HOME BANCSHARES INC

Condensed Notes to Consolidated Financial Statements

(Unaudited)

1. Nature of Operations and Summary of Significant Accounting Policies

Nature of Operations

Home BancShares, Inc. (the "Company" or "HBI") is a bank holding company headquartered in Conway, Arkansas. The Company is primarily engaged in providing a full range of banking services to individual and corporate customers through its wholly-owned community bank subsidiary – Centennial Bank (sometimes referred to as "Centennial" or the "Bank"). As of June 30, 2026, the Bank had branch locations in Arkansas, Florida, South Alabama, Tennessee, Texas and New York City. The Company is subject to competition from other financial institutions. The Company also is subject to the regulation of certain federal and state agencies and undergoes periodic examinations by those regulatory authorities.

A summary of the significant accounting policies of the Company follows:

Operating Segments

Operating segments are components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Bank is the only significant subsidiary upon which management makes decisions regarding how to allocate resources and assess performance. Each of the regions and branches of the Bank provide a group of similar banking services, including such products and services as commercial, real estate and consumer loans, time deposits, checking and savings accounts. The individual bank branches and regions have similar operating and economic characteristics. While the chief operating decision maker monitors the revenue streams of the various products, services, branch locations and regions, operations are managed, and financial performance is evaluated on a company-wide basis. Accordingly, all of the banking services and branch locations are considered by management to be aggregated intoone reportable operating segment.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for credit losses, the valuation of investment securities, and the valuation of foreclosed assets. In connection with the determination of the allowance for credit losses and the valuation of foreclosed assets, management obtains independent appraisals for significant properties.

Principles of Consolidation

The consolidated financial statements include the accounts of HBI and its subsidiaries. Significant intercompany accounts and transactions have been eliminated in consolidation.

Reclassifications

Various items within the accompanying consolidated financial statements for previous periods have been reclassified to provide more comparative information. These reclassifications had no effect on net earnings or stockholders’ equity.

Cash and Cash Equivalents

Cash and cash equivalents consist of cash on hand, cash held as demand deposits at various banks and the Federal Reserve Bank ("FRB") and interest-bearing deposits with other banks. Included in cash and cash equivalents were $8.5 million and $9.4 million of restricted cash as of June 30, 2026 and December 31, 2025, respectively.

Interim financial information

The accompanying unaudited consolidated financial statements have been prepared in condensed format, and therefore do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements.

The information furnished in these interim statements reflects all adjustments which are, in the opinion of management, necessary for a fair statement of the results for each respective period presented. Such adjustments are of a normal recurring nature. The results of operations in the interim statements are not necessarily indicative of the results that may be expected for any other quarter or for the full year. The interim financial information should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s 2025 Form 10-K, filed with the Securities and Exchange Commission on February 27, 2026.

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 discounted cash flow ("DCF") method to estimate expected losses for the Company’s non-acquired loan pools. These pools are as follows: construction & land development; other commercial real estate; residential real estate; commercial & industrial; and consumer & other. The loan portfolio pools were selected in order to generally align with the loan categories specified in the quarterly call reports required to be filed with the Federal Financial Institutions Examination Council. For each of these loan pools, the Company generates cash flow projections at the instrument level wherein payment expectations are adjusted for estimated prepayment speed, curtailments, time to recovery, probability of default, and loss given default. The modeling of expected prepayment speeds, curtailment rates, and time to recovery are based on historical internal data. The Company uses regression analysis of historical internal and peer data to determine suitable loss drivers to utilize when modeling lifetime probability of default and loss given default. This analysis also determines how expected probability of default and loss given default will react to forecasted levels of the loss drivers.

For all DCF models, management has determined that four quarters represents a reasonable and supportable forecast period and reverts to a historical loss rate over four quarters on a straight-line basis. Management leverages economic projections from a reputable and independent third party to inform its loss driver forecasts over the four-quarter forecast period. Other internal and external indicators of economic forecasts are also considered by management when developing the forecast metrics.

Management estimates the allowance balance using relevant available information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. Historical credit loss experience provides the basis for the estimation of expected credit losses. Adjustments to historical loss information are made for differences in current loan-specific risk characteristics such as differences in underwriting standards, portfolio mix, delinquency level, or term as well as for changes in environmental conditions, such as changes in the national unemployment rate, gross domestic product, national retail sales index and the Federal Housing Finance Agency ("FHFA") housing price 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

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 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 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.

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.

Acquisition Accounting and Acquired Loans

The Company accounts for acquisitions in accordance with FASB ASC Topic 805, Business Combinations, using the acquisition method of accounting. Identifiable assets acquired, including loans, are recorded at their estimated fair values as of the acquisition date. The fair value of acquired loans is determined in accordance with FASB ASC Topic 820, Fair Value Measurement, and incorporates estimates of expected prepayments and the amount and timing of expected future principal, interest, and other cash flows.

Purchased loans that have experienced more-than-insignificant credit deterioration since origination are classified as purchased credit deteriorated ("PCD") loans. The Company estimates expected credit losses on PCD loans using methodologies consistent with its allowance for credit losses framework, including individual evaluations or collective assessments, as appropriate. PCD loans are accounted for using the gross-up approach prescribed by ASC 326. Under this approach, an allowance for credit losses is established as of the acquisition date and added to the purchase price of the acquired loan to establish its initial amortized cost basis. The difference between the initial amortized cost basis and the unpaid principal balance of the loan represents a noncredit discount or premium, which is accreted or amortized into interest income over the remaining life of the loan using the effective interest method. Subsequent changes in expected credit losses are recognized through the provision for credit losses and reflected in the allowance for credit losses.

Effective April 1, 2026, the Company early adopted ASU 2025‑08, Financial Instruments—Credit Losses (Topic 326): Purchased Loans. Under ASU 2025‑08, acquired loans that are not classified as PCD loans and otherwise meet the definition of purchased seasoned loans ("PSLs") are accounted for using the gross-up approach. Accordingly, an allowance for credit losses is recognized as of the acquisition date with a corresponding adjustment to the amortized cost basis of the acquired loans, and no day-one provision for credit losses is recognized. The amendments are applied prospectively to qualifying loans acquired on or after the adoption date, and prior-period amounts have not been adjusted.

Following the adoption of ASU 2025‑08, the Company separately identifies and segments qualifying PSLs within its allowance for credit losses framework. PSL segments are aligned with the Company's existing portfolio segmentation structure and generally utilize the same credit risk assumptions, forecasting processes, and qualitative adjustment framework applied to originated loans. In accordance with ASC 326, expected credit losses for PSLs are measured using an expected loss methodology based on the unpaid principal balance of the acquired loans. While the Company's legacy loan portfolio is primarily evaluated using a discounted cash flow methodology based on amortized cost, PSLs are measured based on unpaid principal balance in accordance with ASC 326 and the requirements of ASU 2025‑08.

For further discussion of the Company’s acquisitions, see Note 2 to the Condensed Notes to Consolidated Financial Statements.

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.

Earnings per Share

Basic earnings per share is computed based on the weighted-average number of shares outstanding during each year. Diluted earnings per share is computed using the weighted-average shares and all potential dilutive shares outstanding during the period. The following table sets forth the computation of basic and diluted earnings per share ("EPS") for the following periods:

The impact of anti-dilutive shares to the diluted earnings per share calculation was considered immaterial for the periods ended June 30, 2026 and 2025.

2. Acquisitions

Acquisition of Mountain Commerce Bancorp, Inc.

On April 1, 2026, the Company completed the acquisition of Mountain Commerce Bancorp, Inc (“MCBI”), and merged Mountain Commerce Bank into Centennial Bank. The Company issued approximately 5.4 million shares of its common stock valued at approximately $146.0 million as of April 1, 2026. No cash consideration was paid in connection with the merger, except for cash paid in lieu of fractional shares of Home common stock, equal to $26.77 multiplied by any resulting fractional shares. The acquisition added new markets for expansion and brings complementary businesses together to drive synergies and growth.

