Former name, former address and former fiscal year, if changed since last report

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þx No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þx No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No þx

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practical date.

Common Stock Issued and Outstanding: ~~67,530,400~~67,774,533 shares as of ~~October~~July 31, ~~2014.~~2015.

Some of our statements contained in this document, including matters discussed under the caption “Management’s Discussion and Analysis of Financial Condition and Results of ~~Operation”~~Operation,” are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements relate to future events or our future financial performance and include statements about the competitiveness of the banking industry, potential regulatory obligations, our entrance and expansion into other markets, including through potential acquisitions, our other business strategies and other statements that are not historical facts. Forward-looking statements are not guarantees of performance or results. When we use words like “may,” “plan,” “contemplate,” “anticipate,” “believe,” “intend,” “continue,” “expect,” “project,” “predict,” “estimate,” “could,” “should,” “would,” and similar expressions, you should consider them as identifying forward-looking statements, although we may use other phrasing. These forward-looking statements involve risks and uncertainties and are based on our beliefs and assumptions, and on the information available to us at the time that these disclosures were prepared. These forward-looking statements involve risks and uncertainties and may not be realized due to a variety of factors, including, but not limited to, the following:

All written or oral forward-looking statements attributable to us are expressly qualified in their entirety by this Cautionary Note. Our actual results may differ significantly from those we discuss in these forward-looking statements. For other factors, risks and uncertainties that could cause our actual results to differ materially from estimates and projections contained in these forward-looking statements, see the “Risk Factors” section of our Form 10-K filed with the Securities and Exchange Commission on February ~~28, 2014.~~27, 2015.


(In thousands, except share data)	September 30, 2014			December 31, 2013			June 30, 2015			December 31, 2014
	(Unaudited)						(Unaudited)
Assets
Cash and due from banks	$	109,067		$	104,005		$	116,682		$	105,438
Interest-bearing deposits with other banks		28,416			61,529			87,729			7,090

Cash and cash equivalents		137,483			165,534			204,411			112,528
Federal funds sold		44,275			4,275			—			250
Investment securities – available-for-sale		1,067,617			1,175,484			1,080,000			1,067,287
Investment securities – held-to-maturity		296,036			114,621			336,993			356,790
Loans receivable not covered by loss share		4,583,015			4,194,437			5,499,028			4,817,314
Loans receivable covered by FDIC loss share		250,970			282,516			159,891			240,188
Allowance for loan losses		(52,844	)		(43,815	)		(60,258	)		(55,011	)

Loans receivable, net		4,781,141			4,433,138			5,598,661			5,002,491
Bank premises and equipment, net		211,726			197,224			209,425			206,912
Foreclosed assets held for sale not covered by loss share		19,367			29,869			16,539			16,951
Foreclosed assets held for sale covered by FDIC loss share		13,513			20,999			4,472			7,871
FDIC indemnification asset		42,104			89,611			15,874			28,409
Cash value of life insurance		70,913			63,501			75,015			74,444
Accrued interest receivable		23,366			22,944			24,447			24,075
Deferred tax asset, net		68,070			89,412			62,088			65,227
Goodwill		313,320			301,736			322,728			325,423
Core deposit and other intangibles		21,004			22,298			19,816			20,925
Other assets		86,436			81,215			103,913			93,689

Total assets	$	7,196,371		$	6,811,861		$	8,074,382		$	7,403,272


Liabilities and Stockholders’ Equity
Deposits:
Demand and non-interest-bearing	$	1,170,441		$	991,161		$	1,406,051		$	1,203,306
Savings and interest-bearing transaction accounts		2,830,829			2,792,423			3,099,522			2,974,850
Time deposits		1,276,001			1,609,462			1,372,463			1,245,815

Total deposits		5,277,271			5,393,046			5,878,036			5,423,971
Securities sold under agreements to repurchase		160,895			160,984			150,746			176,465
FHLB borrowed funds		713,553			350,661			866,907			697,957
Accrued interest payable and other liabilities		25,145			5,389			56,166			28,761
Subordinated debentures		60,826			60,826			60,826			60,826

Total liabilities		6,237,690			5,970,906			7,012,681			6,387,980

Stockholders’ equity:
Common stock, par value $0.01; shares authorized 100,000,000 in 2014 and 2013; shares issued and outstanding 66,483,123 in 2014 and 65,081,853 in 2013		665			651
Common stock, par value $0.01; shares authorized 100,000,000 in 2015 and 2014; shares issued and outstanding 67,774,390 in 2015 and 67,570,610 in 2014								677			676
Capital surplus		749,573			708,058			780,731			781,328
Retained earnings		203,107			136,386			274,409			226,279
Accumulated other comprehensive income (loss)		5,336			(4,140	)
Accumulated other comprehensive income								5,884			7,009

Total stockholders’ equity		958,681			840,955			1,061,701			1,015,292

Total liabilities and stockholders’ equity	$	7,196,371		$	6,811,861		$	8,074,382		$	7,403,272


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended June 30,						Six Months Ended June 30,
(In thousands, except per share data)	2014			2013			2014			2013			2015			2014			2015			2014
	(Unaudited)												(Unaudited)
Interest income:
Loans	$	75,917		$	45,003		$	226,334		$	133,198		$	82,360		$	75,404		$	157,847		$	150,417
Investment securities
Taxable		4,905			2,645			14,137			7,538			5,130			4,762			10,673			9,232
Tax-exempt		2,552			1,507			7,248			4,455			2,774			2,379			5,526			4,696
Deposits – other banks		20			19			73			203			44			29			135			53
Federal funds sold		7			2			35			15			3			12			11			28

