for credit losses becomes its initial amortized cost basis. The difference between the initial amortized cost basis and the par value of the loan is a non-credit discount or premium, which is amortized into interest income over the life of the loan. Subsequent changes to the allowance for credit losses are recorded through the provision for credit losses. The Company held approximately $52.2 million and $76.3 million in PCD loans, as of December 31, 2025 and 2024, respectively.
Table 12 sets forth information with respect to our non-performing assets as of December 31, 2025 and 2024. As of these dates, all non-performing restructured loans are included in non-accrual loans.
Table 12: Non-performing Assets
As of December 31,
(Dollars in thousands)
Non-accrual loans
Loans past due 90 days or more (principal or interest payments)
Total non-performing loans
Other non-performing assets
Foreclosed assets held for sale, net
Other non-performing assets
Total other non-performing assets
Total non-performing assets
Allowance for credit losses to non-accrual loans
Allowance for credit losses to non-performing loans
Non-accrual loans to total loans
Non-performing loans to total loans
Non-performing assets to total assets
Our non-performing loans are comprised of non-accrual loans and accruing loans that are contractually past due 90 days. Our bank subsidiary recognizes income principally on the accrual basis of accounting. When loans are classified as non-accrual, the accrued interest is charged off and no further interest is accrued, unless the credit characteristics of the loan improve. If a loan is determined by management to be uncollectible, the portion of the loan determined to be uncollectible is then charged to the allowance for credit losses.
As of December 31, 2025, our non-performing loans decreased to $85.0 million, or 0.54%, of total loans from $98.9 million, or 0.67%, of total loans as of December 31, 2024. The allowance for credit losses as a percentage of non-performing loans increased to 350.17% as of December 31, 2025, compared to 278.99% as of December 31, 2024. As of December 31, 2025, our non-performing assets decreased to $124.8 million, or 0.55%, of total assets from $142.4 million, or 0.63%, of total assets as of December 31, 2024.
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Table 13 below shows the non-performing loans and non-performing assets by region as of December 31, 2025 and December 31, 2024:
Table 13: Non-Performing Loans and Assets by Region
December 31, 2025
(in thousands)
Texas
Arkansas
Centennial CFG
Shore Premier Finance
Florida
Alabama
Total
Non-accrual loans
Loans 90+ days past due
Total non-performing loans
Foreclosed assets held for sale
Total other non-performing assets
Total non-performing assets
December 31, 2024
(in thousands)
Texas
Arkansas
Centennial CFG
Shore Premier Finance
Florida
Alabama
Total
Non-accrual loans
Loans 90+ days past due
Total non-performing loans
Foreclosed assets held for sale
Other non-performing assets
Total other non-performing assets
Total non-performing assets
Debt restructuring generally occurs when a borrower is experiencing, or is expected to experience, financial difficulties in the near term. As a result, we will work with the borrower to prevent further difficulties, and ultimately to improve the likelihood of recovery on the loan. In those circumstances it may be beneficial to restructure the terms of a loan and work with the borrower for the benefit of both parties, versus forcing the property into foreclosure and having to dispose of it in an unfavorable and depressed real estate market. When we have modified the terms of a loan, we usually either reduce the monthly payment and/or interest rate for generally about three to twelve months. For our restructured loans that accrue interest at the time the loan is restructured, it would be a rare exception to have charged-off any portion of the loan. As of December 31, 2025, we had $98.7 million of restructured loans that are in compliance with the modified terms and are not reported as past due or non-accrual. Our Florida market contains $1.4 million, our Arkansas market contains $1.9 million, our Texas market contains $92.5 million and our SPF region contains $2.9 million of these restructured loans.
During the year ended December 31, 2025, the Company restructured approximately $5.0 million in loans to 13 borrowers. The ending balance of these loans as of December 31, 2025, was $4.9 million. The majority of the Bank’s restructured loans involve reducing the interest rate, changing from a principal and interest payment to interest-only, lengthening the amortization period, or a combination of some or all of the three. In addition, it is common for the Bank to seek additional collateral or guarantor support when modifying a loan. At December 31, 2025, the amount of restructured loans was $115.6 million. As of December 31, 2025, 85.4% of all restructured loans were performing to the terms of the restructure. Six of the $115.6 million in restructured loans held by the Company were considered to be collateral dependent as of December 31, 2025. The outstanding balance of these loans was $109.2 million, and the specific reserve was $3.7 million.
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Total foreclosed assets held for sale were $39.8 million as of December 31, 2025, compared to $43.4 million as of December 31, 2024 for a decrease of $3.6 million. The foreclosed assets held for sale as of December 31, 2025 are comprised of approximately $771,000 of assets located in Arkansas, $260,000 of assets located in Florida, $16.0 million located in Texas, zero located in Alabama, zero for SPF and $22.8 million of assets in our Centennial CFG market. The majority of the foreclosed assets held for sale is comprised of two properties. The first is an office building located in Santa Monica, California with a carrying value of $22.8 million. The second is an apartment complex which is under construction in Gunter, Texas with a carrying value of $14.8 million. These two properties account for $37.6 million of the balance of foreclosed assets held for sale at December 31, 2025.
Table 14 shows the summary of foreclosed assets held for sale as of December 31, 2025 and 2024.
Table 14: Total Foreclosed Assets Held for Sale
December 31
(In thousands)
Commercial real estate loans
Non-farm/non-residential
Construction/land development
Residential real estate loans
Residential 1-4 family
Total foreclosed assets held for sale
The Company had $219.4 million and $268.0 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, 2025 and December 31, 2024, respectively. As of December 31, 2025, our Arkansas, Florida, Texas, Alabama, SPF and Centennial CFG markets accounted for approximately $28.8 million, $27.0 million, $149.5 million, $54,000, $13.3 million and $787,000, respectively, of the impaired loans.