Including the effects of the known purchase accounting adjustments, as of the acquisition date, MCBI had approximately $1.77 billion in total assets, $1.47 billion in loans and $1.54 billion in customer deposits. Prior to the merger, MCBI operated its banking business from eight locations in Tennessee.

The purchase price allocation and certain fair value measurements remain preliminary due to the timing of the acquisition. The Company will continue to review the estimated fair values of loans, deposits and intangible assets, and to evaluate the assumed tax positions and contingencies.

The Company has determined that the acquisition of the net assets of MCBI constitutes a business combination as defined by the ASC Topic 805. Accordingly, the assets acquired and liabilities assumed are presented at their fair values as required. Fair values were determined based on the requirements of ASC Topic 820. In many cases, the determination of these fair values required management to make estimates about discount rates, future expected cash flows, market conditions and other future events that are highly subjective in nature and subject to change. The following schedule is a preliminary breakdown of the assets acquired and liabilities assumed as of the acquisition date:

The following is a description of the methods used to determine the fair values of significant assets and liabilities presented above:

Cash and due from banks, interest-bearing deposits with other banks and federal funds sold – The carrying amount of these assets was deemed a reasonable estimate of fair value based on the short-term nature of these assets.

Investment securities – Investment securities were acquired from MCBI with an approximately $523,000 adjustment to fair value based upon quoted market prices. Otherwise, the book value was deemed to approximate fair value.

Loans – Fair values for loans were based on a discounted cash flow methodology that considered factors including the type of loan and related collateral, classification status, fixed or variable interest rate, term of loan, whether or not the loan was amortizing and current discount rates. The discount rates used for loans are based on current market rates for new originations of comparable loans and include adjustments for liquidity concerns. The discount rate does not include a factor for credit losses as that has been included in the estimated cash flows. Loans were grouped together according to similar characteristics and were treated in the aggregate when applying various valuation techniques. See Note 5 to the Condensed Notes to Consolidated Financial Statements, for additional information related to purchased financial assets with credit deterioration.

Bank premises and equipment – Bank premises and equipment were acquired from MCBI with a $7.2 million adjustment to fair value. This represents the difference between current appraisals completed in connection with the acquisition and book value acquired.

Foreclosed assets held for sale – These assets are presented at the estimated fair values that management expects to receive when the properties are sold, net of related costs of disposal.

Cash value of life insurance– Bank owned life insurance is carried at its current cash surrender value, which is the most reasonable estimate of fair value.

Accrued interest receivable – The carrying amount of these assets was deemed a reasonable estimate of the fair value.

Deferred tax asset, net – The current and deferred income tax assets and liabilities are recorded to reflect the differences in the carrying values of the acquired assets and assumed liabilities for financial reporting purposes and the cost basis for federal income tax purposes, at the Company’s statutory federal and state income tax rate of 24.359%.

Core deposit intangible and other intangibles – This core deposit intangible asset represents the value of the relationships that MCBI had with its deposit customers. The fair value of this intangible asset was estimated based on a discounted cash flow methodology that gave appropriate consideration to expected customer attrition rates, cost of the deposit base, and the net maintenance cost attributable to customer deposits.

Deposits – The fair values used for the demand and savings deposits that comprise the transaction accounts acquired, by definition, equal the amount payable on demand at the acquisition date. The $6.9 million fair value adjustment applied for time deposits was because the weighted-average interest rate of MCBI’s certificates of deposits were estimated to be below the current market rates.

FHLB borrowed funds – The fair value of FHLB borrowed funds is estimated based on borrowing rates currently available to the Company for borrowings with similar terms and maturities.

Accrued interest payable and other liabilities – The fair value adjustment results from certain liabilities whose value was estimated to be more or less than book value, such as certain accounts payable and other miscellaneous liabilities. The carrying amount of accrued interest and the remainder of other liabilities was deemed to be a reasonable estimate of fair value.

Purchased loans and leases that reflect a more-than-insignificant deterioration of credit from origination are considered PCD. For PCD loans, the initial estimate of expected credit losses is recognized in the allowance for credit losses on the date of acquisition using the same methodology as other loans and leases held-for-investment. The following table provides a summary of loans purchased as part of the MCBI acquisition with credit deterioration at acquisition:

3. Investment Securities

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

On April 1, 2026, the Company completed the acquisition of MCBI. Including the effects of the known purchase accounting adjustments, as of the acquisition date, MCBI had approximately $103.3 million in investments. The Company classified the entire balance of investments acquired from MCBI as available-for-sale at the acquisition date.

Assets, principally investment securities, having a carrying value of approximately $2.62 billion and $2.65 billion at June 30, 2026 and December 31, 2025, respectively, were pledged to secure public deposits, as collateral for repurchase agreements, and for other purposes required or permitted by law. Investment securities pledged as collateral for repurchase agreements totaled approximately $158.7 million and $155.8 million at June 30, 2026 and December 31, 2025, respectively.

The amortized cost and estimated fair value of securities classified as available-for-sale and held-to-maturity at June 30, 2026, by contractual maturity, are shown below. Expected maturities could differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date are shown separately.

During the three and six months ended June 30, 2026 and 2025, no available-for-sale securities were sold.

The following table shows gross unrealized losses and estimated fair value of investment securities classified as available-for-sale and held-to-maturity, aggregated by investment category and length of time that individual investment securities have been in a continuous loss position as of June 30, 2026 and December 31, 2025.

Debt 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. 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, 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 reversal 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.

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. 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 reversal of) credit loss expense. Losses are charged against the allowance when management believes the uncollectability of a security is confirmed.

During the three and six months ended June 30, 2026, the Company determinedno allowance for credit losses on the available-for-sale portfolio was necessary. The Company also determined the $2.0 million allowance for credit losses on the held-to-maturity portfolio was adequate. Therefore, no provision was considered necessary for either portfolio.

During the three and six months ended June 30, 2025, the Company determined the $2.2 million allowance for credit losses on the available-for-sale portfolio and the $2.0 million allowance for credit losses on the held-to-maturity portfolio were adequate. Therefore, no additional provision was considered necessary.

For the six months ended June 30, 2026, the Company had available-for-sale investment securities with approximately $226.9 million in unrealized losses, of which $223.2 million had been in continuous loss positions for more than twelve months. The Company’s assessments indicated the cause of the market depreciation was primarily due to the change in interest rates and not the issuer’s financial condition or downgrades by rating agencies. In addition, approximately 48.0% of the principal balance from the Company’s investment portfolio will mature or are expected to pay down within five years or less. As a result, the Company has the ability and intent to hold such securities until maturity.

As of June 30, 2026, the Company's available-for-sale securities portfolio consisted of 1,539 investment securities,1,256 of which were in an unrealized loss position. As noted in the table above, the total amount of the unrealized loss was $226.9 million. The U.S. government-sponsored enterprises portfolio contained unrealized losses of $7.2 million on 59 securities. The U.S. government-sponsored mortgage-backed securities portfolio contained $144.3 million of unrealized losses on 626 securities, and the private mortgage-backed securities portfolio contained $8.7 million of unrealized losses on 49 securities. The non-government-sponsored asset backed securities portfolio contained $1.1 million of unrealized losses on 16 securities. The state and political subdivisions portfolio contained $57.5 million of unrealized losses on 445 securities. In addition, the other securities portfolio contained $8.1 million of unrealized losses on 61 securities. The unrealized losses on the Company's investments were a result of interest rate changes, and the Company expects to recover the amortized cost basis over the term of the securities. The Company has determined that, as of June 30, 2026, a reserve for credit losses is not necessary because the decline in market value was attributable to changes in interest rates and not credit quality, and because the Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost basis, which may be maturity.