Total interest income		83,401			49,176			247,827			145,409			90,311			82,586			174,192			164,426

Interest expense:
Interest on deposits		3,243			1,810			9,722			6,424			3,311			3,095			6,569			6,479
Federal funds purchased		2			3			2			3			1			—			2			—
FHLB borrowed funds		1,035			910			2,933			2,926			1,053			952			2,103			1,898
Securities sold under agreements to repurchase		186			87			536			253			163			168			335			350
Subordinated debentures		330			16			986			263			334			328			663			656

Total interest expense		4,796			2,826			14,179			9,869			4,862			4,543			9,672			9,383

Net interest income		78,605			46,350			233,648			135,540			85,449			78,043			164,520			155,043
Provision for loan losses		4,241			—			17,294			850			5,381			6,115			9,168			13,053

Net interest income after provision for loan losses		74,364			46,350			216,354			134,690			80,068			71,928			155,352			141,990

Non-interest income:
Service charges on deposit accounts		6,275			4,072			18,379			11,869			6,056			6,193			11,474			12,104
Other service charges and fees		5,977			3,671			17,641			10,587			6,499			5,978			12,715			11,664
Trust fees		306			15			1,065			51			1,186			323			1,618			759
Mortgage lending income		1,901			1,527			5,215			4,518			2,955			1,801			4,887			3,314
Insurance commissions		984			519			3,334			1,642			640			934			1,207			2,350
Income from title services		59			156			162			401			36			53			70			103
Increase in cash value of life insurance		322			203			891			601			295			281			603			569
Dividends from FHLB, FRB, Bankers’ bank & other		389			179			1,206			755			419			501			834			817
Gain on sale of SBA loans		183			79			183			135
Gain on acquisitions														—			—			1,635			—
Gain (loss) on sale of premises and equipment, net		(35	)		303			419			712			21			445			29			454
Gain (loss) on OREO, net		529			777			1,927			1,304			(263	)		859			230			1,398
Gain (loss) on securities, net		—			—			—			111			—			—			4			—
FDIC indemnification accretion/(amortization), net		(6,947	)		(3,177	)		(18,313	)		(7,452	)		(2,202	)		(6,622	)		(6,158	)		(11,366	)
Other income		888			994			2,442			2,914			1,385			793			2,549			1,554

Total non-interest income		10,831			9,318			34,551			28,148			17,027			11,539			31,697			23,720

Non-interest expense:
Salaries and employee benefits		19,368			12,981			57,114			38,890			22,056			18,813			41,446			37,746
Occupancy and equipment		6,234			4,010			18,711			11,498			6,678			6,251			12,727			12,477
Data processing expense		1,801			1,114			5,387			3,855			3,063			1,793			5,482			3,586
Other operating expenses		15,414			8,610			39,582			24,190			11,453			11,763			24,308			24,168

Total non-interest expense		42,817			26,715			120,794			78,433			43,250			38,620			83,963			77,977

Income before income taxes		42,378			28,953			130,111			84,405			53,845			44,847			103,086			87,733
Income tax expense		15,007			10,590			46,974			30,835			19,939			16,418			38,061			31,967

Net income	$	27,371		$	18,363		$	83,137		$	53,570		$	33,906		$	28,429		$	65,025		$	55,766

Basic earnings per share	$	0.41		$	0.33		$	1.27		$	0.96		$	0.50		$	0.44		$	0.96		$	0.86

Diluted earnings per share	$	0.41		$	0.33		$	1.26		$	0.95		$	0.50		$	0.43		$	0.96		$	0.85


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended June 30,						Six Months Ended June 30,
(In thousands)	2014			2013			2014			2013			2015			2014			2015			2014
	(Unaudited)												(Unaudited)
Net income	$	27,371		$	18,363		$	83,137		$	53,570		$	33,906		$	28,429		$	65,025		$	55,766
Net unrealized gain (loss) on available-for-sale securities		1,071			(5,505	)		15,594			(21,882	)
Net unrealized (loss) gain on available-for-sale securities														(6,905	)		6,870			(1,855	)		14,523
Less: reclassification adjustment for realized (gains) losses included in income		—			—			—			(111	)		—			—			4			—

Other comprehensive income (loss), before tax effect		1,071			(5,505	)		15,594			(21,993	)
Other comprehensive (loss) income, before tax effect														(6,905	)		6,870			(1,851	)		14,523
Tax effect		(421	)		2,160			(6,118	)		8,628			2,709			(2,695	)		726			(5,697	)

Other comprehensive income (loss)		650			(3,345	)		9,476			(13,365	)
Other comprehensive (loss) income														(4,196	)		4,175			(1,125	)		8,826

Comprehensive income	$	28,021		$	15,018		$	92,613		$	40,205		$	29,710		$	32,604		$	63,900		$	64,592


(In thousands, except share data)	Common Stock		Capital Surplus			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total			Common Stock			Capital Surplus			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total
Balance at January 1, 2013	$	281	$	416,354		$	86,837		$	12,001		$	515,473