As of December 31, 2025, the amortized cost balance for loans with a specific allocation was $71.3 million, and the specific allocation was $17.0 million. As of December 31, 2024, the amortized cost balance for loans with a specific allocation was $92.7 million, and the specific allocation was $23.8 million.
Past Due and Non-Accrual Loans
Table 15 shows the summary non-accrual loans as of December 31, 2025 and 2024:
Table 15: Total Non-Accrual Loans
As of December 31,
(In thousands)
Real estate:
Commercial real estate loans
Non-farm/non-residential
Construction/land development
Agricultural
Residential real estate loans
Residential 1-4 family
Multifamily residential
Total real estate
Consumer
Commercial and industrial
Agricultural & other
Total non-accrual loans
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If the non-accrual loans had been accruing interest in accordance with the original terms of their respective agreements, interest income of approximately $6.3 million for the year ended December 31, 2025, $7.4 million in 2024, and $5.4 million in 2023 would have been recorded. Interest income recognized on the non-accrual loans for the years ended December 31, 2025, 2024 and 2023 was considered immaterial.
Table 16 shows the summary of accruing past due loans 90 days or more as of December 31, 2025 and 2024:
Table 16: Total Loans Accruing Past Due 90 Days or More
As of December 31,
(In thousands)
Real estate:
Commercial real estate loans
Non-farm/non-residential
Construction/land development
Residential real estate loans
Residential 1-4 family
Total real estate
Consumer
Commercial and industrial
Total loans accruing past due 90 days or more
Our total loans accruing past due 90 days or more and non-accrual loans to total loans was 0.54% and 0.67% as of December 31, 2025 and 2024, respectively.
Allowance for Credit Losses
Overview . The allowance for credit losses on loans receivable increased from $275.9 million as of December 31, 2024 to $297.6 million as of December 31, 2025. The specific reserve for loans individually analyzed for credit losses was $17.0 million on $186.5 million of individually analyzed loans as of December 31, 2025, compared to a reserve of $23.8 million on $209.8 million of individually analyzed loans as of December 31, 2024. The allowance for credit losses as a percentage of loans was 1.90% and 1.87% at December 31, 2025 and December 31, 2024, respectively.
Loans Collectively Evaluated for Credit Loss. Loans receivable collectively evaluated for credit loss increased by approximately $945.0 million from $14.55 billion at December 31, 2024 to $15.50 billion at December 31, 2025. 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 1.73% at December 31, 2024 to 1.81% at December 31, 2025.
Charge-offs and Recoveries. Total charge-offs decreased to $15.2 million for the year ended December 31, 2025, compared to $63.0 million for the year ended December 31, 2024. Total recoveries increased to $12.8 million for the year ended December 31, 2025, compared to $2.3 million for the same period in 2024. Net loans charged off for the years ended December 31, 2025 and 2024 were $2.4 million and $60.8 million, respectively. The increase in net charge-offs for the year ended December 31, 2024 was due to the asset quality cleanup project the Company completed in the fourth quarter of 2024.
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Table 17 below shows a summary of the charge-off detail by region for the years ended December 31, 2025 and December 31, 2024.
Table 17: Charge-Off Detail by Region
December 31, 2025
(in thousands)
Texas
Arkansas
Centennial CFG
Shore Premier Finance
Florida
Alabama
Total
Charge-off
Recovery
Net (recoveries) charge-offs
December 31, 2024
(in thousands)
Texas
Arkansas
Centennial CFG
Shore Premier Finance
Florida
Alabama
Total
Charge-off
Recovery
Net charge-offs
While the 2025 charge-offs and recoveries consisted of many relationships, there was only one individual relationship that consisted of a charge-off greater than $1.0 million. This was a $2.2 million charge-off for a commercial real estate loan in our Florida market.
While the 2024 charge-offs and recoveries consisted of many relationships, there were seven individual relationships that consisted of charge-offs greater than $1.0 million. The first was a $26.1 million charge-off for a commercial real estate loan in our Texas market. The second was an $8.8 million charge-off for a commercial real estate loan in our Texas market. The third was a $6.5 million charge-off for a residential real estate loan in our Texas market. The fourth was a $3.0 million charge-off for a commercial and industrial loan in our Arkansas market. The fifth was a $2.0 million charge-off for a commercial and industrial loan in our Texas market. The sixth was a $2.0 million charge-off for a commercial and industrial loan in our Centennial CFG Market. The seventh was a $1.1 million charge-off for commercial real estate loan in our Texas market. As noted previously, the increase in charge-offs was primarily due to the asset quality cleanup project completed during the fourth quarter of 2024.
We have not charged off an amount less than what was determined to be the fair value of the collateral as presented in the appraisal, less estimated costs to sell (for collateral dependent loans), for any period presented. Loans partially charged-off are placed on non-accrual status until it is proven that the borrower's repayment ability with respect to the remaining principal balance can be reasonably assured. This is usually established over a period of 6-12 months of timely payment performance.
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Table 18 shows the allowance for credit losses, charge-offs and recoveries for loans as of and for the years ended December 31, 2025 and 2024.
Table 18: Analysis of Allowance for Credit Losses
As of December 31,
(Dollars in thousands)
Balance, beginning of year
Loans charged off
Real estate:
Commercial real estate loans:
Non-farm/non-residential
Construction/land development
Residential real estate loans:
Residential 1-4 family
Multifamily residential
Total real estate
Consumer
Commercial and industrial
Other
Total loans charged off
Recoveries of loans previously charged off
Real estate:
Commercial real estate loans:
Non-farm/non-residential
Construction/land development
Residential real estate loans:
Residential 1-4 family
Total real estate
Consumer
Commercial and industrial
Other
Total recoveries
Net loans charged off (recovered)
Provision for credit loss - loans
Balance, end of year
Net charge-offs (recoveries) to average loans receivable
Allowance for credit losses to total loans
Allowance for credit losses to net charge-offs (recoveries)
Net charge-offs to average loans receivable were 0.02% and 0.41% as of December 31, 2025 and 2024, respectively. The low level of charge-offs for the year ended December 31, 2025, emphasize the Company's strong asset quality, and additional disclosure of net charge-offs to average loans outstanding by loan category is not considered necessary. Despite the higher level in net charge-offs for the year ended December 31, 2024, related to the asset quality cleanup project, the Company considers the level immaterial for additional disclosure of net charge-offs to average loans outstanding by loan category.