As of June 30, 2026, the Company's held-to-maturity securities portfolio consisted of 512 investment securities,496 of which were in an unrealized loss position. As noted in the table above, the total amount of the unrealized loss was $106.1 million. The U.S. government-sponsored enterprises portfolio contained unrealized losses of $1.9 million on 5 securities. The U.S. government-sponsored mortgage-backed securities portfolio contained unrealized losses of $4.8 million on 17 securities. The state and political subdivisions portfolio contained $99.4 million of unrealized losses on 474 securities. The unrealized losses on the Company's investments were a result of interest rate changes. The Company expects to recover the amortized cost basis over the term of the securities. Because the decline in market value was attributable to changes in interest rates and not credit quality, the Company has determined that an additional provision for credit losses was not necessary as of June 30, 2026.

The following table summarizes bond ratings for the Company’s held-to-maturity portfolio, based upon amortized cost, issued by state and political subdivisions and other securities as of June 30, 2026:

Income earned on securities for the three and six months ended June 30, 2026 and 2025, is as follows:

4. Loans Receivable

The various categories of loans receivable are summarized as follows:

On April 1, 2026, the Company completed the acquisition of MCBI. Including the effects of the known purchase accounting adjustments, as of the acquisition date, MCBI had approximately $1.47 billion in loans. This balance consisted of approximately $46.3 million in PCD loans and $1.42 billion in PSL loans.

During the three months ended June 30, 2026, the Company didnot sell guaranteed portions of SBA loans. During the six months ended June 30, 2026, the Company sold $1.2 million of the guaranteed portions of SBA loans, which resulted in a gain of approximately $80,000. During the three months ended June 30, 2025, the Company didnot sell any guaranteed portions of SBA loans. During the six months ended June 30, 2025, the Company sold $4.0 million guaranteed portions of certain SBA loans, which resulted in a gain of approximately $288,000.

Mortgage loans held for sale of approximately $219.8 million and $204.0 million at June 30, 2026 and December 31, 2025, respectively, are included in residential 1-4 family loans. Mortgage loans held for sale are carried at the lower of cost or fair value, determined using an aggregate basis. Gains and losses resulting from sales of mortgage loans are recognized when the respective loans are sold to investors. Gains and losses are determined by the difference between the selling price and the carrying amount of the loans sold, net of discounts collected or paid. The Company obtains forward commitments to sell mortgage loans to reduce market risk on mortgage loans in the process of origination and mortgage loans held for sale. The forward commitments acquired by the Company for mortgage loans in process of origination are considered mandatory forward commitments. Because these commitments are structured on a mandatory basis, the Company is required to substitute another loan or to buy back the commitment if the original loan does not fund. The Company regularly sells mortgages into the capital markets to mitigate the effects of interest rate volatility during the period from the time an interest rate lock commitment ("IRLC") is issued until the IRLC funds creating a mortgage loan held for sale and its subsequent sale into the secondary/capital markets. Loan sales are typically executed on a mandatory basis. Under a mandatory commitment, the Company agrees to deliver a specified dollar amount with predetermined terms by a certain date. Generally, the commitment is not loan specific, and any combination of loans can be delivered into the outstanding commitment provided the terms fall within the parameters of the commitment. Upon failure to deliver, the Company is subject to fees based on market movement. These commitments and IRLCs are derivative instruments and their fair values at June 30, 2026 and December 31, 2025 were not material.

The Company held approximately $95.8 million and $52.2 million in PCD loans, as of June 30, 2026 and December 31, 2025, respectively. As of June 30, 2026, $50.1 million and $45.7 million resulted from the acquisitions of Happy Bancshares, Inc. in 2022 and Mountain Commerce Bancorp, Inc. in 2026, respectively.

A description of our accounting policies for loans and impaired loans (which includes loans individually analyzed for credit losses for which a specific reserve has been recorded, non-accrual loans, loans past due 90 days or more and restructured loans made to borrowers experiencing financial difficulty) are set forth in our 2025 Form 10-K filed with the SEC on February 27, 2026.

5. Allowance for Credit Losses, Credit Quality and Other

The Company uses the discounted cash flow ("DCF") method to estimate expected losses for the Company’s non-acquired 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.

The combination of adjustments for credit expectations (default and loss) and time expectations (prepayment, curtailment, and time to recovery) produces an expected cash flow stream at the instrument level. Instrument effective yield is calculated, net of the impacts of prepayment assumptions, and the instrument expected cash flows are then discounted at that effective yield to produce an instrument-level net present value of expected cash flows ("NPV"). An allowance for credit loss is established for the difference between the instrument’s NPV and amortized cost basis.

Purchased loans that have experienced more-than-insignificant credit deterioration since origination are classified as PCD loans. The Company estimates expected credit losses on PCD loans using methodologies consistent with its allowance for credit losses framework, including individual evaluations or collective assessments, as appropriate. PCD loans are accounted for using the gross-up approach prescribed by ASC 326. Under this approach, an allowance for credit losses is established as of the acquisition date and added to the purchase price of the acquired loan to establish its initial amortized cost basis. The difference between the initial amortized cost basis and the unpaid principal balance of the loan represents a noncredit discount or premium, which is accreted or amortized into interest income over the remaining life of the loan using the effective interest method. Subsequent changes in expected credit losses are recognized through the provision for credit losses and reflected in the allowance for credit losses.

Effective April 1, 2026, the Company early adopted ASU 2025‑08, Financial Instruments—Credit Losses (Topic 326): Purchased Loans. Under ASU 2025‑08, acquired loans that are not classified as PCD loans and otherwise meet the definition of PSLs are accounted for using the gross-up approach. Accordingly, an allowance for credit losses is recognized as of the acquisition date with a corresponding adjustment to the amortized cost basis of the acquired loans, and no day-one provision for credit losses is recognized. The amendments are applied prospectively to qualifying loans acquired on or after the adoption date, and prior-period amounts have not been adjusted.

Following the adoption of ASU 2025‑08, the Company separately identifies and segments qualifying PSLs within its allowance for credit losses framework. PSL segments are aligned with the Company's existing portfolio segmentation structure and generally utilize the same credit risk assumptions, forecasting processes, and qualitative adjustment framework applied to originated loans. In accordance with ASC 326, expected credit losses for PSLs are measured using an expected loss methodology based on the unpaid principal balance of the acquired loans. While the Company's legacy loan portfolio is primarily evaluated using a discounted cash flow methodology based on amortized cost, PSLs are measured based on unpaid principal balance in accordance with ASC 326 and the requirements of ASU 2025‑08.

Management qualitatively adjusts model results for risk factors ("Q-Factors") that are not considered within our modeling processes but are, nonetheless, relevant in assessing the expected credit losses within our loan pools. These 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.

Each year management evaluates the performance of the selected models used in the CECL calculation through backtesting. Based on the results of the testing, management determines if the various models produced accurate results compared to the actual losses incurred for the current economic environment. Management then determines if changes to the assumptions and economic factors would produce a stronger overall calculation that is more responsive to changes in economic conditions. The Company continues to use regression analysis to determine suitable loss drivers to utilize when modeling lifetime probability of default and loss given default for the changes in the economic factors for the loss driver segments. Based on this analysis, management determined that changes to some of the economic factors for the loss driver segments, along with other model improvements and updates, were necessary, and updated models were implemented beginning with the March 31, 2026 allowance for credit losses calculation. The identified loss drivers by segment are included below as of both June 30, 2026 and December 31, 2025:

Construction/Land Development and Other 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 ofone tofive years. These loans are generally underwritten by assessing cash flow (debt service coverage), primary and secondary source of repayment, the financial strength of the borrower as well as any guarantors, the strength of the tenant (if any), the borrower’s liquidity and leverage, management experience, ownership structure, economic conditions and industry specific trends and collateral. Generally, we will loan up to 85% of the value of improved property,65% of the value of raw land and 75% of the value of land to be acquired and developed. 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.