Balance at January 1, 2014															$	651		$	708,058		$	136,386		$	(4,140	)	$	840,955
Comprehensive income:
Net income		—		—			53,570			—			53,570			—			—			55,766			—			55,766
Other comprehensive income (loss)		—		—			—			(13,365	)		(13,365	)		—			—			—			8,826			8,826
Net issuance of 46,225 shares of common stock from exercise of stock options		1		275			—			—			276
2-for-1 stock split during June 2013		281		(281	)		—			—			—
Net issuance of 18,784 shares of common stock from exercise of stock options																—			97			—			—			97
Disgorgement of profits																—			25			—			—			25
Tax benefit from stock options exercised		—		339			—			—			339			—			196			—			—			196
Share-based compensation		—		940			—			—			940			—			1,140			—			—			1,140
Cash dividends – Common Stock, $0.215 per share		—		—			(12,091	)		—			(12,091	)
Cash dividends – Common Stock, $0.15 per share																—			—			(9,770	)		—			(9,770	)

Balances at September 30, 2013 (unaudited)		563		417,627			128,316			(1,364	)		545,142
Balances at June 30, 2014 (unaudited)																651			709,516			182,382			4,686			897,235
Comprehensive income:
Net income		—		—			12,950			—			12,950			—			—			57,297			—			57,297
Other comprehensive income (loss)		—		—			—			(2,776	)		(2,776	)		—			—			—			2,323			2,323
Net issuance of 39,976 shares of common stock from exercise of stock options		—		155			—			—			155
Issuance of 8,763,930 shares of common stock from acquisition of Liberty, net of issuance costs of approximately $577		88		289,421			—			—			289,509
Net issuance of 101,577 shares of common stock from exercise of stock options																1			476			—			—			477
Issuance of 1,316,072 shares of common stock from acquisition of Traditions, net of issuance costs of approximately $215																13			39,254			—			—			39,267
Issuance of 1,020,824 shares of common stock from acquisition of Broward, net of issuance costs of approximately $116																10			30,121			—			—			30,131
Tax benefit from stock options exercised		—		497			—			—			497			—			1,029			—			—			1,029
Share-based compensation		—		358			—			—			358			1			932			—			—			933
Cash dividends – Common Stock, $0.075 per share		—		—			(4,880	)		—			(4,880	)
Cash dividends - Common Stock, $0.20 per share																—			—			(13,400	)		—			(13,400	)

Balances at December 31, 2013		651		708,058			136,386			(4,140	)		840,955
Balances at December 31, 2014																676			781,328			226,279			7,009			1,015,292
Comprehensive income:
Net income		—		—			83,137			—			83,137			—			—			65,025			—			65,025
Other comprehensive income (loss)		—		—			—			9,476			9,476			—			—			—			(1,125	)		(1,125	)
Net issuance of 43,698 shares of common stock from exercise of stock options		1		207			—			—			208
Issuance of 1,316,072 shares of common stock from acquisition of Traditions, net of issuance costs of approximately $215		13		39,254			—			—			39,267
Disgorgement of profits		—		25			—			—			25
Net issuance of 162,528 shares of common stock from exercise of stock options																1			116			—			—			117
Repurchase of 67,332 shares of common stock																(1	)		(2,014	)		—			—			(2,015	)
Tax benefit from stock options exercised		—		410			—			—			410			—			83			—			—			83
Share-based compensation		—		1,619			—			—			1,619			1			1,218			—			—			1,219
Cash dividends – Common Stock, $0.25 per share		—		—			(16,416	)		—			(16,416	)		—			—			(16,895	)		—			(16,895	)

Balances at September 30, 2014 (unaudited)	$	665	$	749,573		$	203,107		$	5,336		$	958,681
Balances at June 30, 2015 (unaudited)															$	677		$	780,731		$	274,409		$	5,884		$	1,061,701


	Nine Months Ended September 30,						Six Months Ended June 30,
(In thousands)	2014			2013			2015			2014
	(Unaudited)						(Unaudited)
Operating Activities
Net income	$	83,137		$	53,570		$	65,025		$	55,766
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation		7,492			4,908			5,191			4,988
Amortization/(accretion)		25,647			(732	)		11,967			16,170
Share-based compensation		1,619			940			1,219			1,140
Tax benefits from stock options exercised		(410	)		(339	)		(83	)		(196	)
(Gain) loss on assets		(2,529	)		(2,588	)		(255	)		(1,852	)
Gain on acquisitions								(1,635	)		—
Provision for loan losses		17,294			850			9,168			13,053
Deferred income tax effect		15,752			9,581			3,864			10,563
Increase in cash value of life insurance		(891	)		(601	)		(603	)		(569	)
Originations of mortgage loans held for sale		(169,905	)		(167,903	)		(129,259	)		(107,389	)
Proceeds from sales of mortgage loans held for sale		163,228			162,917			122,069			107,993
Changes in assets and liabilities:
Accrued interest receivable		289			2,030			(372	)		2,097
Indemnification and other assets		26,959			54,427			(3,842	)		25,322
Accrued interest payable and other liabilities		19,166			5,381			27,488			17,165

Net cash provided by (used in) operating activities		186,848			122,441			109,942			144,251

