Home BancShares (HOMB) could be a solid choice for investors given its recent upgrade to a Zacks Rank #2 (Buy). This upgrade primarily reflects an upward trend in earnings estimates, which is one of the most powerful forces impacting stock prices.A company's changing earnings picture is at the core of the Zacks rating. The system tracks the Zacks Consensus Estimate -- the consensus measure of EPS estimates from the sell-side analysts covering the stock -- for the current and following years.The power of a c ...

For the quarter ended March 2024, Home BancShares (HOMB) reported revenue of $246.39 million, down 1% over the same period last year. EPS came in at $0.49, compared to $0.54 in the year-ago quarter.The reported revenue compares to the Zacks Consensus Estimate of $239.53 million, representing a surprise of +2.86%. The company delivered an EPS surprise of +6.52%, with the consensus EPS estimate being $0.46.While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and ...

Financial Performance - Net income for Q1 2024 was $100.1 million, or $0.50 diluted earnings per share, with adjusted net income of $99.2 million and $0.49 per share[6]. - Net income for Q1 2024 was $100.1 million, up from $86.2 million in Q4 2023, representing a 16.5% increase[16]. - Total revenue for Q1 2024 was $246.4 million, slightly up from $245.6 million in Q4 2023[16]. - Pre-tax net income to total revenue ratio improved to 52.92% in Q1 2024 from 45.92% in Q4 2023[16]. - Return on assets (ROA) increased to 1.78% in Q1 2024 compared to 1.55% in Q4 2023[16]. - Diluted earnings per share for Q1 2024 was $0.50, an increase from $0.43 in Q4 2023[16]. - GAAP net income available to common shareholders for Q1 2024 was $100,109,000, an increase from $86,243,000 in Q4 2023[37]. - Earnings, as adjusted, for Q1 2024 were $99,195,000, compared to $92,213,000 in Q4 2023, reflecting a growth of 8.6%[37]. - Return on average assets for Q1 2024 was 1.78%, an increase from 1.55% in Q4 2023[37]. - Return on average common equity was 10.64%, an increase from 9.36% in the previous period[38]. Liquidity and Deposits - Total loans receivable increased to $14.51 billion as of March 31, 2024, up from $14.42 billion at December 31, 2023[8]. - Total deposits rose to $16.87 billion at March 31, 2024, compared to $16.79 billion at December 31, 2023[8]. - The company held approximately $8.42 billion in uninsured deposits, representing about 28.4% of total deposits as of March 31, 2024[4]. - Net available liquidity was $3.11 billion as of March 31, 2024, including $2.91 billion with the Federal Home Loan Bank[3]. - The company has access to $798.3 million in liquidity with the Federal Reserve Bank, with $700.0 million drawn upon[3]. - Total available liquidity reached $8,311,627,000, an increase from $5,774,260,000 in the previous quarter[57]. Loan Performance - Non-performing loans totaled $80.0 million as of March 31, 2024, with non-performing assets at $110.7 million[9]. - Non-performing loans to total loans increased to 0.55% as of March 31, 2024, compared to 0.44% at the end of Q4 2023[24]. - The yield on loans improved to 7.37% in Q1 2024, up from 7.20% in Q4 2023, with average loans increasing from $14.34 billion to $14.49 billion[21]. - The allowance for credit losses on loans was $290.3 million at March 31, 2024, representing 2.00% of total loans, consistent with the previous quarter[42]. - Provision for credit losses on loans was $5,500 thousand, down from $5,650 thousand in the previous quarter[34]. Interest Income and Expenses - Interest expense increased by approximately $71.7 million for Q1 2024 due to high interest rates[5]. - Net interest income for Q1 2024 was $205.5 million, an increase from $203.9 million in Q4 2023, driven by a $10.5 million rise in interest income[22]. - The net interest margin for Q1 2024 was 4.13%, slightly down from 4.17% in Q4 2023, impacted by approximately $500 million in excess liquidity[21]. - Total interest income for the quarter ended March 31, 2024, was $316,915,000, an increase from $284,939,000 in the same quarter last year, representing a growth of 11.2%[48]. - Net interest income after credit loss expense was $200,090,000, compared to $213,395,000 in the same quarter last year, reflecting a decrease of 6.2%[48]. Operational Efficiency - Non-interest expense for Q1 2024 totaled $111.5 million, with salaries and employee benefits accounting for $60.9 million[23]. - The efficiency ratio for Q1 2024 was 44.22%, with the adjusted efficiency ratio at 44.43%[23]. - Total other operating expenses decreased to $26,888 thousand from $39,673 thousand in the previous quarter, indicating improved cost management[33]. - Non-interest