Residential Real Estate Loans. We originate one to four family, residential mortgage loans generally secured by property located in our primary market areas. 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.

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 generallyone toseven 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 the borrower as well as any guarantors, the borrower’s liquidity and leverage, management experience, ownership structure, economic conditions and industry specific trends and collateral. The loan to value ratio depends on the type of collateral. Generally, 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.

Consumer & Other Loans. Our consumer & other loans are primarily composed of loans to finance United States Coast Guard registered high-end sail and power boats. The performance of consumer & other loans will be affected by the local and regional economies as well as the rates of personal bankruptcies, job loss, divorce and other individual changes in circumstance.

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 loss on off-balance sheet credit exposures is adjusted as a provision for credit loss expense. The Company estimates expected credit losses for its off-balance-sheet credit exposures using methodologies consistent with those applied to the related loan portfolio segments within its allowance for credit losses framework. Off-balance-sheet credit exposures generally exhibit risk characteristics similar to the Company's on-balance-sheet loan portfolios and are evaluated using comparable credit risk assumptions, forecasting processes, and qualitative adjustment factors. The estimate of expected credit losses incorporates both the probability that funding will occur and the expected losses associated with amounts expected to be funded.

During the three months ended June 30, 2026, the Company recorded $5.2 million in provision for credit losses on loans, and the Company recorded no credit losses on unfunded commitments as the current level of the reserve was considered adequate. During the six months ended June 30, 2026, the Company recorded $6.7 million in provision for credit losses on loans, and the Company recovered $1.0 million in credit losses on unfunded commitments.

During the three and six months ended June 30, 2025, the Company recorded $3.0 million in provision for credit losses on loans. In addition, management determined that a provision was not necessary for the unfunded commitments as the current level of the reserve was considered adequate.

The Company completed the acquisition of MCBI on April 1, 2026. In connection with the acquisition, the Company acquired approximately $1.50 billion in loans and recorded $30.8 million in net loan discounts. Pursuant to ASC 326 and ASU 2025‑08, the Company established an acquisition-date allowance for credit losses of $31.3 million using the gross-up approach, consisting of $7.6 million related to PCD loans and $23.7 million related to PSLs. The acquisition-date allowance was recorded as an adjustment to the amortized cost basis of the acquired loans and did not result in provision for credit losses expense upon acquisition.

The following table presents the activity in the allowance for credit losses for the three and six months ended June 30, 2026:

During the first quarter of 2026, the Company implemented updated allowance for credit loss models as part of the annual model review and challenge process. The allowance calculation called for a higher level of reserves for the CRE portfolio, which was largely offset by a corresponding reduction in reserves for the commercial and industrial portfolio as well as the consumer portfolio.

The following table presents the activity in the allowance for credit losses for the three and six months ended June 30, 2025 and the year ended December 31, 2025:

The following table presents the amortized cost basis of loans on nonaccrual status and loans past due over 90 days still accruing as of June 30, 2026 and December 31, 2025:

The Company had $183.2 million and $78.0 million in nonaccrual loans as of June 30, 2026 and December 31, 2025, respectively. In addition, the Company had $2.1 million and $7.0 million in loans past due 90 days or more and still accruing as of June 30, 2026 and December 31, 2025, respectively.

The Company had $24.2 million and $29.8 million in nonaccrual loans with a specific reserve as of June 30, 2026 and December 31, 2025, respectively. Interest income recognized on the non-accrual loans for the periods ended June 30, 2026 and June 30, 2025 was considered immaterial.

The following table presents the amortized cost basis of impaired loans (which includes loans individually analyzed for credit losses for which a specific reserve has been recorded, non-accrual loans, loans past due 90 days or more and restructured loans made to borrowers experiencing financial difficulty) by class of loans as of June 30, 2026 and December 31, 2025:

The Company had $223.5 million and $219.4 million in impaired loans for the periods ended June 30, 2026 and December 31, 2025, respectively.

Interest recognized on impaired loans during the three and six months ended June 30, 2026 was approximately $553,000 and $1.1 million. Interest recognized on impaired loans during the three and six months ended June 30, 2025 was approximately $3.0 million and $6.0 million. The amount of interest recognized on impaired loans on the cash basis is not materially different than the accrual basis.

The following is an aging analysis for loans receivable as of June 30, 2026 and December 31, 2025:

Credit Quality Indicators. As part of the on-going monitoring of the credit quality of the Company’s loan portfolio, management tracks certain credit quality indicators including trends related to (i) the risk rating of loans, (ii) the level of classified loans, (iii) net charge-offs, (iv) non-performing loans and (v) the general economic conditions in Arkansas, Florida, Texas, Alabama and New York.

The Company utilizes a risk rating matrix to assign a risk rating to each of its loans. Loans are rated on a scale from 1 to 8. Descriptions of the general characteristics of the 8 risk ratings are as follows:

•Risk rating 1 – Excellent. Loans in this category are to persons or entities of unquestionable financial strength, a highly liquid financial position, with collateral that is liquid and well margined. These borrowers have performed without question on past obligations, and the Bank expects their performance to continue. Internally generated cash flow covers current maturities of long-term debt by a substantial margin. Loans secured by bank certificates of deposit and savings accounts, with appropriate holds placed on the accounts, are to be rated in this category.

•Risk rating 2 – Good. These are loans to persons or entities with strong financial condition and above-average liquidity that have previously satisfactorily handled their obligations with the Bank. Collateral securing the Bank’s debt is margined in accordance with policy guidelines. Internally generated cash flow covers current maturities of long-term debt more than adequately. Unsecured loans to individuals supported by strong financial statements and on which repayment is satisfactory may be included in this classification.

•Risk rating 3 – Satisfactory. Loans to persons or entities with an average financial condition, adequate collateral margins, adequate cash flow to service long-term debt, and net worth comprised mainly of fixed assets are included in this category. These entities are minimally profitable now, with projections indicating continued profitability into the foreseeable future. Closely held corporations or businesses where a majority of the profits are withdrawn by the owners or paid in dividends are included in this rating category. Overall, these loans are basically sound.

•Risk rating 4 – Watch. Borrowers who have marginal cash flow, marginal profitability or have experienced an unprofitable year and a declining financial condition characterize these loans. The borrower has in the past satisfactorily handled debts with the Bank, but in recent months has either been late, delinquent in making payments, or made sporadic payments. While the Bank continues to be adequately secured, margins have decreased or are decreasing, despite the borrower’s continued satisfactory condition. Other characteristics of borrowers in this class include inadequate credit information, weakness of financial statement and repayment capacity, but with collateral that appears to limit exposure.

•Risk rating 5 – Other Loans Especially Mentioned ("OLEM"). A loan criticized as OLEM has potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the institution’s credit position at some future date. OLEM assets are not adversely classified and do not expose the institution to sufficient risk to warrant adverse classification.

•Risk rating 6 – Substandard. A loan classified as substandard is inadequately protected by the sound worth and paying capacity of the borrower or the collateral pledged. Loss potential, while existing in the aggregate amount of substandard loans, does not have to exist in individual assets.

•Risk rating 7 – Doubtful. A loan classified as doubtful has all the weaknesses inherent in a loan classified as substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. These are poor quality loans in which neither the collateral, if any, nor the financial condition of the borrower presently ensure collectability in full in a reasonable period of time; in fact, there is permanent impairment in the collateral securing the loan.

•Risk rating 8 – Loss. Assets classified as loss are considered uncollectible and of such little value that the continuance as bankable assets is not warranted. This classification does not mean that the asset has absolutely no recovery or salvage value, but rather, it is not practical or desirable to defer writing off this basically worthless asset, even though partial recovery may occur in the future. This classification is based upon current facts, not probabilities. Assets classified as loss should be charged-off in the period in which they became uncollectible.