Investing Activities
Net (increase) decrease in federal funds sold		(39,730	)		6,448			250			3,425
Net (increase) decrease in loans, excluding loans acquired		(131,200	)		6,868			(283,216	)		63,544
Purchases of investment securities – available-for-sale		(79,543	)		(299,305	)		(126,016	)		(73,910	)
Proceeds from maturities of investment securities – available-for-sale		212,629			159,613			108,079			138,930
Proceeds from sale of investment securities – available-for-sale		—			167			931			—
Purchases of investment securities – held-to-maturity		(194,240	)		(9,536	)		(6,556	)		(99,212	)
Proceeds from maturities of investment securities – held-to-maturity		12,194			—			25,212			7,962
Proceeds from foreclosed assets held for sale		34,307			27,352			16,135			24,954
Proceeds from sale of SBA loans		—			2,085
Proceeds from sale of insurance book of business								2,938			—
Purchases of premises and equipment, net		(3,680	)		(9,950	)		(7,675	)		(3,504	)
Death benefits received		—			540
Return of investment on cash value of life insurance								27			—
Net cash proceeds (paid) received – market acquisitions		13,315			—			140,820			—

Net cash provided by (used in) investing activities		(175,948	)		(115,718	)		(129,071	)		62,189

Financing Activities
Net increase (decrease) in deposits, excluding deposits acquired		(383,123	)		(234,634	)		(13,509	)		(201,037	)
Net increase (decrease) in securities sold under agreements to repurchase		(89	)		5,029			(25,719	)		(16,382	)
Net increase (decrease) in FHLB borrowed funds		360,249			139,844			168,950			(1,551	)
Retirement of subordinated debentures		—			(25,000	)
Proceeds from exercise of stock options		208			276			117			97
Repurchase of common stock								(2,015	)		—
Disgorgement of profits		25			—			—			25
Common stock issuance costs – market acquisitions		(215	)		—
Tax benefits from stock options exercised		410			339			83			196
Dividends paid on common stock		(16,416	)		(12,091	)		(16,895	)		(9,770	)

Net cash provided by (used in) financing activities		(38,951	)		(126,237	)		111,012			(228,422	)

Net change in cash and cash equivalents		(28,051	)		(119,514	)		91,883			(21,982	)
Cash and cash equivalents – beginning of year		165,534			231,855			112,528			165,534

Cash and cash equivalents – end of period	$	137,483		$	112,341		$	204,411		$	143,552

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~~wholly-owned community bank subsidiary – Centennial Bank ~~(the~~(sometimes referred to as “Centennial” or the “Bank”). The Bank has branch locations in Arkansas, Florida and South ~~Alabama.~~Alabama and a loan production office in 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.

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 branches of the Bank provide a group of similar community banking services, including such products and services as commercial, real estate and consumer loans, time deposits, and checking and savings accounts. The individual bank branches have similar operating and economic characteristics. While the chief decision maker monitors the revenue streams of the various products, services and branch locations, operations are managed and financial performance is evaluated on a Company-wide basis. Accordingly, all of the community banking services and branch locations are considered by management to be aggregated into one reportable operating segment, community banking.

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 loan losses, the valuation of investment securities, the valuation of foreclosed assets, the valuations of assets acquired and liabilities assumed in business combinations, covered loans and the related indemnification asset. In connection with the determination of the allowance for loan losses and the valuation of foreclosed assets, management obtains independent appraisals for significant properties.

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

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

The accompanying unaudited consolidated financial statements as of ~~September~~June 30, ~~2014~~2015 and ~~2013~~2014 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 ~~2013~~2014 Form 10-K, filed with the Securities and Exchange Commission.

Basic earnings per share is computed based on the ~~weighted average~~weighted-average number of shares outstanding during each year. Diluted earnings per share is computed using the ~~weighted average~~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:


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014		2013		2015		2014		2015		2014
	(In thousands, except per share data)								(In thousands)
Net income	$	27,371	$	18,363	$	83,137	$	53,570	$	33,906	$	28,429	$	65,025	$	55,766

Average shares outstanding		66,223		56,256		65,499		56,238		67,632		65,140		67,611		65,131
Effect of common stock options		393		364		390		339		283		405		301		392

Average diluted shares outstanding		66,616		56,620		65,889		56,577		67,915		65,545		67,912		65,523


Basic earnings per share	$	0.41	$	0.33	$	1.27	$	0.96	$	0.50	$	0.44	$	0.96	$	0.86
Diluted earnings per share	$	0.41	$	0.33	$	1.26	$	0.95	$	0.50	$	0.43	$	0.96	$	0.85

Acquisition ~~Florida Traditions Bank~~of Pool of National Commercial Real Estate Loans

On ~~July 17, 2014,~~April 1, 2015, the ~~Company~~Company’s wholly-owned bank subsidiary, Centennial, entered into an agreement with AM PR LLC, an affiliate of J.C. Flowers & Co. (collectively, the “Seller”) to purchase a pool of national commercial real estate loans totaling approximately $289.1 million for a purchase price of 99% of the total principal value of the acquired loans. The purchase of the loans was completed on April 1, 2015. The acquired loans were originated by the former Doral Bank within its Doral Property Finance portfolio (“DPF Portfolio”) and were transferred to the Seller by Banco Popular of Puerto Rico (“Popular”) upon its acquisition of ~~Florida Traditions~~the assets and liabilities of Doral Bank from the Federal Deposit Insurance Corporation (“~~Traditions”~~FDIC”) ~~pursuant to~~, as receiver for the failed Doral Bank. This pool of loans is now housed in a ~~previously announced definitive agreement and plan~~division of ~~merger whereby Traditions merged with and into~~ Centennial ~~Bank~~known as the Centennial Commercial Finance Group (“~~Centennial”~~Centennial CFG”). ~~Under~~The Centennial CFG is responsible for servicing the ~~terms~~acquired loan pool and originating new loan production.