expenses were reduced by $3 million quarter over quarter, contributing to improved efficiency[61]. - The company is focusing on improving operational efficiency and reducing costs as indicated by the lower efficiency ratio and other operating expenses[33]. Asset Management - Total assets increased to $22,835,721 as of March 31, 2024, compared to $22,656,658 at December 31, 2023[39]. - Stockholders' equity rose to $3.81 billion at March 31, 2024, up from $3.79 billion at December 31, 2023, primarily due to a $63.9 million increase in retained earnings[25]. - Book value per share increased to $18.98 in Q1 2024 from $18.81 in Q4 2023[16]. - Tangible book value per common share rose to $18.98 as of March 31, 2024, compared to $18.81 at the end of the previous quarter[39]. - Total liabilities decreased slightly to $18,899,607 thousand from $19,126,263 thousand[36]. Market Outlook - Forward-looking statements indicate potential risks including economic conditions, credit quality, and regulatory changes[13]. - Management expressed optimism for the upcoming quarters, citing positive trends in net interest income, revenue, and liquidity[61].

CONWAY, Ark., April 18, 2024 (GLOBE NEWSWIRE) -- Home BancShares, Inc. (NYSE:HOMB) ("Home" or the "Company"), parent company of Centennial Bank, released quarterly earnings today. Quarterly Highlights MetricQ1 2024Q4 2023Q3 2023Q2 2023Q1 2023Net income$100.1 million$86.2 million$98.5 million$105.3 million$103.0 millionNet income, as adjusted (non-GAAP)(1)$99.2 million$92.2 million$94.7 million$102.6 million$108.9 millionTotal revenue (net)$246.4 million$245.6 million$245.4 million$257.2 million$248.8 millio ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-K (Mark One) ☑ Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Fiscal Year Ended December 31, 2023 or ☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Transition period from _____ to _____ Commission File Number: 001-41093 HOME BANCSHARES, INC. (Exact Name of Registrant as Specified in Its Charter) | Arkansas | | 71-068 ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q (Mark One) ☑ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarterly Period Ended September 30, 2023 or ☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Transition period from ______ to ______ Commission File Number: 001-41093 HOME BANCSHARES, INC. (Exact Name of Registrant as Specified in Its Charter) Arkansas 7 ...

Financial Data and Key Metrics Changes - The company reported a slight decrease in net income due to rising operating and interest expenses, with an efficiency ratio of nearly 46% [102] - Interest expense increased from 2.27% in June to 2.55% at the end of the quarter, while the net interest margin (NIM) fell by nine basis points to 4.19% [102][106] - The company achieved a record earnings of $415 million over the last four quarters, with a return on assets (ROA) of 1.78% and a return on tangible common equity of 17.62% [117][118] Business Line Data and Key Metrics Changes - Loan demand has decreased significantly, with yields on loans rising to 6.98% from 6.48%, indicating a potential loan recession [121] - The company expects loan growth in the fourth quarter, with new loans being written in the high nines and lower tens [121] Market Data and Key Metrics Changes - The company maintains a strong capital position with a common equity tier 1 (CET1) ratio of 14%, placing it among the top-tier banks in the U.S. [108] - Non-performing assets (NPAs) remain low at 0.42%, indicating strong asset quality [118] Company Strategy and Development Direction - The company is focused on increasing revenue and reducing expenses to improve profitability, emphasizing the need for strategic planning rather than relying on luck [104][105] - There is an ongoing evaluation of all segments of the company to determine their viability and potential for improvement [30] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about overcoming interest expense increases in the fourth quarter, citing improved margins in September [103] - The company is preparing for potential economic challenges, with a focus on maintaining strong reserves and capital to navigate future crises [112][113] Other Important Information - The company has a robust reserve for bad loans, amounting to almost $300 million, which is 2% of outstanding loans [112] - The company is actively looking for opportunities in the current economic environment, similar to past crises [113] Q&A Session Summary Question: What are the drivers behind the negative event income in the third quarter? - Management indicated that the negative event income was primarily due to $1 million in non-accrual interest