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Table 19 presents the allocation of allowance for credit losses as of December 31, 2025 and 2024.
Table 19: Allocation of Allowance for Credit Losses
December 31, 2025
Allowance
Amount
loans (1)
Allowance
Amount
loans (1)
(Dollars in thousands)
Real estate:
Commercial real estate loans:
Non-farm/non- residential
Construction/land development
Agricultural
Residential real estate loans:
Residential 1-4 family
Multifamily residential
Total real estate
Consumer
Commercial and industrial
Agricultural
Other
Total
(1) Percentage of loans in each category to total loans receivable.
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. 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 4.9 years as of December 31, 2025.
Securities held-to-maturity, which include any security for which we have the positive intent and ability to hold until maturity, are reported at historical cost adjusted for amortization of premiums and accretion of discounts. Premiums and discounts are amortized/accreted to the call date to interest income using the constant effective yield method over the estimated life of the security. We had $1.26 billion and $1.28 billion of held-to-maturity securities at December 31, 2025 and 2024, respectively.
As of December 31, 2025, $1.10 billion, or 87.4%, were invested in obligations of state and political subdivisions, compared to $1.11 billion, or 86.8%, as of December 31, 2024. As of December 31, 2025, $43.8 million, or 3.5%, were invested in obligations of U.S. Government-sponsored enterprises, compared to $43.6 million, or 3.4%, as of December 31, 2024. As of December 31, 2025, $114.8 million, or 9.1%, were invested in U.S. Government-sponsored mortgage-backed securities, compared to $124.2 million, or 9.7%, as of December 31, 2024.
Securities available-for-sale are reported at fair value with unrealized holding gains and losses reported as a separate component of stockholders’ equity as other comprehensive income. Securities that are held as available-for-sale are used as a part of our asset/liability management strategy. Securities that may be sold in response to interest rate changes, changes in prepayment risk, the need to increase regulatory capital, and other similar factors are classified as available-for-sale. Available-for-sale securities were $2.87 billion and $3.07 billion as of December 31, 2025 and 2024, respectively.
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As of December 31, 2025, $1.21 billion, or 42.2%, of our available-for-sale securities were invested in U.S. government-sponsored mortgage-backed securities, compared to $1.32 billion, or 43.1%, of our available-for-sale securities as of December 31, 2024. To reduce our income tax burden, $887.8 million, or 30.9%, of our available-for-sale securities portfolio as of December 31, 2025, were primarily invested in tax-exempt obligations of state and political subdivisions, compared to $870.4 million, or 28.3%, of our available-for-sale securities as of December 31, 2024. We had $240.8 million, or 8.4%, invested in obligations of U.S. Government-sponsored enterprises as of December 31, 2025, compared to $284.8 million, or 9.3%, of our available-for-sale securities as of December 31, 2024. We had $157.8 million, or 5.5%, invested in non-government-sponsored asset backed securities as of December 31, 2025, compared to $225.6 million, or 7.3%, of our available-for-sale securities as of December 31, 2024. As of December 31, 2025, $145.7 million, or 5.1%, of our available-for-sale securities were invested in private mortgage-backed securities, compared to $171.4 million, or 5.6%, of our available-for-sale securities as of December 31, 2024. Also, we had approximately $226.8 million, or 7.9%, invested in other securities as of December 31, 2025, compared to $195.8 million, or 6.4% of our available-for-sale securities as of December 31, 2024.
During the year ended December 31, 2025, the Company recovered $2.2 million in AFS reserves due to an upgrade in the credit quality of the subordinated debt investment securities for which an allowance had been previously recorded. During the year ended December 31, 2024, the Company recovered $330,000 in AFS reserves due to an improvement in the unrealized loss position of one of the Company's subordinated debt investments. During the year ended December 31, 2023, one of the Company’s AFS subordinated debt investment securities was downgraded below investment grade. As result, the Company wrote down the value of the investment to its unrealized loss position, which required a $1.7 million provision, but the remaining $842,000 allowance for credit losses on AFS investments associated with certain securities in the subordinated debt portfolio within the banking sector was considered adequate.
At December 31, 2025, 2024 and 2023, the $2.0 million allowance for credit losses for the held-to-maturity portfolio was considered adequate. No additional provision for credit losses was considered necessary for the HTM portfolio.
Table 20 presents the carrying value and fair value of available-for-sale and held-to-maturity investment securities as of December 31, 2025 and 2024.
Table 20: Investment Securities
December 31, 2025
Amortized
Cost
Allowance for Credit Losses
Net Carrying Amount
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair Value
(In thousands)
Available-for-sale
U.S. government-sponsored enterprises
U.S. government-sponsored mortgage-backed securities
Private mortgage-backed securities
Non-government-sponsored asset backed securities
State and political subdivisions
Other securities
Total
December 31, 2025
Amortized
Cost
Allowance for Credit Losses
Net Carrying Amount
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair Value
(In thousands)
Held-to-maturity
U.S. government-sponsored enterprises
U.S. government-sponsored mortgage-backed securities
State and political subdivisions
Total
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December 31, 2024
Amortized
Cost
Allowance for Credit Losses
Net Carrying Amount
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair Value
(In thousands)
Available-for-sale
U.S. government-sponsored enterprises
U.S. government-sponsored mortgage-backed securities
Private mortgage-backed securities
Non-government-sponsored asset backed securities
State and political subdivisions
Other securities
Total
December 31, 2024
Amortized
Cost
Allowance for Credit Losses
Net Carrying Amount
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair Value
(In thousands)
Held-to-maturity
U.S. government-sponsored enterprises
U.S. government-sponsored mortgage-backed securities
State and political subdivisions
Total
Table 21 reflects the amortized cost and estimated fair value of available-for-sale and held-to-maturity securities as of December 31, 2025 and 2024, by contractual maturity as well as the weighted-average yields (for tax-exempt obligations on a fully taxable equivalent basis) of those securities by contractual maturity. Expected maturities could differ from contractual maturities because borrowers may have the right to call or prepay obligations, with or without call or prepayment penalties.