In connection with this acquisition of loans, the ~~Agreement~~Company opened a loan production office on April 23, 2015 in New York City. Through the loan production office, Centennial CFG plans to build out a national lending platform focusing on commercial real estate plus commercial and ~~Plan~~industrial loans.

Acquisition of ~~Merger dated April 25, 2014, by~~Doral Bank’s Florida Panhandle operations

On February 27, 2015, the Company’s banking subsidiary, Centennial acquired all the deposits and ~~among HBI, Centennial, and Traditions, HBI issued 1,316,072 shares~~substantially all the assets of ~~its common stock valued at~~Doral Bank’s Florida Panhandle operations (“Doral Florida”) through an alliance agreement with Popular who was the successful lead bidder with the FDIC on the failed Doral Bank of San Juan, Puerto Rico. The acquisition provided the Company with loans of approximately ~~$39.5~~$37.9 million asnet of ~~July 17, 2014,~~loan discounts, deposits of approximately $466.3 million, plus a $428.2 million cash settlement to balance the transaction. There is no loss-share with the FDIC in ~~exchange for all outstanding shares of Traditions common stock.~~the acquired assets.

Prior to the acquisition, ~~Traditions~~Doral Florida operated ~~eight banking~~five branch locations in ~~Central~~Panama City, Panama City Beach and Pensacola, Florida ~~including its main~~plus a loan production office in ~~Dade City,~~Tallahassee, Florida. AsAt the time of acquisition, ~~date, Traditions had $297.6 million~~Centennial operated 29 branch locations in ~~total assets, $241.6 million in loans after $8.5 million of loan discounts,~~the Florida Panhandle. As a result, the Company closed all five branch locations during the July 2015 systems conversion and ~~$267.3 million in deposits.~~

~~The transaction was accretive~~returned the facilities back to the ~~Company’s book value per common share and tangible book value per common share by $0.31 per share and $0.21 per share, respectively.~~FDIC.

The Company has determined that the acquisition of the net assets of ~~Traditions~~Doral Florida constitutes a business combination as defined by the FASB ASC Topic 805,Business Combinations. Accordingly, the assets acquired and liabilities assumed are presented at their fair values as required. Fair values were determined based on the requirements of FASB ASC Topic 820,Fair Value Measurements. 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 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 is a reasonable estimate of fair value based on the short-term nature of these assets. The ~~$5,000~~$428.2 million adjustment is the cash settlement ~~paid to Traditions shareholders~~received from Popular for ~~cash-in-lieu of fractional shares.~~

~~Investment securities~~ ~~– Investment securities were acquired from Traditions with an $81,000 adjustment to market value based upon quoted market prices.~~the net equity received, assets discount bid and other customary closing adjustments.

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 and 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 Company evaluated ~~all~~$36.9 million of the loans purchased in conjunction with the acquisition in accordance with the provisions of FASB ASC Topic 310-20,Nonrefundable Fees and Other Costs~~. None~~, and were recorded with a $3.4 million discount. As a result, the fair value discount on these loans is being accreted into interest income over the weighted-average life of the loans using a constant yield method. The remaining approximately $5.3 million of loans evaluated were considered purchased credit impaired loans with in the provisions of FASB ASC Topic 310-30,Loans and Debt Securities Acquired with Deteriorated Credit Quality~~. As~~, and were recorded with a ~~result, the fair value discount is being accreted into~~$950,000 discount. These purchased credit impaired loans will recognize interest income ~~over~~through accretion of the ~~weighted average life~~difference between the carrying amount of the loans ~~using a constant yield method.~~

~~Bank premises and equipment~~ – Bank premises and equipment were acquired from Traditions with a $2.1 million adjustment to market value. This represents the difference between current appraisal completed in connection with the acquisition and book value acquired.

~~Foreclosed assets held for sale not covered by loss share~~ ~~– 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– Cash value of life insurance was acquired from Traditions at market value.~~

~~Accrued interest receivable~~ ~~– Accrued interest receivable was acquired from Traditions at market value.~~

~~Deferred tax asset~~ – 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 39.225%.~~

~~Goodwill~~ ~~– The consideration paid as a result of the acquisition exceeded the fair value of the assets acquired; therefore, the Company recorded $11.6 million of goodwill.~~expected cash flows.

Core deposit intangible – This intangible asset represents the value of the relationships that ~~Traditions~~Doral Florida 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. The Company recorded ~~$2.2~~$1.4 million of core deposit intangible.

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. NoThe Bank was able to reset deposit rates. However, the Bank did not lower the deposit rates as low as the market rates currently offered. As a result, a $1.3 million fair value adjustment was applied for time deposits because the ~~weighted average~~estimated weighted-average interest rate of ~~Traditions’~~Doral Florida’s certificates of deposits were atstill estimated to be above the current market rates ~~of similar funding at~~after the ~~time of acquisition.~~

~~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 used represents the adjustment of certain estimated liabilities from Traditions.~~rate reset.

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

The Company’s operating results for the period ended ~~September~~June 30, ~~2014,~~2015, include the operating results of the acquired assets and assumed liabilities subsequent to the acquisition date. Due to the fair value adjustments recorded and the fact ~~Traditions~~Doral Florida total assets acquired ~~are~~excluding the cash settlement received is less than 5%1% of total assets ~~as of September 30, 2014 excluding Traditions as recorded by HBI~~ as of acquisition date, historical results are not believed to be material to the Company’s results, and thus no pro-forma information is presented.