from two credits, resulting in a net negative of about $0.5 million [12][13] Question: What is the outlook for non-interest-bearing deposits? - Management noted that outflows in non-interest-bearing deposits were due to customers seeking higher yields, with balances down 20% to 25% over the past year [16][17] Question: Can you provide insights on margin stability? - Management expressed cautious optimism about margin stability, noting slight improvements in September and ongoing efforts to manage deposit costs [24][34] Question: What is the company's strategy regarding M&A in the current environment? - Management stated that potential M&A deals are challenging without government assistance, and they are focusing on organic growth and evaluating existing segments [26][28] Question: What are the trends in criticized and classified loans? - Management reported minor increases in criticized and classified loans, but nothing systemic, with past dues slightly up in the mortgage product portfolio [84][85]

Part I: Financial Information [Item 1: Financial Statements](index=5&type=section&id=Item%201%3A%20Financial%20Statements) This section presents Home BancShares, Inc.'s unaudited consolidated financial statements and detailed notes on accounting policies and financial items [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) Consolidated Balance Sheet Highlights (In thousands) | Metric | June 30, 2023 | December 31, 2022 | Change (vs. Dec 31, 2022) | | :----- | :------------ | :---------------- | :------------------------ | Assets (In thousands) | Asset Category | June 30, 2023 | December 31, 2022 | Change | | :------------- | :------------ | :---------------- | :----- | Liabilities and Stockholders' Equity (In thousands) | Liability/Equity Category | June 30, 2023 | December 31, 2022 | Change | | :------------------------ | :------------ | :---------------- | :----- | [Consolidated Statements of Income](index=6&type=section&id=Consolidated%20Statements%20of%20Income) Consolidated Statements of Income Highlights (In thousands, except per share data) | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :----- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | Interest Income (In thousands) | Category | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | | :------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | Interest Expense (In thousands) | Category | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | | :------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | Non-Interest Income (In thousands) | Category | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | | :------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | Non-Interest Expense (In thousands) | Category | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | | :------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | [Consolidated Statements of Comprehensive Income (Loss)](index=8&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) Consolidated Statements of Comprehensive Income (Loss) (In thousands) | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :----- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | [Consolidated Statements of Stockholders' Equity](index=9&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity) Stockholders' Equity Balances (In thousands) | Category | Balances at January 1, 2023 | Balances at March 31, 2023 | Balances at June 30, 2023 | | :------- | :-------------------------- | :------------------------- | :------------------------ | Stockholders' Equity Changes (In thousands) | Activity | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2023 | | :------- | :------------------------------- | :----------------------------- | Stockholders' Equity Balances (In thousands) | Category | Balances at January 1, 2022 | Balances at March 31, 2022 | Balances at June 30, 2022 | | :------- | :-------------------------- | :------------------------- | :------------------------ | Stockholders' Equity Changes (In thousands) | Activity | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2022 | | :------- | :------------------------------- | :----------------------------- | [Consolidated Statements of Cash Flows](index=11&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Consolidated Statements of Cash Flows (In thousands) | Activity | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :------- | :----------------------------- | :----------------------------- | [Condensed Notes to Consolidated Financial Statements](index=12&type=section&id=Condensed%20Notes%20to%20Consolidated%20Financial%20Statements) [1. Nature of Operations and Summary of Significant Accounting Policies](index=12&type=section&id=1.