Table 21: Maturity and Yield Distribution of Investment Securities
December 31, 2025
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
U.S. government-sponsored mortgage-backed securities
Private mortgage-backed securities
Non-government-sponsored asset backed securities
State and political subdivisions
Other securities
Total
Percentage of total amortized cost
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December 31, 2025
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
U.S. government-sponsored mortgage-backed securities
State and political subdivisions
Total
Percentage of total amortized cost
December 31, 2025
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
U.S. government-sponsored mortgage-backed securities
Private mortgage-backed securities
Non-government-sponsored asset backed securities
State and political subdivisions
Other securities
Held-to-maturity
U.S. government-sponsored enterprises
U.S. government-sponsored mortgage-backed securities
State and political subdivisions
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
U.S. government-sponsored mortgage-backed securities
Private mortgage-backed securities
Non-government-sponsored asset backed securities
State and political subdivisions
Other securities
Total
Percentage of total amortized cost
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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
U.S. government-sponsored mortgage-backed securities
State and political subdivisions
Total
Percentage of total amortized cost
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
U.S. government-sponsored mortgage-backed securities
Private mortgage-backed securities
Non-government-sponsored asset backed securities
State and political subdivisions
Other securities
Held-to-maturity
U.S. government-sponsored enterprises
U.S. government-sponsored mortgage-backed securities
State and political subdivisions
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. Tax-exempt obligations have been computed on a tax-equivalent basis. Taxable-equivalent adjustments are the result of increasing income from tax-free investments by an amount equal to the taxes that would be paid if the income were fully taxable, thus making tax-exempt yields comparable to taxable asset yields. Taxable equivalent adjustments were based upon 24.359% and 24.433% income tax rates for 2025 and 2024, respectively. In 2025, $30.9 million of interest income on debt securities was excluded from Federal taxation, and $8.0 million was excluded from state taxation. In 2024, $31.0 million of interest income on debt securities was excluded from Federal taxation, and $13.1 million was excluded from state taxation.
Deposits
Our deposits averaged $17.32 billion for the year ended December 31, 2025 and $16.85 billion for 2024. Total deposits increased $333.7 million, or 1.9%, to $17.48 billion as of December 31, 2025, from $17.15 billion as of December 31, 2024. Uninsured deposits including related interest accrued and unpaid were $8.77 billion as of December 31, 2025 compared to $8.39 billion as of December 31, 2024. Deposits are our primary source of funds. We offer a variety of products designed to attract and retain deposit customers. Those products consist of checking accounts, regular savings deposits, NOW accounts, money market accounts and certificates of deposit. Deposits are gathered from individuals, partnerships and corporations in our market areas. In addition, we obtain deposits from state and local entities and, to a lesser extent, U.S. Government and other depository institutions.
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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. We also participate in the One-Way Buy Insured Cash Sweep (“ICS”) service and similar services, which provide for one-way buy transactions among banks for the purpose of purchasing cost-effective floating-rate funding without collateralization or stock purchase requirements. Management believes these sources represent a reliable and cost-efficient alternative funding source for the Company. However, to the extent that our condition or reputation deteriorates, or to the extent that there are significant changes in market interest rates which we do not elect to match, we may experience an outflow of brokered deposits. In that event we would be required to obtain alternate sources for funding.
Table 22 reflects the classification of the brokered deposits as of December 31, 2025 and 2024.
Table 22: Brokered Deposits
December 31, 2025
December 31, 2024
(In thousands)
Insured Cash Sweep and Other Transaction Accounts
Total Brokered Deposits
The interest rates paid are competitively priced for each particular deposit product and structured to meet our funding requirements. 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.
The Federal Reserve Board sets various benchmark rates, including the Federal Funds rate, and thereby influences the general market rates of interest, including the deposit and loan rates offered by financial institutions. The Federal Reserve reduced the target rate three times during 2024. First, on September 18, 2024, the Federal Reserve reduced the target rate to 4.75% to 5.00%, second, on November 7, 2024, the target rate was reduced to 4.50% to 4.75% and third, on December 18, 2024, the target rate was reduced to 4.25% to 4.50%. The Federal Reserve reduced the target rate three times during 2025. First, on September 17, 2025, the Federal Reserve reduced the target rate to 4.00% to 4.25%, second, on October 29, 2025, the target rate was reduced to 3.75% to 4.00% and third, on December 10, 2025, the target rate was reduced to 3.50% to 3.75%.
Table 23 reflects the classification of the average deposits and the average rate paid on each deposit category which is in excess of 10 percent of average total deposits, for the years ended December 31, 2025, 2024, and 2023.
Table 23: Average Deposit Balances and Rates
Years Ended December 31,
Average
Amount
Average
Rate Paid
Average
Amount
Average
Rate Paid
Average
Amount
Average
Rate Paid
(Dollars in thousands)
Non-interest-bearing transaction accounts
Interest-bearing transaction accounts
Savings deposits
Time deposits:
$100,000 or more
Other time deposits
Total
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Table 24 presents our maturities of time deposits as of December 31, 2025 and December 31, 2024.