On October ~~24, 2013, Home BancShares,~~23, 2014, the Company completed its acquisition of Broward Financial Holdings, Inc. ~~acquired Liberty Bancshares, Inc.~~ (“~~Liberty”~~Broward”), parent company of ~~Liberty~~Broward Bank of ~~Arkansas~~Commerce, pursuant to a previously announced definitive agreement and plan of merger whereby a wholly-owned acquisition subsidiary (“~~Liberty Bank”~~Acquisition Sub II”). of HBI merged with and into Broward, resulting in Broward becoming a wholly-owned subsidiary of HBI. Immediately thereafter, Broward Bank of Commerce was merged into Centennial. Under the terms of the Agreement and Plan of Merger dated July 30, 2014 by and among HBI, Centennial, Broward, Broward Bank of Commerce and Acquisition Sub II, HBI issued ~~8,763,930~~1,020,824 shares of its common stock valued at approximately ~~$290.1~~$30.2 million as of October 23, ~~2013,~~2014, plus ~~$30.0~~$3.3 million in cash in exchange for all outstanding shares of ~~Liberty~~Broward common stock. ~~Additionally,~~HBI has also agreed to pay the Broward shareholders, at an undetermined date, up to approximately $751,000 in additional consideration. The amount and timing of the additional payment, if any, will depend on future payments received or losses incurred by Centennial from certain current Broward Bank of Commerce loans. At June 30, 2015 and December 31, 2014, the Company ~~also repurchased all~~had recorded a fair value of ~~Liberty’s SBLF preferred stock held by~~zero for the ~~U.S. Treasury in connection with the closing.~~potential additional consideration.

Prior to the acquisition, ~~Liberty~~Broward Bank of Commerce operated 46two banking ~~offices located~~locations in ~~northeast Arkansas, north central Arkansas and northwest Arkansas.~~Fort Lauderdale, Florida. Including the effects of the purchase accounting adjustments, ~~the Company acquired~~Broward had approximately ~~$2.82 billion~~$184.4 million in total assets, ~~approximately $1.73 billion~~$121.1 million in total loans ~~including~~after $3.0 million of loan discounts, and $134.2 million in deposits.

As of the acquisition date, Broward’s common equity totaled $20.4 million and the Company paid a purchase price to the Broward shareholders of approximately ~~$2.13 billion~~$33.6 million for the Broward acquisition. As a result, the Company paid a multiple of ~~deposits. The merger significantly increased the Company’s deposit market~~1.62 of Broward’s book value per share ~~in Arkansas.~~and tangible book value per share.

See Note 2 “Business Combinations” in the Notes to Consolidated Financial Statements on Form 10-K for the year ended December 31, ~~2013~~2014 for an additional discussion ofregarding the acquisition of ~~Liberty.~~Broward.

On July 17, 2014, the Company completed the acquisition of all of the issued and outstanding shares of common stock of Florida Traditions Bank (“Traditions”) and merged Traditions into Centennial. Under the terms of the Agreement and Plan of Merger dated April 25, 2014, by and among the Company, Centennial, and Traditions, the shareholders of Traditions received approximately $39.5 million of the Company’s common stock valued at the time of closing, in exchange for all outstanding shares of Traditions common stock.

Prior to the acquisition, Traditions operated eight banking locations in Central Florida, including its main office in Dade City, Florida. Including the effects of the purchase accounting adjustments, Traditions had $310.5 million in total assets, $241.6 million in loans after $8.5 million of loan discounts, and $267.3 million in deposits.

The transaction was accretive to the Company’s book value per common share and tangible book value per common share by $0.31 per share and $0.21 per share, respectively.

See Note 2 “Business Combinations” in the Notes to Consolidated Financial Statements on Form 10-K for the year ended December 31, 2014 for an additional discussion regarding the acquisition of Traditions.

The amortized cost and estimated fair value of investment securities that are classified as available-for-sale and held-to-maturity are as follows:


	Held-to-Maturity									June 30, 2015
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)			Estimated Fair Value		Available-for-Sale
	(In thousands)									Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)			Estimated Fair Value
										(In thousands)
U.S. government-sponsored enterprises										$	355,102	$	2,917	$	(479	)	$	357,540
Mortgage-backed securities											489,467		4,259		(1,411	)		492,315
State and political subdivisions											178,700		4,918		(596	)		183,022
Other securities											47,049		381		(307	)		47,123

Total										$	1,070,318	$	12,475	$	(2,793	)	$	1,080,000


										Held-to-Maturity
										Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)			Estimated Fair Value
										(In thousands)
U.S. government-sponsored enterprises										$	7,808	$	11	$	(6	)	$	7,813
Mortgage-backed securities	$	117,850	$	232	$	(225	)	$	117,857		148,546		595		(293	)		148,848
State and political subdivisions		178,186		4,098		(118	)		182,166		180,639		3,188		(471	)		183,356

Total	$	296,036	$	4,330	$	(343	)	$	300,023	$	336,993	$	3,794	$	(770	)	$	340,017

   December 31, 2013
   Available-for-Sale
   Amortized
Cost    Gross
Unrealized
Gains    Gross
Unrealized
(Losses) Estimated
Fair Value
   (In thousands)
U.S. government-sponsored enterprises
   $ 467,535       $ 1,330       $ (5,324 ) $ 463,541
Mortgage-backed securities
   462,510       3,343       (4,265 ) 461,588
State and political subdivisions
   196,472       3,085       (4,045 ) 195,512
Other securities
   55,780       216       (1,153 ) 54,843