%20Nature%20of%20Operations%20and%20Summary%20of%20Significant%20Accounting%20Policies) Home BancShares, Inc. operates as a bank holding company through Centennial Bank, offering banking services across multiple states, with financial statements prepared under GAAP using significant management estimates - Home BancShares, Inc. (HBI) is a bank holding company operating through its subsidiary, Centennial Bank, with branches in Arkansas, Florida, South Alabama, Texas, and New York City[27](index=27&type=chunk) - The company operates as a single reportable operating segment, with financial performance evaluated on a company-wide basis[28](index=28&type=chunk) - Key accounting estimates include the allowance for credit losses, valuation of investment securities, foreclosed assets, and assets/liabilities from business combinations[30](index=30&type=chunk) - Loans are reported at outstanding principal balance, adjusted for charge-offs and deferred fees[35](index=35&type=chunk) The allowance for credit losses is a valuation account based on expected collectability, considering historical data, current conditions, and forecasts[36](index=36&type=chunk)[37](index=37&type=chunk) - Revenue recognition for most transactions (loans, investments) is outside ASC Topic 606[45](index=45&type=chunk) For in-scope activities like service charges and trust fees, revenue is recognized as performance obligations are satisfied[47](index=47&type=chunk) Earnings Per Share (In thousands, except per share data) | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :----- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | [2. Business Combinations](index=15&type=section&id=2.%20Business%20Combinations) On April 1, 2022, the Company acquired Happy Bancshares, Inc. for approximately **$962.5 million**, issuing **42.4 million** shares of common stock, adding new markets in Texas with **$6.69 billion** in total assets, **$3.65 billion** in loans, and **$5.86 billion** in customer deposits, resulting in **$425.2 million** in goodwill - On April 1, 2022, Home BancShares acquired Happy Bancshares, Inc. for approximately **$962.5 million**, issuing **42.4 million** shares of common stock[47](index=47&type=chunk) - The acquisition added new markets in Texas and brought approximately **$6.69 billion** in total assets, **$3.65 billion** in loans, and **$5.86 billion** in customer deposits[48](index=48&type=chunk) - The acquisition resulted in **$425.2 million** in goodwill, calculated as the difference between the purchase price and the fair value of net assets acquired[49](index=49&type=chunk) Assets Acquired and Liabilities Assumed from Happy Bancshares, Inc. (In thousands) | Category | Acquired from Happy | Fair Value Adjustments | As Recorded by HBI | | :------- | :------------------ | :--------------------- | :----------------- | - Fair values for acquired assets and liabilities were determined using discounted cash flow methodologies and market prices, with significant estimates for loans and core deposit intangibles[52](index=52&type=chunk)[56](index=56&type=chunk) Unaudited Pro-Forma Combined Financial Information (Six Months Ended June 30, 2022, In thousands, except per share data) | Metric | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2022 | | :----- | :------------------------------- | :----------------------------- | Purchased Loans with Credit Deterioration (PCD) at Acquisition (April 1, 2022, In thousands) | Metric | Amount | | :----- | :----- | [3. Investment Securities](index=18&type=section&id=3.%20Investment%20Securities) The Company's investment securities portfolio includes available-for-sale (AFS) and held-to-maturity (HTM) securities, with **$390.6 million** in unrealized AFS losses and **$129.7 million** in HTM unrealized losses as of June 30, 2023, primarily due to interest rate changes, and a **$1.7 million** provision for credit losses on an AFS subordinated debt security Investment Securities - Available-for-Sale (In thousands) | Category | Amortized Cost (June 30, 2023) | Fair Value (June 30, 2023) | Gross Unrealized Gains (June 30, 2023) | Gross Unrealized Losses (June 30, 2023) | Amortized Cost (Dec 31, 2022) | Fair Value (Dec 31, 2022) | Gross Unrealized Gains (