Loans that do not share risk characteristics are evaluated on an individual basis. All loans over $2.0 million that are rated 5 – 8 are individually assessed for credit losses on a quarterly basis. For these loans, where the Company has determined that foreclosure of the collateral is probable, or where the borrower is experiencing financial difficulty and the Company expects repayment of the financial asset to be provided substantially through the sale of the collateral, the allowance for credit losses is measured based on the difference between the fair value of the collateral, net of estimated costs to sell, and the amortized cost basis of the loan as of the measurement date. 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, less estimated costs to sell, or present value of cash flows at the measurement date exceeds the amortized cost basis of the loan.

Based on the most recent analysis performed, the risk category of loans by class of loans as of June 30, 2026 and December 31, 2025 is as follows:

The following table presents gross write-offs by origination date as of June 30, 2026 and December 31, 2025.

*The 2026 write-off consists entirely of overdrafts.

**The 2025 write-offs primarily consist of overdrafts.

The Company considers the performance of the loan portfolio and its impact on the allowance for credit losses. The Company also evaluates credit quality based on the aging status of the loan, which was previously presented, and by payment activity. The following tables present the amortized cost of performing and nonperforming loans (includes impaired loans - 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 for purposes of the disclosure) as of June 30, 2026 and December 31, 2025.

The Company had approximately $69.9 million or 279 total revolving loans convert to term loans for the six months ended June 30, 2026 compared to $35.7 million or 103 total revolving loans convert to term loans for the six months ended June 30, 2025. These loans were considered immaterial for vintage disclosure inclusion.

The following table presents the amortized cost basis of modified loans to borrowers experiencing financial difficulty by class and modification type at June 30, 2026 and December 31, 2025. The percentage of the amortized cost basis of loans that were modified to borrowers in financial distress as compared to the amortized cost basis of each class of financing receivable is also presented below.

During the six months ended June 30, 2026, the Company restructured approximately $315,000 in loans tothree borrowers. The ending balance of these loans as of June 30, 2026, was $302,000. During the six months ended June 30, 2025, the Company restructured approximately $4.2 million in loans tosix borrowers. The ending balance of these loans as of June 30, 2025, was $4.1 million. The Company considered the financial effect of these loan modifications to borrowers experiencing financial difficulty during the six months ended June 30, 2026 and June 30, 2025 as well as the unadvanced balances to these borrowers immaterial for tabular disclosure inclusion.

The following table presents the amortized cost basis of loans that had a payment default during the six months ended June 30, 2026 and were modified in the twelve months prior to that default to borrowers experiencing financial difficulty.

The Company closely monitors the performance of the loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. The Company has modified 10 loans over the past 12 months to borrowers experiencing financial difficulty. The pre-modification balance of the loans was $1.1 million, and the ending balance as of June 30, 2026 was $1.0 million. The $1.0 million balance consists of $487,000 of non-accrual loans and $532,000 of current loans as of June 30, 2026.

Upon the Company's determination that a modified loan (or portion of a loan) has subsequently been deemed uncollectible, the loan (or a portion of the loan) is written off. Therefore, the amortized cost basis of the loan is reduced by the uncollectible amount and the allowance for credit losses on loans is adjusted by the same amount. The defaults impact the loss rate by applicable loan pool for the quarterly CECL calculation. For individually analyzed loans which are not considered to be collateral dependent, an allowance is recorded based on the loss rate for the respective pool within the collective evaluation.

The following is a presentation of total foreclosed assets as of June 30, 2026 and December 31, 2025:

6. Goodwill and Core Deposits and Other Intangibles

Changes in the carrying amount and accumulated amortization of the Company’s goodwill and core deposits and other intangibles at June 30, 2026 and December 31, 2025, were as follows:

The carrying basis and accumulated amortization of core deposit intangibles at June 30, 2026 and December 31, 2025 were:

Core deposit intangible amortization expense was approximately $2.9 million and $2.0 million for the three months ended June 30, 2026 and 2025, respectively. Core deposit intangible amortization expense was approximately $4.8 million and $4.1 million for the six months ended June 30, 2026 and 2025, respectively. The Company’s estimated amortization expense of core deposits intangibles for each of the years 2026 through 2030 is approximately: 2026 – $10.6 million; 2027 – $10.4 million; 2028 – $8.0 million; 2029 – $8.0 million; 2030 - $8.0 million.

The carrying amount of the Company’s goodwill was $1.41 billion and $1.40 billion at June 30, 2026 and December 31, 2025, respectively. Goodwill is tested annually for impairment during the fourth quarter or more often if events and circumstances indicate there may be an impairment. During the 2025 review, no impairment was found. If the implied fair value of goodwill is lower than its carrying amount, goodwill impairment is indicated, and goodwill is written down to its implied fair value. Subsequent increases in goodwill value are not recognized in the consolidated financial statements.

7. Other Assets

Other assets consist primarily of equity securities without a readily determinable fair value and other miscellaneous assets. As of June 30, 2026 and December 31, 2025, other assets were $374.3 million and $374.6 million, respectively.

The Company has equity securities without readily determinable fair values such as stock holdings in the Federal Home Loan Bank ("FHLB"), the Federal Reserve Bank ("Federal Reserve") and First National Bankers' Bank ("FNBB") which are outside the scope of ASC Topic 321, Investments – Equity Securities("ASC Topic 321"). These equity securities without a readily determinable fair value were $127.6 million and $128.1 million at June 30, 2026 and December 31, 2025, and are accounted for at cost.

The Company holds equity securities accounted for under ASC Topic 321, including securities without a readily determinable fair value and securities measured using net asset value as a practical expedient to determine fair value under ASC Topic 820. These equity securities were $104.7 million and $97.1 million at June 30, 2026 and December 31, 2025, respectively. There were no transactions during the period that would indicate a material change in fair value. The remaining capital commitments were $26.0 million and $27.0 million at June 30, 2026 and December 31, 2025, respectively.

8. Deposits

On April 1, 2026, the Company completed the acquisition of MCBI. Including the effects of the known purchase accounting adjustments, as of the acquisition date, MCBI had approximately $1.54 billion in deposits.

The aggregate amount of time deposits of $250,000 or less was $1.02 billion and $805.3 million at June 30, 2026 and December 31, 2025, respectively, and the aggregate amount of time deposits of more than $250,000 was $1.22 billion and $1.01 billion at June 30, 2026 and December 31, 2025, respectively.

The following table presents the interest expense on time deposits for the three-month and six-month periods ended June 30, 2026 and 2025:

As of June 30, 2026 and December 31, 2025, brokered deposits were $587.3 million and $435.7 million, respectively. Deposits totaling approximately $3.23 billion and $3.32 billion at June 30, 2026 and December 31, 2025, respectively, were public funds obtained primarily from state and political subdivisions in the United States.

9. Securities Sold Under Agreements to Repurchase

At June 30, 2026 and December 31, 2025, securities sold under agreements to repurchase totaled $158.7 million and $155.8 million, respectively. For the three-month periods ended June 30, 2026 and 2025, securities sold under agreements to repurchase daily weighted-average totaled $167.9 million and $143.8 million, respectively. For the six-month periods ended June 30, 2026 and 2025, securities sold under agreements to repurchase daily weighted-average totaled $159.9 million and $149.8 million, respectively.

The remaining contractual maturity of securities sold under agreements to repurchase in the consolidated balance sheets as of June 30, 2026 and December 31, 2025 is presented in the following table:

10. FHLB and Other Borrowed Funds

The Company’s FHLB borrowed funds, which are secured by our loan portfolio, were $450.0 million and $500.0 million at June 30, 2026 and December 31, 2025, respectively. At June 30, 2026, $50.0 million and $400.0 million of the outstanding balances were classified as short-term and long-term advances, respectively. At December 31, 2025, $100.0 million and $400.0 million of the outstanding balances were 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 4.67%. Expected maturities could differ from contractual maturities because FHLB may have the right to call, or the Company may have the right to prepay certain obligations.