Table 24: Maturities of Time Deposits
As of December 31,
Insured
Uninsured
Total
Insured
Uninsured
Total
(Dollars in thousands)
Maturing
Three months or less
Over three months to six months
Over six months to 12 months
Over 12 months
Total
Securities Sold Under Agreements to Repurchase
We enter into short-term purchases of securities under agreements to resell (resale agreements) and sales of securities under agreements to repurchase (repurchase agreements) of substantially identical securities. 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 decreased $6.5 million, or 4.0%, from $162.4 million as of December 31, 2024 to $155.8 million as of December 31, 2025.
FHLB and Other Borrowed Funds
The Company’s FHLB borrowed funds, which are secured by our loan portfolio, were $500.0 million and $600.0 million at December 31, 2025 and 2024, respectively. At December 31, 2025, $100.0 million and $400.0 million balance was classified as short-term and long-term advances, respectively. At December 31, 2024, $100.0 million and $500.0 million balance was classified as short-term and long-term advances, respectively. The FHLB advances mature from 2026 to 2037 with fixed interest rates ranging from 3.37% to 4.84% and are secured by loans and investments securities. Expected maturities could differ from contractual maturities because the FHLB has the right to call or the Company has the right to prepay certain obligations.
Other borrowed funds were $250,000 as of December 31, 2025 and were classified as short-term advances. Other borrowed funds were $750,000 as of December 31, 2024 and were classified as short-term advances. During the fourth quarter of 2024, the Company paid off its $700.0 million advance from the Federal Reserve's Bank Term Funding Program ("BTFP").
Additionally, the Company had $1.48 billion and $1.22 billion at December 31, 2025 and 2024, respectively, in letters of credit under a FHLB blanket borrowing line of credit, which are used to collateralize public deposits at December 31, 2025 and 2024, respectively.
Subordinated Debentures
Subordinated debentures were $279.3 million and $439.2 million as of December 31, 2025 and 2024, respectively.
On July 31, 2025, the Company completed the payoff of its $140.0 million in aggregate principal amount of 5.500% Fixed-to-Floating Rate Subordinated Notes due 2030 (the "2030 Notes") acquired from Happy on April 1, 2022, for which the Company had recorded a value of approximately $144.4 million, including fair value adjustments. Each 2030 Note was redeemed pursuant to the terms of the Subordinated Indenture, dated as of July 30, 2020, between the Company and UMB Bank, the Trustee for the 2030 Notes, at the redemption price of 100% of its principal amount, plus accrued and unpaid interest to, but excluding, the redemption date.
Prior to their redemption, the 2030 Notes were unsecured, subordinated debt obligations of the Company and were scheduled to mature on July 31, 2030. From and including the date of issuance to, but excluding July 31, 2025 or the date of earlier redemption, the 2030 Notes bore interest at an initial rate of 5.50% per annum, payable in arrears on January 31 and July 31 of each year. From and including July 31, 2025 to, but excluding, the maturity date or earlier redemption, the 2030 Notes were to 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.
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The Company was permitted, beginning with the interest payment date of July 31, 2025, and on any interest payment date thereafter, to redeem the 2030 Notes, in whole or in part, subject to prior approval of the Federal Reserve if then required, at a redemption price equal to 100% of the principal amount of the 2030 Notes to be redeemed plus accrued and unpaid interest to but excluding the date of redemption. The Company was also permitted to redeem the 2030 Notes at any time, including prior to July 31, 2025, at the Company’s option, in whole but not in part, subject to prior approval of the Federal Reserve if then required, if certain events occurred that could impact the Company’s ability to deduct interest payable on the 2030 Notes for U.S. federal income tax purposes or preclude the 2030 Notes from being recognized as Tier 2 capital for regulatory capital purposes, or if the Company was required to register as an investment company under the Investment Company Act of 1940, as amended. In each case, the redemption would be at a redemption price equal to 100% of the principal amount of the 2030 Notes plus any accrued and unpaid interest to, but excluding, the redemption date.
On January 18, 2022, the Company completed an underwritten public offering of $300.0 million in aggregate principal amount of its 3.125% Fixed-to-Floating Rate Subordinated Notes due 2032 (the “2032 Notes”) for net proceeds, after underwriting discounts and issuance costs of approximately $296.4 million. The 2032 Notes are unsecured, subordinated debt obligations of the Company and will mature on January 30, 2032. From and including the date of issuance to, but excluding January 30, 2027 or the date of earlier redemption, the 2032 Notes will bear interest at an initial rate of 3.125% per annum, payable in arrears on January 30 and July 30 of each year. From and including January 30, 2027 to, but excluding, the maturity date or earlier redemption, the 2032 Notes will bear interest at a floating rate equal to the Benchmark rate (which is expected to be Three-Month Term SOFR)), each as defined in and subject to the provisions of the applicable supplemental indenture for the 2032 Notes, plus 182 basis points, payable quarterly in arrears on January 30, April 30, July 30, and October 30 of each year, commencing on April 30, 2027.
The Company may, beginning with the interest payment date of January 30, 2027 , and on any interest payment date thereafter, redeem the 2032 Notes, in whole or in part, subject to prior approval of the Federal Reserve if then required, at a redemption price equal to 100% of the principal amount of the 2032 Notes to be redeemed plus accrued and unpaid interest to but excluding the date of redemption. The Company may also redeem the 2032 Notes at any time, including prior to January 30, 2027 , at the Company’s option, in whole but not in part, subject to prior approval of the Federal Reserve if then required, if certain events occur that could impact the Company’s ability to deduct interest payable on the 2032 Notes for U.S. federal income tax purposes or preclude the 2032 Notes from being recognized as Tier 2 capital for regulatory capital purposes, or if the Company is required to register as an investment company under the Investment Company Act of 1940, as amended. In each case, the redemption would be at a redemption price equal to 100% of the principal amount of the 2032 Notes plus any accrued and unpaid interest to, but excluding, the redemption date.
On September 4, 2025 , the Company repurchased $20.0 million of the 2032 Notes in an open-market transaction. The repurchase resulted in a $1.9 million gain.