Part I: Financial Information [Item 1: Financial Statements](index=5&type=section&id=Item%201%3A%20Financial%20Statements) This section presents the unaudited consolidated financial statements for Home BancShares, Inc. as of March 31, 2023, and for the three-month period then ended, with comparative data for prior periods [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) The Consolidated Balance Sheet shows a slight decrease in total assets to $22.52 billion as of March 31, 2023, from $22.88 billion at year-end 2022, primarily driven by a decrease in investment securities and total deposits, while stockholders' equity increased to $3.63 billion Consolidated Balance Sheet Highlights (Unaudited) | (In thousands) | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | **Total Assets** | **$22,518,255** | **$22,883,588** | | Loans receivable, net | $14,099,465 | $14,119,811 | | Total investment securities | $5,058,511 | $5,329,295 | | **Total Liabilities** | **$18,887,370** | **$19,357,226** | | Total deposits | $17,445,466 | $17,938,783 | | **Total Stockholders' Equity** | **$3,630,885** | **$3,526,362** | [Consolidated Statements of Income](index=6&type=section&id=Consolidated%20Statements%20of%20Income) For the three months ended March 31, 2023, the company reported a significant year-over-year increase in net income to $103.0 million from $64.9 million, driven by a substantial rise in net interest income reflecting the higher interest rate environment and the Happy Bancshares acquisition Consolidated Income Statement Highlights (Unaudited) | (In thousands, except per share data) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | Net interest income | $214,595 | $131,148 | | Provision for credit losses | $1,200 | $— | | Non-interest income | $34,164 | $30,669 | | Non-interest expense | $114,644 | $76,896 | | **Net income** | **$102,962** | **$64,892** | | **Diluted earnings per share** | **$0.51** | **$0.40** | [Consolidated Statements of Stockholders' Equity](index=8&type=section&id=Consolidated%20Statements%20of%20Stockholders%27%20Equity) Stockholders' equity increased from $3.53 billion at the start of 2023 to $3.63 billion at March 31, 2023, primarily driven by net income and positive changes in other comprehensive income, partially offset by common stock dividends and stock repurchases - Key changes in stockholders' equity for Q1 2023 included: - Net income of **$103.0 million**[20](index=20&type=chunk) - Other comprehensive income of **$49.2 million**[20](index=20&type=chunk) - Cash dividends paid of **$36.6 million** (**$0.18** per share)[20](index=20&type=chunk) - Repurchase of **590,000** shares of common stock for **$13.5 million**[20](index=20&type=chunk) [Consolidated Statements of Cash Flows](index=10&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the first three months of 2023, the company experienced a net decrease in cash and cash equivalents of $36.7 million, with net cash provided by operating activities of $117.9 million and investing activities providing $381.1 million, while financing activities used $535.8 million Cash Flow Summary (Unaudited) | (In thousands) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $117,948 | $89,486 | | Net cash provided by (used in) investing activities | $381,140 | $(716,414) | | Net cash (used in) provided by financing activities | $(535,824) | $596,071 | | **Net change in cash and cash equivalents** | **$(36,736)** | **$(30,857)** | [Condensed Notes to Consolidated Financial Statements](index=11&type=section&id=Condensed%20Notes%20to%20Consolidated%20Financial%20Statements) The notes provide detailed explanations of the company's accounting policies and financial statement components, covering the Happy Bancshares acquisition, investment and loan portfolios, allowance for credit losses, goodwill, deposits, borrowings, and regulatory capital - On April 1, 2022, the Company completed its acquisition of Happy Bancshares, Inc. for a total transaction value of approximately **$962.5 million**, adding **$6.69 billion** in assets and creating **$425.2 million** in goodwill[49](index=49&type=chunk)[50](index=50&type=chunk)[51](index=51&type=chunk) - As of March 31, 2023, the investment portfolio had gross unrealized losses of **$343.7 million** in the available-for-sale portfolio and **$117.5 million** in the held-to-maturity portfolio, primarily attributed to changes in interest rates rather than credit quality[72](index=72&type=chunk)[78](index=78&type=chunk)[79](index=79&type=chunk) - The allowance for credit losses on loans was **$287.2 million** as of March 31, 2023, down slightly from **$289.7 million** at year-end 2022[98](index=98&type=chunk)[96](index=96&type=chunk] - A provision for credit losses of **$1.2 million** was recorded in Q1 2023[96](index=96&type=chunk) [Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations](index=57&type=section&id=Item%202%3A%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial performance for the first quarter of 2023, highlighting a 58.7% increase in net income to $103.0 million year-over-year, attributing this growth to the Happy Bancshares acquisition and