Total
   $ 1,182,297       $ 7,974       $ (14,787 ) $ 1,175,484


	Held-to-Maturity									December 31, 2014
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)			Estimated Fair Value		Available-for-Sale
	(In thousands)									Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)			Estimated Fair Value
										(In thousands)
U.S. government-sponsored enterprises										$	333,880	$	2,467	$	(269	)	$	336,078
Mortgage-backed securities											500,292		4,235		(1,445	)		503,082
State and political subdivisions											170,207		6,522		(88	)		176,641
Other securities											51,375		437		(326	)		51,486

Total										$	1,055,754	$	13,661	$	(2,128	)	$	1,067,287


										Held-to-Maturity
										Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)			Estimated Fair Value
										(In thousands)
U.S. government-sponsored enterprises										$	4,724	$	2	$	(11	)	$	4,715
Mortgage-backed securities											161,051		580		(193	)		161,438
State and political subdivisions	$	114,621	$	361	$	(1,081	)	$	113,901		191,015		5,178		(74	)		196,119

Total	$	114,621	$	361	$	(1,081	)	$	113,901	$	356,790	$	5,760	$	(278	)	$	362,272

Assets, principally investment securities, having a carrying value of approximately ~~$1.14~~$1.19 billion and ~~$1.13~~$1.23 billion at ~~September~~June 30, ~~2014~~2015 and December 31, ~~2013,~~2014, respectively, were pledged to secure public deposits and for other purposes required or permitted by law. Also, investment securities pledged as collateral for repurchase agreements totaled approximately ~~$160.9~~$150.7 million and ~~$161.0~~$176.5 million at ~~September~~June 30, ~~2014~~2015 and December 31, ~~2013,~~2014, respectively.

The amortized cost and estimated fair value of securities classified as available-for-sale and held-to-maturity at ~~September~~June 30, ~~2014,~~2015, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.


									Available-for-Sale				Held-to-Maturity
	Available-for-Sale				Held-to-Maturity				Amortized		Estimated		Amortized		Estimated
	Amortized		Estimated		Amortized		Estimated		Cost		Fair Value		Cost		Fair Value
	Cost		Fair Value		Cost		Fair Value		(In thousands)
	(In thousands)
Due in one year or less	$	307,892	$	309,364	$	63,466	$	64,341	$	342,698	$	344,472	$	69,681	$	70,154
Due after one year through five years		595,946		600,534		142,024		144,203		534,388		540,979		158,593		160,914
Due after five years through ten years		133,306		135,305		57,500		58,407		156,522		157,639		64,364		64,789
Due after ten years		21,692		22,414		33,046		33,072		36,710		36,910		44,355		44,160

Total	$	1,058,836	$	1,067,617	$	296,036	$	300,023	$	1,070,318	$	1,080,000	$	336,993	$	340,017

For purposes of the maturity tables, mortgage-backed securities, which are not due at a single maturity date, have been allocated over maturity groupings based on anticipated maturities. The mortgage-backed securities may mature earlier than their weighted-average contractual maturities because of principal prepayments.

During the ~~three and nine-month periods ended September 30, 2014, no available-for-sale securities were sold.~~

~~During the~~ three-month period ended ~~September~~June 30, ~~2013,~~2015, no available-for-sale securities were sold. During the ~~nine-month~~six-month period ended ~~September~~June 30, ~~2013, $167,000~~2015, approximately $931,000, in available-for-sale securities were sold. The gross realized ~~gains~~gain on ~~these sales~~the sale for the six-month period ended June 30, 2015 totaled approximately ~~$111,000.~~$4,000. The income tax expense/benefit to net security gains and losses was 39.225% of the gross amounts.

During the three and six-month periods ended June 30, 2014, no available-for-sale securities were sold.

The Company evaluates all securities quarterly to determine if any unrealized losses are deemed to be other than temporary. In completing these evaluations the Company follows the requirements of FASB ASC 320,~~Investments—~~Investments - Debt and Equity Securities. Certain investment securities are valued less than their historical cost. These declines are primarily the result of the rate for these investments yielding less than current market rates. Based on evaluation of available evidence, management believes the declines in fair value for these securities are temporary. The Company does not intend to sell or believe it will be required to sell these investments before recovery of their amortized cost bases, which may be maturity. Should the impairment of any of these securities become other than temporary, the cost basis of the investment will be reduced and the resulting loss recognized in net income in the period the other-than-temporary impairment is identified.

During the ~~nine-month~~six-month period ended ~~September~~June 30, ~~2014,~~2015, no securities were deemed to have other-than-temporary impairment besides securities for which impairment was taken in prior periods.

As of ~~September~~June 30, ~~2014,~~2015, the Company had investment securities with a fair value of approximately ~~$2.6 million~~$729,000 in unrealized losses, which have been in continuous loss positions for more than twelve months. Excluding impairment write downs taken in prior periods, the Company’s assessments indicated that the cause of the market depreciation was primarily the change in interest rates and not the issuer’s financial condition, or downgrades by rating agencies. In addition, approximately ~~81.8%~~78.6% of the Company’s investment portfolio matures in five years or less. As a result, the Company has the ability and intent to hold such securities until maturity.