Stockholders’ Equity
Stockholders’ equity increased $335.8 million to $4.30 billion as of December 31, 2025, compared to $3.96 billion as of December 31, 2024. The increase in stockholders’ equity is primarily associated with the $475.4 million in net income and the $90.2 million in accumulated other comprehensive income, which were partially offset by the $158.9 million of shareholder dividends paid and the repurchase of $81.4 million of our common stock during 2025. The improvement in stockholders’ equity was 8.5% for the year ended December 31, 2025 compared to December 31, 2024. As of December 31, 2025 and 2024, our equity to asset ratio was 18.78% and 17.61%, respectively. Book value per common share was $21.88 at December 31, 2025 compared to $19.92 at December 31, 2024.
Common Stock Cash Dividends. We declared cash dividends on our common stock of $0.805, $0.75 and $0.72 per share for the years ended December 31, 2025, 2024 and 2023, respectively. The common stock dividend payout ratio for the year ended December 31, 2025, 2024 and 2023 was 33.43%, 37.29% and 37.13% respectively.
Stock Repurchase Program. 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. During 2025, the Company repurchased a total of 2,890,706 shares with a weighted-average stock price of $28.13 per share. The 2025 earnings were used to fund the repurchases during the year. Shares repurchased under the program as of December 31, 2025 total 29,398,213 shares. The remaining balance available for repurchase was 17,109,294 shares at December 31, 2025.
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Liquidity and Capital Adequacy Requirements
Parent Company Liquidity . The primary sources for payment of our operating expenses and dividends are current cash on hand ($415.4 million as of December 31, 2025), dividends received from our bank subsidiary and a $20.0 million unfunded line of credit with another financial institution.
Bank Liquidity . At December 31, 2025, we held $1.94 billion in assets that could be used for liquidity purposes, which we refer to as net available internal liquidity. This balance consisted of $1.40 billion in unpledged investment securities which could be used for additional secured borrowing capacity, $385.1 million in cash on deposit with the Federal Reserve Bank ("FRB") and $147.6 million in other liquid cash accounts.
Consistent with our practice of maintaining access to significant external liquidity, we had $4.02 billion in net available sources of borrowed funds, which we refer to as net available external liquidity, as of December 31, 2025. This included $5.75 billion in total borrowing capacity with the Federal Home Loan Bank ("FHLB"), of which $1.98 billion has been drawn upon in the ordinary course of business, resulting in $3.77 billion in net available liquidity with the FHLB as of December 31, 2025. The $1.98 billion consisted of $500.0 million in outstanding FHLB advances and $1.48 billion used for pledging purposes. We also had access to approximately $162.9 million available borrowing capacity from the Discount Window. As of December 31, 2025, the Company also had access to $35.0 million from First National Bankers’ Bank ("FNBB"), and $55.0 million from other various external sources.
Overall, we had $5.96 billion net available liquidity as of December 31, 2025, which consisted of $1.94 billion of net available internal liquidity and $4.02 billion in net available external liquidity.
Table 25 reflects the details on our available liquidity as of December 31, 2025.
Table 25: Available Liquidity
(in thousands)
Total Available
Amount Used
Net Availability
Internal Sources
Unpledged investment securities (market value)
Cash at FRB
Other liquid cash accounts
Total Internal Liquidity
External Sources
FHLB
FRB Discount Window
FNBB
Other
Total External Liquidity
Total Available Liquidity
We have continued to limit our exposure to uninsured deposits and have been actively monitoring this exposure. As of December 31, 2025, we held approximately $8.77 billion in uninsured deposits of which $943.7 million were intercompany subsidiary deposit balances and $3.26 billion were collateralized deposits, for a net position of $4.56 billion. This represents approximately 26.1% of total deposits. In addition, net available liquidity exceeded uninsured and uncollateralized deposits by $1.40 billion.
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Table 26 presents our uninsured deposit detail as of December 31, 2025.
Table 26: Uninsured Deposits
(in thousands)
As of December 31, 2025
Uninsured Deposits
Intercompany Subsidiary and Affiliate Balances
Collateralized Deposits
Net Uninsured Position
Total Available Liquidity
Net Uninsured Position
Net Available Liquidity in Excess of Uninsured Deposits
Risk-Based Capital . We, as well as our bank subsidiary, are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and other discretionary actions by regulators that, if enforced, could have a direct material effect on our financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, we must meet specific capital guidelines that involve quantitative measures of our assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. Our capital amounts and classifications are also subject to qualitative judgments by the regulators as to components, risk weightings and other factors.
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”). Basel III applies to all depository institutions, bank holding companies with total consolidated assets of $500 million or more, and savings and loan holding companies. Basel III became effective for the Company and its bank subsidiary on January 1, 2015. Basel III limits a banking organization’s capital distributions and certain discretionary bonus payments if the banking organization does not hold a “capital conservation buffer” of 2.5% of common equity Tier 1 capital to risk-weighted assets, which is in addition to the amount necessary to meet its minimum risk-based capital requirements.
Basel III amended the prompt corrective action rules to incorporate a common equity Tier 1 ("CET1") capital requirement and to raise the capital requirements for certain capital categories. In order to be adequately capitalized for purposes of the prompt corrective action rules, a banking organization is required to have at least a 4.5% CET1 risk-based capital ratio, a 4% Tier 1 leverage ratio, a 6% Tier 1 risk-based capital ratio and an 8% total risk-based capital ratio.
Quantitative measures established by regulation to ensure capital adequacy require us to maintain minimum amounts and ratios (set forth in the table below) of total and Tier 1 capital to risk-weighted assets, and of Tier 1 capital to average assets. Management believes that, as of December 31, 2025 and December 31, 2024, we met all regulatory capital adequacy requirements to which we were subject.