a rising interest rate environment that expanded the net interest margin to 4.37% [Results of Operations](index=58&type=section&id=Results%20of%20Operations) Net income for Q1 2023 rose to $103.0 million ($0.51 per diluted share) from $64.9 million ($0.40 per diluted share) in Q1 2022, driven by a $140.0 million rise in interest income that outpaced the $56.6 million increase in interest expense, expanding the net interest margin to 4.37% Q1 Performance Comparison | Metric | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Net Income | $103.0M | $64.9M | | Diluted EPS | $0.51 | $0.40 | | Net Interest Margin (FTE) | 4.37% | 3.21% | | Return on Average Assets | 1.84% | 1.43% | | Return on Average Equity | 11.70% | 9.58% | - The increase in net interest income was primarily due to higher yields on a larger base of earning assets, a result of both the Happy acquisition and the rising interest rate environment[214](index=214&type=chunk)[252](index=252&type=chunk) [Financial Condition](index=71&type=section&id=Financial%20Condition) Total assets decreased slightly to $22.52 billion at March 31, 2023, from $22.88 billion at year-end 2022, mainly due to a $270.8 million decrease in investment securities, while the loan portfolio remained stable and total deposits decreased by $493.3 million - The loan portfolio experienced a **$94.6 million** organic decline from the Centennial Commercial Finance Group, offset by **$73.9 million** in organic growth elsewhere[283](index=283&type=chunk)[285](index=285&type=chunk) - Non-performing loans increased to **$74.0 million** (**0.51%** of total loans) from **$60.9 million** (**0.42%** of total loans) at year-end 2022[218](index=218&type=chunk)[303](index=303&type=chunk) - The allowance for credit losses stood at **$287.2 million**, or **2.00%** of total loans, as of March 31, 2023[341](index=341&type=chunk) [Liquidity and Capital Adequacy](index=85&type=section&id=Liquidity%20and%20Capital%20Adequacy) The company maintains strong capital ratios, with a Common Equity Tier 1 (CET1) ratio of 13.21% and a Total Risk-Based Capital ratio of 16.84% as of March 31, 2023, both well above regulatory minimums for being "well-capitalized," and management details the company's liquidity and risk management strategies Risk-Based Capital Ratios | Ratio | As of March 31, 2023 | Well-Capitalized Guideline | | :--- | :--- | :--- | | Common Equity Tier 1 Capital | 13.21% | 6.50% | | Tier 1 Risk-Based Capital | 13.21% | 8.00% | | Total Risk-Based Capital | 16.84% | 10.00% | | Leverage Ratio | 11.37% | 5.00% | [Item 3: Quantitative and Qualitative Disclosures About Market Risk](index=91&type=section&id=Item%203%3A%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company details its liquidity and market risk management framework, reporting total net available liquidity of $6.92 billion as of March 31, 2023, which exceeded net uninsured and uncollateralized deposits, and presents an interest rate sensitivity analysis showing an estimated 8.55% increase in net interest income in a +200 basis point rate shock scenario Available Liquidity as of March 31, 2023 | (in thousands) | Net Availability | | :--- | :--- | | Total Internal Liquidity | $2,743,339 | | Total External Liquidity | $4,180,764 | | **Total Available Liquidity** | **$6,924,103** | - Net available liquidity of **$6.92 billion** exceeded the net uninsured deposit position of **$5.21 billion** by **$1.72 billion**[408](index=408&type=chunk)[409](index=409&type=chunk) Net Interest Income Sensitivity | Interest Rate Scenario | Percentage Change from Base | | :--- | :--- | | Up 200 basis points | 8.55% | | Down 100 basis points | (4.83)% | [Item 4: Controls and Procedures](index=93&type=section&id=Item%204%3A%20Controls%20and%20Procedures) The company's Chief Executive Officer and Chief Financial Officer concluded that as of March 31, 2023, the disclosure controls and procedures were effective, with no material changes in the company's internal control over financial reporting identified during the quarter - Management concluded that disclosure controls and procedures are effective[423](index=423&type=chunk) - No material changes to internal control over financial reporting were identified during the quarter ended March 31, 2023[424](index=424&type=chunk) Part II: Other Information [Item 1: Legal Proceedings](index=93&type=section&id=Item%201%3A%20Legal%20Proceedings) The company reports no material pending legal proceedings outside of ordinary routine litigation incidental to its business - There are no material pending legal proceedings, other than ordinary routine litigation[425](index=425&type=chunk) [Item 1A: Risk