Other borrowed funds were $250,000 at both June 30, 2026 and December 31, 2025. These were classified as short-term advances.

Additionally, the Company had $1.85 billion and $1.48 billion at June 30, 2026 and December 31, 2025, respectively, in letters of credit under a FHLB blanket borrowing line of credit, which are used to collateralize public deposits.

11. Subordinated Debentures

Subordinated debentures at June 30, 2026 and December 31, 2025 consisted of the following components:

Subordinated Debt Securities. 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.

12. Income Taxes

The following is a summary of the components of the provision for income taxes for the three and six months ended June 30, 2026 and 2025:

The reconciliation between the statutory federal income tax rate and effective income tax rate by dollar amount and percentage is as follows for the three and six months ended June 30, 2026 and 2025:

(1) State taxes in Arkansas, Florida and New York made up the majority (greater than 50%) of the tax effect in this category.

The effective tax rate differs from the U.S. federal statutory rate primarily due to state income taxes, net of federal benefit, and executive compensation, which increased the rate. These increases were partially offset by the effect of non-taxable interest income, which lowered the rate.

Income taxes paid, net of refunds received, for the six months ended June 30, 2026 is as follows:

The types of temporary differences between the tax basis of assets and liabilities and their financial reporting amounts that give rise to deferred income tax assets and liabilities, and their approximate tax effects, are as follows:

The Company files income tax returns in the U.S. federal jurisdiction. The Company is no longer subject to U.S. federal and state tax examinations by tax authorities for years before 2022. The Company’s income tax returns are open and subject to examinations from the 2022 tax year and forward.

The Company recognizes interest related to unrecognized tax benefits in interest expense and penalties in other non-interest expense. During the three and six months ended June 30, 2026 and 2025, the Company did not recognize any significant interest or penalties.

13. Common Stock, Compensation Plans and Other

Common Stock

As of June 30, 2026, the Company’s Restated Articles of Incorporation, as amended, authorized the issuance of up to 400,000,000 shares of common stock, par value $0.01 per share. The Company also has the authority to issue up to 5,500,000 shares of preferred stock, par value $0.01 per share under the Company’s Restated Articles of Incorporation, as amended.

Stock Repurchases

During the six months ended June 30, 2026, the Company repurchased a total of 2,007,622 shares with a weighted-average stock price of $27.04 per share. Shares repurchased under the program as of June 30, 2026 since its inception total 31,405,835 shares. The remaining balance available for repurchase is 15,101,672 shares at June 30, 2026.

Stock Compensation Plans

The Company has a stock option and performance incentive plan known as the Home BancShares, Inc. 2022 Equity Incentive Plan (the "Plan"). The purpose of the Plan is to attract and retain highly qualified officers, directors, key employees, and other persons, and to motivate those persons to improve the Company’s business results. As of June 30, 2026, the maximum total number of shares of the Company’s common stock available for issuance under the Plan was 14,788,000 shares. At June 30, 2026, the Company had 1,141,347 shares of common stock available for future grants and 2,307,548 shares of common stock reserved for issuance pursuant to the Plan.

The intrinsic value of the stock options outstanding was $6.3 million, which includes the intrinsic value of vested stock options of $6.2 million at June 30, 2026. The intrinsic value of stock options exercised during the six months ended June 30, 2026 was approximately $506,000. Total unrecognized compensation cost related to non-vested stock option awards, which are expected to be recognized over the vesting periods, was approximately $230,000 as of June 30, 2026.

The table below summarizes the stock option transactions under the Plan at June 30, 2026 and December 31, 2025 and changes during the six-month period and year then ended:

Stock-based compensation expense for stock-based compensation awards granted is based on the grant-date fair value. For stock option awards, the fair value is estimated at the date of grant using the Black-Scholes option-pricing model. This model requires the input of highly subjective assumptions, changes to which can materially affect the fair value estimate. Additionally, there may be other factors that would otherwise have a significant effect on the value of employee stock options granted but are not considered by the model. Accordingly, while management believes that the Black-Scholes option-pricing model provides a reasonable estimate of fair value, the model does not necessarily provide the best single measure of fair value for the Company's employee stock options. There were no options granted during the six months ended June 30, 2026. The fair value of each option granted is estimated on the date of grant using the Black-Scholes option-pricing model based on the weighted-average assumptions for expected dividend yield, expected stock price volatility, risk-free interest rate, and expected life of options granted.

The assumptions used in determining the fair value of the 2026 and 2025 stock option grants were as follows:

The following is a summary of currently outstanding and exercisable options at June 30, 2026:

The table below summarized the activity for the Company’s restricted stock issued and outstanding at June 30, 2026 and December 31, 2025 and changes during the period and year then ended:

Total unrecognized compensation cost related to non-vested restricted stock awards, which are expected to be recognized over the vesting periods, was approximately $25.4 million as of June 30, 2026.

14. Non-Interest Expense

The table below shows the components of non-interest expense for the three and six months ended June 30, 2026 and 2025:

15. Leases

The Company leases land and office facilities under long-term, non-cancelable operating lease agreements. The leases expire at various dates through 2039 and do not include renewal options based on economic factors that would have implied that continuation of the lease was reasonably certain. Certain leases provide for increases in future minimum annual rental payments as defined in the lease agreements. The leases generally include real estate taxes and common area maintenance charges in the rental payments. Short-term leases are leases having a term of twelve months or less. The Company does not separate nonlease components from the associated lease component of our operating leases. As a result, the Company accounts for these components as a single component since (i) the timing and pattern of transfer of the nonlease components and the associated lease component are the same and (ii) the lease component, if accounted for separately, would be classified as an operating lease. The Company recognizes short term leases on a straight-line basis and does not record a related right-of-use ("ROU") asset and liability for such leases. In addition, equipment leases were determined to be immaterial and a related ROU asset and liability for such leases is not recorded.

As of June 30, 2026, the balances of the ROU asset and lease liability were $31.9 million and $32.8 million, respectively. As of December 31, 2025, the balances of the ROU asset and lease liability were $33.9 million and $34.8 million, respectively. The ROU asset is included inbank premises and equipment, net, and the lease liability is included inaccrued interest payable and other liabilities.

The minimum rental commitments under these noncancelable operating leases are as follows (in thousands) as of June 30, 2026 and December 31, 2025:

Additional information (dollar amounts in thousands):

The Company currently leasestwo properties fromtwo related parties. Total rent expense from the leases was $21,000, or 0.76% of total lease expense, and $40,000, or 0.75% of total lease expense, for the three and six months ended June 30, 2026, respectively.

16. Significant Estimates and Concentrations of Credit Risks

Accounting principles generally accepted in the United States of America require disclosure of certain significant estimates and current vulnerabilities due to certain concentrations. Estimates related to the allowance for credit losses and certain concentrations of credit risk are reflected in Note 5, while deposit concentrations are reflected in Note 8.

The Company’s primary market areas are in Arkansas, Florida, Texas, Tennessee, South Alabama and New York. The Company primarily grants loans to customers located within these markets unless the borrower has an established relationship with the Company.

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

Although the Company has a diversified loan portfolio, at both June 30, 2026 and December 31, 2025, commercial real estate loans represented 52.7% and 53.2% of total loans receivable, respectively, and 198.6% and 194.3% of total stockholders’ equity, respectively. Residential real estate loans represented 22.3% and 20.9% of total loans receivable and 83.9% and 76.2% of total stockholders’ equity at June 30, 2026 and December 31, 2025, respectively.

Approximately 81.2% of the Company’s total loans and 85.1% of the Company’s real estate loans as of June 30, 2026, are to borrowers whose collateral is located in Alabama, Arkansas, Florida, Texas, Tennessee and New York, the states in which the Company has its branch locations.

Any future volatility in the economy could cause the values of assets and liabilities recorded in the financial statements to change rapidly, resulting in material future adjustments in asset values, the allowance for credit losses and capital that could negatively impact the Company’s ability to meet regulatory capital requirements and maintain sufficient liquidity.