On December 31, 2018, the federal banking agencies issued a joint final rule to revise their regulatory capital rules to permit bank holding companies and banks to phase-in, for regulatory capital purposes, the day-one impact of the new CECL accounting rule on retained earnings over a period of three years. As part of its response to the impact of COVID-19, on March 27, 2020, the federal banking regulatory agencies issued an interim final rule that provided the option to temporarily delay certain effects of CECL on regulatory capital for two years, followed by a three-year transition period. The interim final rule allows bank holding companies and banks to delay for two years 100% of the day-one impact of adopting CECL and 25% of the cumulative change in the reported allowance for credit losses since adopting CECL. The Company elected to adopt the interim final rule, which is reflected in the risk-based capital ratios as of December 31, 2024. The risk-based capital ratios as of December 31, 2025, do not include a transitional period adjustment as the transition period has ended.
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Table 27 presents our risk-based capital ratios as of December 31, 2025 and 2024.
Table 27: Risk-Based Capital
December 31, 2025
December 31, 2024
(Dollars in thousands)
Tier 1 capital
Stockholders’ equity
ASC 326 transitional period adjustment
Goodwill and core deposit intangibles, net
Unrealized loss on available-for-sale securities
Total common equity Tier 1 capital
Total Tier 1 capital
Tier 2 capital
Allowance for credit losses
ASC 326 transitional period adjustment
Disallowed allowance for credit losses (limited to 1.25% of risk weighted assets)
Qualifying allowance for credit losses
Qualifying subordinated notes
Total Tier 2 capital
Total risk-based capital
Average total assets for leverage ratio
Risk weighted assets
Ratios at end of period
Common equity Tier 1 capital
Leverage ratio
Tier 1 risk-based capital
Total risk-based capital
Minimum guidelines – Basel III
Common equity Tier 1 capital
Leverage ratio
Tier 1 risk-based capital
Total risk-based capital
Well-capitalized guidelines
Common equity Tier 1 capital
Leverage ratio
Tier 1 risk-based capital
Total risk-based capital
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As of the most recent notification from regulatory agencies, our bank subsidiary was “well-capitalized” under the regulatory framework for prompt corrective action. To be categorized as “well-capitalized”, we, as well as our banking subsidiary, must maintain minimum CET1 capital, leverage, Tier 1 risk-based capital, and total risk-based capital ratios as set forth in the table. There are no conditions or events since that notification that we believe have changed the bank subsidiary’s category.
Table 28 presents actual capital amounts and ratios as of December 31, 2025 and 2024, for our bank subsidiary and us.
Table 28: Capital and Ratios
Actual
Minimum Capital
Requirement –
Basel III
Minimum To Be
Well-Capitalized
Under Prompt
Corrective Action
Provision
Amount
Ratio
Amount
Ratio
Amount
Ratio
(Dollars in thousands)
As of December 31, 2025
Common equity Tier 1 capital ratios:
Home BancShares
Centennial Bank
Leverage ratios:
Home BancShares
Centennial Bank
Tier 1 capital ratios:
Home BancShares
Centennial Bank
Total risk-based capital ratios:
Home BancShares
Centennial Bank
As of December 31, 2024
Common equity Tier 1 capital ratios:
Home BancShares
Centennial Bank
Leverage ratios:
Home BancShares
Centennial Bank
Tier 1 capital ratios:
Home BancShares
Centennial Bank
Total risk-based capital ratios:
Home BancShares
Centennial Bank
Cash Commitments and Resources
In the normal course of business, we enter into a number of financial commitments. Examples of these commitments include but are not limited to operating lease obligations, FHLB advances & other borrowings, lines of credit, subordinated debentures, unfunded loan commitments and letters of credit.
Commitments to extend credit and letters of credit are legally binding, conditional agreements generally having certain expiration or termination dates. These commitments generally require customers to maintain certain credit standards and are established based on management’s credit assessment of the customer. The commitments may expire without being drawn upon. Therefore, the total commitment does not necessarily represent future requirements.
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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. 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 $131.9 million and $153.9 million at December 31, 2025 and 2024, respectively.
Table 29 presents the anticipated funding requirements of our most significant financial commitments, excluding interest, as of December 31, 2025.
Table 29: Funding Requirements of Financial Commitments
Payments Due by Period
Less than
One Year
One-Three
Years
Three-Five
Years
Greater than
Five Years
Total
(In thousands)
Operating lease obligations
FHLB advances & other borrowings by contractual maturity
Subordinated debentures
Loan commitments
Letters of credit
Non-GAAP Financial Measurements
Our accounting and reporting policies conform to generally accepted accounting principles in the United States (“GAAP”) and the prevailing practices in the banking industry. However, this report contains financial information determined by methods other than in accordance with GAAP, including earnings, as adjusted; diluted earnings per common share, as adjusted; tangible book value per share; return on average assets, excluding intangible amortization; return on average assets, as adjusted; return on average common equity, as adjusted; return on average tangible equity excluding intangible amortization; return on average tangible equity, as adjusted; tangible equity to tangible assets; and efficiency ratio, as adjusted.
We believe these non-GAAP measures and ratios, when taken together with the corresponding GAAP measures and ratios, provide meaningful supplemental information regarding our performance. We believe investors benefit from referring to these non-GAAP measures and ratios in assessing our operating results and related trends, and when planning and forecasting future periods. However, these non-GAAP measures and ratios should be considered in addition to, and not as a substitute for or preferable to, ratios prepared in accordance with GAAP.
The tables below present non-GAAP reconciliations of earnings, as adjusted, and diluted earnings per share, as adjusted, as well as the non-GAAP computations of tangible book value per share; return on average assets, excluding intangible amortization; return on average assets, as adjusted; return on average common equity, as adjusted; return on average tangible equity excluding intangible amortization; return on average tangible equity, as adjusted; tangible equity to tangible assets; and efficiency ratio, as adjusted. The items used in these calculations are included in financial results presented in accordance with GAAP.