Factors](index=94&type=section&id=Item%201A%3A%20Risk%20Factors) There were no material changes from the risk factors disclosed in the company's 2022 Form 10-K, with the exception of a new risk factor concerning the potential adverse effects from the failure of other financial institutions - A new risk factor was added regarding the potential adverse effects from the failure of other financial institutions, which could lead to losses on investments, increased deposit insurance premiums, and negative impacts on stock price and investor confidence[428](index=428&type=chunk) [Item 2: Unregistered Sales of Equity Securities and Use of Proceeds](index=94&type=section&id=Item%202%3A%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During the first quarter of 2023, the company repurchased 590,000 shares of its common stock at an average price of $22.92 per share as part of its publicly announced stock repurchase program Share Repurchases in Q1 2023 | Period | Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | Jan 2023 | 150,000 | $22.67 | | Feb 2023 | 60,000 | $23.95 | | Mar 2023 | 380,000 | $22.85 | | **Total** | **590,000** | **-** | [Item 3: Defaults Upon Senior Securities](index=94&type=section&id=Item%203%3A%20Defaults%20Upon%20Senior%20Securities) Not applicable [Item 4: Mine Safety Disclosures](index=94&type=section&id=Item%204%3A%20Mine%20Safety%20Disclosures) Not applicable [Item 5: Other Information](index=94&type=section&id=Item%205%3A%20Other%20Information) Not applicable [Item 6: Exhibits](index=95&type=section&id=Item%206%3A%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including certifications by the CEO and CFO, and XBRL data files

Financial Data and Key Metrics Changes - Earnings for the quarter were $103 million or $0.51 per share, with adjusted earnings of $0.54 per share [47] - Return on assets was 1.84%, adjusted to 1.95%, while return on tangible common equity was 19.75%, adjusted to 20.90% [47] - Tangible book value increased by 5.4% from the first quarter, reaching $10.71 [47] - Net interest margin improved to 4.37% from 4.21%, a significant increase from 3.21% a year ago [68] - Total deposits declined slightly less than $500 million in the quarter, marking the lowest decline since the Happy Acquisition [102] Business Line Data and Key Metrics Changes - Loan origination volumes softened to $1.09 billion, with over 75% coming from Community Bank regions [76] - Non-performing loans and non-performing assets remained low at 0.51% and 0.33% respectively [78] - The yield on the loan book increased to 6.64%, up from 6.23% [97] Market Data and Key Metrics Changes - The company reported a quarterly decline in total deposits, which was spread evenly across the past three months [102] - The mix of deposit accounts stands at approximately two-thirds commercial or business and one-third retail, with 80% of accounts being retail [103] Company Strategy and Development Direction - The company aims to maintain strong liquidity and capital ratios, with a total risk-based capital ratio ending at 16.8% [55] - The management is cautious about loan growth, focusing on servicing existing customers and being selective in new lending opportunities [126] - The company is looking for opportunistic acquisitions but remains cautious due to the current market conditions [35][36] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the company's ability to weather the current banking crisis, emphasizing strong liquidity and capital [40][64] - There is a belief that the current turmoil in the banking sector may not be over, and the company is prepared to navigate through potential challenges [127] - Management highlighted the importance of protecting existing customer relationships while being cautious about new lending [12][126] Other Important Information - The company has repurchased 590,000 shares during the first quarter and continues to be active under its stock repurchase plan [55] - The allowance for credit losses remains at 2% of loans, providing 388% coverage of non-performing loans [79] Q&A Session Summary Question: How is the company managing deposit outflows? - Management noted that deposit outflows were down about 4.90% through the quarter, the lowest seen in a while, and some deposits have started to flow back in [33] Question: What is the company's outlook on loan growth? - Management indicated that while there is potential for loan growth, they are being very careful and selective in their lending practices [126] Question: How does the company view the current banking crisis? - Management expressed that the crisis is serious and fragile, but the company is well-positioned to handle it due to strong liquidity and capital [12][64]