17. Commitments and Contingencies

In the ordinary course of business, the Company makes various commitments and incurs certain contingent liabilities to fulfill the financing needs of its customers. These commitments and contingent liabilities include lines of credit and commitments to extend credit and issue standby letters of credit. The Company applies the same credit policies and standards as they do in the lending process when making these commitments. The collateral obtained is based on the assessed creditworthiness of the borrower.

At June 30, 2026 and December 31, 2025, commitments to extend credit of $4.09 billion and $4.13 billion, respectively, were outstanding. A percentage of these balances are participated out to other banks; therefore, the Company can call on the participating banks to fund future draws. Since some of these commitments are expected to expire without being drawn upon, the total commitment amount does not necessarily represent future cash requirements.

Outstanding standby letters of credit are contingent commitments issued by the Company, generally to guarantee the performance of a customer in third-party borrowing arrangements. The term of the guarantee is dependent upon the creditworthiness of the borrower. The amount of collateral obtained, if deemed necessary, is based on management’s credit evaluation of the counterparty. Collateral held varies but may include accounts receivable, inventory, property, plant and equipment, commercial real estate and residential real estate. Management uses the same credit policies in granting lines of credit as it does for on-balance-sheet instruments. The maximum amount of future payments the Company could be required to make under these guarantees at June 30, 2026 and December 31, 2025, was $118.2 million and $131.9 million, respectively.

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

18. Regulatory Matters

The Bank is subject to a legal limitation on dividends that can be paid to the parent company without prior approval of the applicable regulatory agencies. Arkansas bank regulators have specified that the maximum dividend limit state banks may pay to the parent company without prior approval is 75% of the current year earnings plus 75% of the retained net earnings of the preceding year. Since the Bank is also under supervision of the Federal Reserve, it is further limited if the total of all dividends declared in any calendar year by the Bank exceeds the Bank’s net profits to date for that year combined with its retained net profits for the preceding two years. During the six months ended June 30, 2026, the Company requested approximately $181.1 million in regular dividends from its banking subsidiary.

The Company’s banking subsidiary is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s consolidated financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company must meet specific capital guidelines that involve quantitative measures of the Company’s assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. The Company’s capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. Furthermore, the Company’s regulators could require adjustments to regulatory capital not reflected in the consolidated financial statements.

Quantitative measures established by regulation to ensure capital adequacy require the Company to maintain minimum amounts and ratios of total, Tier 1 common equity Tier 1 ("CET1") and Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined) and of Tier 1 capital (as defined) to average assets (as defined). Management believes that, as of June 30, 2026, the Company meets all capital adequacy requirements to which it is subject.

Basel III became effective for the Company and its bank subsidiary on January 1, 2015. Basel III amended the prompt corrective action rules to incorporate a CET1 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 capital ratio, a 6% Tier 1 risk-based capital ratio and an 8% total risk-based capital ratio.

The Federal Reserve Board’s risk-based capital guidelines include the definitions for (1) a well-capitalized institution, (2) an adequately-capitalized institution, and (3) an undercapitalized institution. Under Basel III, the criteria for a well-capitalized institution are: a 6.5% CET1 risk-based capital ratio, a 5% Tier 1 leverage capital ratio, an 8% Tier 1 risk-based capital ratio, and a 10% total risk-based capital ratio. As of June 30, 2026, the Bank met the capital standards for a well-capitalized institution. The Company’s CET1 risk-based capital ratio, Tier 1 leverage capital ratio, Tier 1 risk-based capital ratio, and total risk-based capital ratio were 16.34%,13.94%,16.34%, and 19.01%, respectively, as of June 30, 2026.

19. Additional Cash Flow Information

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

20. Financial Instruments

Fair value is the price that would be received for an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements must maximize the use of observable inputs and minimize the use of unobservable inputs. There is a hierarchy of three levels of inputs that may be used to measure fair values:

A financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. Transfers of financial instruments between levels within the fair value hierarchy are recognized on the date management determines that the underlying circumstances or assumptions have changed.

Available-for-sale securities –Available-for-sale securities are the only material instruments valued on a recurring basis which are held by the Company at fair value. The Company's available-for-sale securities are primarily considered to be Level 2 securities. The Level 2 securities consist primarily of U.S. government-sponsored enterprises, mortgage-backed securities plus state and political subdivisions. For these securities, the Company obtains fair value measurements from an independent pricing service. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the bond’s terms and conditions, among other things. There were no material transfers between hierarchy levels during the periods ended June 30, 2026 and December 31, 2025.

The Company reviews the prices supplied by the independent pricing service, as well as their underlying pricing methodologies, for reasonableness and to ensure such prices are aligned with traditional pricing matrices. In general, the Company does not purchase investment portfolio securities with complicated structures. Pricing for the Company’s investment securities is fairly generic and is easily obtained. The Company uses a third-party comparison pricing vendor in order to reflect consistency in the fair values of the investment securities sampled by the Company each quarter. See footnote 3 for further detail related to the fair value of the Company's available-for-sale investment portfolio.

The following table presents the Company's financial assets by level within the fair value hierarchy that were measured at fair value on a recurring basis during the periods ended June 30, 2026 and December 31, 2025 (in thousands):

Certain assets and liabilities are measured at fair value on a nonrecurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances. Assets and liabilities measured at fair value on a nonrecurring basis include the following:

Individually Evaluated Loans –Individually evaluated loans are the only material financial assets valued on a non-recurring basis which are held by the Company at fair value. When the Company has a specific expectation to initiate, or has initiated, foreclosure proceedings, and when the repayment of a loan is expected to be substantially dependent upon the liquidation of the underlying collateral, the loan relationship is considered to be collateral dependent. Fair value of the loan is determined by establishing an allowance for credit loss for any exposure based on the valuation of the underlying collateral. The valuation of the collateral is determined by either an independent third-party appraisal or other collateral analysis. Discounts can be made by the Company based upon the overall evaluation of the independent appraisal. Collateral-dependent loans are classified within Level 3 of the fair value hierarchy due to the unobservable inputs used in determining their fair value such as collateral values and the borrower’s underlying financial condition. Collateral values supporting the individually assessed loans are evaluated quarterly for updates to appraised values or adjustments due to non-current valuations. The Company reversed $450,000 and $471,000 of accrued interest receivable when impaired loans were put on non-accrual status during the three months ended June 30, 2026 and 2025, respectively. The Company reversed $2.8 million and $1.3 million of accrued interest receivable when impaired loans were put on non-accrual status during the six months ended June 30, 2026 and 2025, respectively.

Foreclosed assets held for sale –Foreclosed assets held for sale are the only material non-financial assets valued on a non-recurring basis which are held by the Company at fair value, less estimated costs to sell. At foreclosure, if the fair value, less estimated costs to sell, of the real estate acquired is less than the Company’s recorded investment in the related loan, a write-down is recognized through a charge to the allowance for credit losses. Additionally, valuations are periodically performed by management and any subsequent reduction in value is recognized by a charge to income. Regulatory guidelines require the Company to reevaluate the fair value of foreclosed assets held for sale on at least an annual basis. The Company’s policy is to comply with the regulatory guidelines.

The following table presents the Company's assets by level within the fair value hierarchy that were measured at fair value on a nonrecurring basis during the periods ended June 30, 2026 and December 31, 2025 (in thousands):

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

(2) Specific reserves of $18.4 million and $17.0 million were related to collateral-dependent loans for which fair value re-measurements took place during the periods ended June 30, 2026 and December 31, 2025, respectively.

