Home BancShares(HOMB) - 2023 Q2 - Quarterly Report

Part I: Financial Information Item 1: Financial Statements This section presents Home BancShares, Inc.'s unaudited consolidated financial statements and detailed notes on accounting policies and financial items Consolidated Balance Sheets 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 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) 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 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 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 1. Nature of Operations and Summary of Significant Accounting Policies 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] - The company operates as a single reportable operating segment, with financial performance evaluated on a company-wide basis[28] - Key accounting estimates include the allowance for credit losses, valuation of investment securities, foreclosed assets, and assets/liabilities from business combinations[30] - Loans are reported at outstanding principal balance, adjusted for charge-offs and deferred fees[35] The allowance for credit losses is a valuation account based on expected collectability, considering historical data, current conditions, and forecasts[36][37] - Revenue recognition for most transactions (loans, investments) is outside ASC Topic 606[45] For in-scope activities like service charges and trust fees, revenue is recognized as performance obligations are satisfied[47] 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 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] - 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] - 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] 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][56] 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 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 (