Earnings, as adjusted, and diluted earnings per common share, as adjusted, are meaningful non-GAAP financial measures for management, as they exclude certain items such as merger expenses and/or certain gains and losses. Management believes the exclusion of these items in expressing earnings provides a meaningful foundation for period-to-period and company-to-company comparisons, which management believes will aid both investors and analysts in analyzing our financial measures and predicting future performance. 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.
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In Table 30 below, we have provided a reconciliation of the non-GAAP calculation of the financial measure for the periods indicated.
Table 30: Earnings, As Adjusted
Years Ended December 31,
(In thousands, except per share data)
GAAP net income available to common shareholders (A)
Adjustments:
FDIC special assessment
BOLI death benefit
Fair value adjustment for marketable securities
Gain on sale of building
Recoveries on historic losses
Special income from equity investments
Merger expenses
Gain on retirement of subordinated debt
Legal fee reimbursement
Legal claims expense
Total adjustments
Tax-effect of adjustments (1)
Deferred tax asset write-down
Total adjustments after tax (B)
Earnings, as adjusted (C)
Average diluted shares outstanding (D)
GAAP diluted earnings per share: A/D
Adjustments after-tax: B/D
Diluted earnings per common share excluding adjustments: C/D
(1) Blended statutory tax rate of 24.359% for 2025, 24.433% for 2024 and 24.989% for 2023.
We had $1.43 billion, $1.44 billion and $1.45 billion total goodwill, core deposit intangibles and other intangible assets as of December 31, 2025, 2024 and 2023, respectively. Because of our level of intangible assets and related amortization expenses, management believes tangible book value per share; return on average assets, excluding intangible amortization; return on average assets, as adjusted; return on average common equity, as adjusted; return on average tangible equity excluding intangible amortization; return on average tangible equity, as adjusted and tangible equity to tangible assets are useful in evaluating our Company. 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 31 through 34, respectively.
Table 31: Tangible Book Value Per Share
Years Ended December 31,
(In thousands, except per share data)
Book value per share: A/B
Tangible book value per share: (A-C-D)/B
(A) Total equity
(B) Shares outstanding
(C) Goodwill
(D) Core deposit intangible
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Table 32: Return on Average Assets Excluding Intangible Amortization
Years Ended December 31,
(Dollars in thousands)
Return on average assets: A/D
Return on average assets excluding intangible amortization: (A+B)/(D-E)
Return on average assets, as adjusted: (A+C)/D
(A) Net income
(B) Intangible amortization after-tax
(C) Adjustments after-tax
(D) Average assets
(E) Average goodwill, core deposits and other intangible assets
Table 33: Return on Average Tangible Equity Excluding Intangible Amortization
Years Ended December 31,
(Dollars in thousands)
Return on average equity: A/D
Return on average common equity, as adjusted: (A+C)/D
Return on average tangible common equity: A/(D-E)
Return on average tangible equity excluding intangible amortization: B/(D-E)
Return on average tangible common equity, as adjusted: (A+C)/(D-E)
(A) Net income
(B) Earnings excluding intangible amortization
(C) Adjustments after-tax
(D) Average equity
(E) Average goodwill, core deposits and other intangible assets
Table 34: Tangible Equity to Tangible Assets
Years Ended December 31,
(Dollars in thousands)
Equity to assets: B/A
Tangible equity to tangible assets: (B-C-D)/(A-C-D)
(A) Total assets
(B) Total equity
(C) Goodwill
(D) Core deposit intangible
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The efficiency ratio is a standard measure used in the banking industry and is calculated by dividing non-interest expense less amortization of core deposit intangibles by the sum of net interest income on a tax equivalent basis and non-interest income. The efficiency ratio, as adjusted, is a meaningful non-GAAP measure for management, as it excludes certain items and is calculated by dividing non-interest expense less amortization of core deposit intangibles by the sum of net interest income on a tax equivalent basis and non-interest income excluding items such as merger expenses and/or certain other gains and losses. In Table 35 below, we have provided a reconciliation of the non-GAAP calculation of the financial measure for the periods indicated.
Table 35: Efficiency Ratio, As Adjusted
Years Ended December 31,
(Dollars in thousands)
Net interest income (A)
Non-interest income (B)
Non-interest expense (C)
FTE Adjustment (D)
Amortization of intangibles (E)
Adjustments:
Non-interest income:
Gain on retirement of subordinated debt
Fair value adjustment for marketable securities
Special income from equity investments
(Loss) gain on OREO, net
Gain on branches, equipment and other assets, net
BOLI death benefits
Legal expense reimbursement
Recoveries on historic losses
Total non-interest income adjustments (F)
Non-interest expense:
FDIC special assessment
Merger expenses
Legal claims expense
Total non-interest expense adjustments (G)
Efficiency ratio (reported): ((C-E)/(A+B+D))
Efficiency ratio, as adjusted (non-GAAP): ((C-E-G)/(A+B+D-F))
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Table 36 presents selected unaudited quarterly financial information for 2025 and 2024.
Table 36: Quarterly Results
2025 Quarters
First
Second
Third
Fourth
Total
(In thousands, except per share data)
Income statement data:
Total interest income
Total interest expense
Net interest income
Provision for credit losses
Net interest income after provision for credit losses
Total non-interest income
Total non-interest expense
Income before income taxes
Income tax expense
Net income
Per share data:
Basic earnings per common share
Diluted earnings per common share
2024 Quarters
First
Second
Third
Fourth
Total
(In thousands, except per share data)
Income statement data:
Total interest income
Total interest expense
Net interest income
Provision for credit losses
Net interest income after provision for credit losses
Total non-interest income
Total non-interest expense
Income before income taxes
Income tax expense
Net income
Per share data:
Basic earnings per common share
Diluted earnings per common share
Recent Accounting Pronouncements
See Note 24 to the Notes to Consolidated Financial Statements for a discussion of certain recent accounting pronouncements.