The significant unobservable (Level 3) inputs used in the fair value measurement of collateral for collateral-dependent impaired loans and foreclosed assets primarily relate to customized discounting criteria applied to the customer’s reported amount of collateral. The amount of the collateral discount depends upon the condition and marketability of the underlying collateral. As the Company’s primary objective in the event of default would be to monetize the collateral to settle the outstanding balance of the loan, less marketable collateral would receive a larger discount. During the reported periods, collateral discounts ranged from approximately 10% to 60%.

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

Cash and cash equivalents and federal funds sold – For these short-term instruments, the carrying amount is a reasonable estimate of fair value.

Investment securities - held-to-maturity securities –These securities consist primarily of U.S. government-sponsored enterprises, mortgage-backed securities plus state and political subdivisions. For these securities, the Company obtains fair value measurements from an independent pricing service. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the bond’s terms and conditions, among other things.

Loans receivable, net of impaired loans and allowance – For variable-rate loans that reprice frequently and with no significant change in credit risk, fair values are assumed to approximate the carrying amounts. The fair values for fixed-rate loans are estimated using discounted cash flow analysis, based on interest rates currently being offered for loans with similar terms to borrowers of similar credit quality. Loan fair value estimates include judgments regarding future expected loss experience and risk characteristics. Fair values for acquired loans are based on a discounted cash flow methodology that considers factors including the type of loan and related collateral, classification status, fixed or variable interest rate, term of loan, current discount rates and whether or not the loan is amortizing. Loans are grouped together according to similar characteristics and are treated in the aggregate when applying various valuation techniques. The discount rates used for loans are based on current market rates for new originations of comparable loans and include adjustments for liquidity concerns. The discount rate does not include a factor for credit losses as that has been included in the estimated cash flows.

Accrued interest receivable and payable – The carrying amounts of accrued interest approximates fair value.

FHLB, FRB & FNBB stock; other equity investments; marketable equity securities –The carrying amount of these investments approximate fair value.

Deposits and securities sold under agreements to repurchase –The fair values of demand deposits, savings deposits and securities sold under agreements to repurchase are, by definition, equal to the amount payable on demand and, therefore, approximate their carrying amounts. The fair values for time deposits are estimated using a discounted cash flow calculation that utilizes interest rates currently being offered on time deposits with similar contractual maturities.

FHLB and other borrowed funds –For short-term instruments, the carrying amount is a reasonable estimate of fair value. The fair value of long-term debt is estimated based on the current rates available to the Company for debt with similar terms and remaining maturities.

Subordinated debentures – The fair value of subordinated debentures is estimated using the rates that would be charged for subordinated debentures of similar remaining maturities.

Commitments to extend credit, letters of credit and lines of credit – The fair value of commitments is estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present creditworthiness of the counterparties. For fixed-rate loan commitments, fair value also considers the difference between current levels of interest rates and the committed rates. The fair values of letters of credit and lines of credit are based on fees currently charged for similar agreements or on the estimated cost to terminate or otherwise settle the obligations with the counterparties at the reporting date. The fair value of these commitments is not material and are therefore, omitted from this disclosure.

The following table presents the estimated fair values of the Company’s financial instruments. Fair value is the exchange price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date.

21. Segment Information

The Company hasone reportable segment: The Banking Segment. The Company's reportable segment is determined by the Chairman and Chief Executive Officer, who is the designated chief operating decision maker ("CODM"), based upon information provided about the Company's products and services offered, primarily banking operations. The segment is also defined by the level of detailed information provided to the CODM, who uses such information to review performance of various components of the business such as geographical regions and branches, which are then aggregated since these have similar operating and economic characteristics. Each of the branches and regions of the Bank provide a group of similar banking services, including such products and services as commercial, real estate and consumer loans, time deposits, checking and savings accounts.

The CODM will evaluate the financial performance of the Company's business components such as evaluating revenue streams, significant expenses and budget to actual results in order to assess the Company's segment and to determine the allocation of resources. The CODM uses revenue streams to evaluate product pricing and significant expenses to assess performance and evaluate return on assets. The CODM uses consolidated net income in order to benchmark the Company against its competitors. The benchmarking analysis coupled with monitoring of budget to actual results are used in assessment performance and in establishing compensation. Loans, investments and deposits provide the revenues in the banking operation. Interest expense, provision for credit losses and payroll provide the significant expenses in the banking operation. All operations are domestic.

Accounting policies for segments are the same as those described in Note 1. Segment performance is evaluated using consolidated net income. The table below presents the information reported internally for performance assessment by the CODM as of the three and six months ended June 30, 2026 and 2025.

*Includes earnings in equity method investments of $4.0 million and $4.3 million for the three months ended June 30, 2026 and 2025, respectively, and $5,526,160 and $9,445,436 for the six months ended June 30, 2026 and 2025, respectively.

** Includes depreciation and amortization expense of $5.4 million and $5.2 million for the three-month periods ended June 30, 2026 and 2025, respectively, and $10,794,655 and $10,529,515 for the six months ended June 30, 2026 and 2025, respectively.

***Other segment items include expenses for advertising, amortization of intangibles, directors' fees, due from bank service charges, insurance expense, legal and accounting fees, other professional fees, operating supplies, postage and telephone.

22. Recent Accounting Pronouncements

Recently Adopted Accounting Standards

Effective December 31, 2025, the Company adopted ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amendments require enhanced annual income tax disclosures, including additional disaggregation of income tax rate reconciliation items and income taxes paid. The guidance was applied prospectively beginning with the Company's 2025 Annual Report on Form 10-K. The adoption did not have a material impact on the Company's financial position, results of operations, or cash flows and primarily affected annual income tax disclosures.

Effective April 1, 2026, the Company early adopted ASU 2025‑08, Financial Instruments—Credit Losses (Topic 326): Purchased Loans. The amendments expand the gross-up approach under ASC 326 to certain acquired loans classified as purchased seasoned loans. Under the amended guidance, an allowance for credit losses is established at the acquisition date with a corresponding adjustment to the amortized cost basis of qualifying acquired loans. The amendments were applied prospectively to loans acquired on or after the adoption date, and prior-period amounts were not adjusted. The adoption impacted the accounting for loans acquired in the Mountain Commerce Bank acquisition and did not result in a cumulative-effect adjustment to retained earnings.

Accounting Standards Not Yet Adopted

In November 2024, the FASB issued ASU No. 2024-03,"Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses." The ASU requires footnote disclosure about specific expenses by requiring companies to disaggregate, in a tabular presentation, each relevant expense caption on the face of the income statement that includes any of the following natural expenses: (i) purchases of inventory, (ii) employee compensation, (iii) depreciation, (iv) intangible asset amortization and (v) depreciation, depletion and amortization recognized as part of oil- and gas-producing activities. The tabular disclosure would also include certain other expenses, when applicable. The ASU does not change or remove existing expense disclosure requirements; however, it may affect where that information appears in the footnotes to the financial statements. The ASU is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the potential impacts related to the adoption of the ASU.

In January 2025, the FASB issued ASU No. 2025-01,"Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date."The ASU revises the effective date to clarify that all public business entities are required to adopt the guidance in the annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Entities within the ASU's scope are permitted to early adopt the ASU. The Company is currently evaluating the potential impacts related to the adoption of the ASU.

In December 2025, the FASB issued ASU 2025‑11, "Interim Reporting (Topic 270): Narrow‑Scope Improvements." The ASU clarifies the scope, form, content, and disclosure requirements applicable to interim financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). The amendments are intended to improve the navigability of Topic 270 and clarify existing guidance without changing the fundamental nature of interim reporting or significantly expanding or reducing current interim disclosure requirements. The ASU confirms that interim financial statement form and content continue to be governed by applicable SEC rules (including Regulation S‑X, Rule 10‑01, as applicable), while enhancing Topic 270 by consolidating interim disclosure requirements from other Codification Topics and introducing a disclosure principle requiring registrants to disclose material events or changes occurring since the end of the most recent annual reporting period. ASU 2025‑11 is effective for interim reporting periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of adoption on its interim financial statement disclosures.