The following shows gross unrealized losses and estimated fair value of investment securities classified as available-for-sale and held-to-maturity with unrealized losses that are not deemed to be other-than-temporarily impaired, aggregated by investment category and length of time that individual investment securities have been in a continuous loss position as of ~~September~~June 30, ~~2014~~2015 and December 31, ~~2013:~~2014:


	December 31, 2013															June 30, 2015
	Less Than 12 Months					12 Months or More					Total					Less Than 12 Months					12 Months or More					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized			Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses			Value		Losses			Value		Losses			Value		Losses
	(In thousands)															(In thousands)
U.S. government-sponsored enterprises	$	312,674	$	(5,205	)	$	6,529	$	(119	)	$	319,203	$	(5,324	)	$	34,989	$	(470	)	$	7,869	$	(15	)	$	42,858	$	(485	)
Mortgage-backed securities		267,105		(3,968	)		11,749		(297	)		278,854		(4,265	)		196,920		(1,231	)		42,519		(473	)		239,439		(1,704	)
State and political subdivisions		130,718		(4,831	)		4,042		(295	)		134,760		(5,126	)		62,403		(1,038	)		2,716		(29	)		65,119		(1,067	)
Other securities		36,125		(1,153	)		—		—			36,125		(1,153	)		7,820		(95	)		12,235		(212	)		20,055		(307	)

Total	$	746,622	$	(15,157	)	$	22,320	$	(711	)	$	768,942	$	(15,868	)	$	302,132	$	(2,834	)	$	65,339	$	(729	)	$	367,471	$	(3,563	)


																December 31, 2014
																Less Than 12 Months					12 Months or More					Total
																Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
																Value		Losses			Value		Losses			Value		Losses
																(In thousands)
U.S. government-sponsored enterprises																$	22,004	$	(113	)	$	27,616	$	(167	)	$	49,620	$	(280	)
Mortgage-backed securities																	221,171		(812	)		76,596		(826	)		297,767		(1,638	)
State and political subdivisions																	15,171		(106	)		10,038		(56	)		25,209		(162	)
Other securities																	10,054		(51	)		12,390		(275	)		22,444		(326	)

Total																$	268,400	$	(1,082	)	$	126,640	$	(1,324	)	$	395,040	$	(2,406	)

Income earned on securities for the three and ~~nine~~six months ended ~~September~~June 30, ~~2014~~2015 and ~~2013,~~2014, is as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014		2013		2015		2014		2015		2014
	(In thousands)								(In thousands)
Taxable:
Available-for-sale	$	4,295	$	2,644	$	13,214	$	7,537	$	4,248	$	4,499	$	8,755	$	8,919
Held-to-maturity		610		1		923		1		882		263		1,918		313
Non-taxable:
Available-for-sale		1,391		1,479		4,330		4,427		1,375		1,449		2,721		2,939
Held-to-maturity		1,161		28		2,918		28		1,399		930		2,805		1,757

Total	$	7,457	$	4,152	$	21,385	$	11,993	$	7,904	$	7,141	$	16,199	$	13,928

The various categories of loans not covered by loss share are summarized as follows:


					June 30,		December 31,
	September 30, 2014		December 31, 2013		2015		2014
	(In thousands)				(In thousands)
Real estate:
Commercial real estate loans
Non-farm/non-residential	$	1,918,827	$	1,739,668	$	2,477,688	$	1,987,890
Construction/land development		660,107		562,667		796,589		700,139
Agricultural		78,243		81,618		81,633		72,211
Residential real estate loans
Residential 1-4 family		935,547		913,332		997,952		963,990
Multifamily residential		251,726		213,232		321,593		250,222

Total real estate		3,844,450		3,510,517		4,675,455		3,974,452
Consumer		57,821		69,570		48,320		56,720
Commercial and industrial		547,706		511,421		658,501		670,124
Agricultural		64,875		37,129		72,766		48,833
Other		68,163		65,800		43,986		67,185

Loans receivable not covered by loss share	$	4,583,015	$	4,194,437	$	5,499,028	$	4,817,314

During the three and ~~nine-month~~six-month periods ended ~~September~~June 30, 2015 and 2014, ~~the Company sold $1.3 million of the guaranteed portion of~~no SBA loans ~~which resulted in a gain of approximately $183,000.~~

During the three and nine-month periods ended September 30, 2013, the Company sold $1.4 million and $1.9 million, respectively, of the guaranteed portion of SBA loans, which resulted in a gain of approximately $79,000 and $135,000, respectively.were sold.

Mortgage loans held for sale of approximately ~~$37.2~~$37.3 million and ~~$30.5~~$33.1 million at ~~September~~June 30, ~~2014~~2015 and December 31, ~~2013,~~2014, 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 not mandatory forward commitments. These commitments are structured on a best efforts basis; therefore the Company is not required to substitute another loan or to buy back the commitment if the original loan does not fund. Typically, the Company delivers the mortgage loans within a few days after the loans are funded. These commitments are derivative instruments and their fair values at ~~September~~June 30, ~~2014~~2015 and December 31, ~~2013~~2014 were not material.

The Company evaluated loans purchased in conjunction with the acquisitions under purchase and assumption agreements with the FDIC for impairment in accordance with the provisions of FASB ASC Topic 310-30. Purchased covered loans are considered impaired if there is evidence of credit deterioration since origination and if it is probable that not all contractually required payments will be collected.

The following table reflects the carrying value of all purchased FDIC covered impaired loans as of ~~September~~June 30, ~~2014~~2015 and December 31, ~~2013~~2014 for the Company:


	September 30, 2014		December 31, 2013		June 30, 2015		December 31, 2014
	(In thousands)				(In thousands)
Real estate:
Commercial real estate loans
Non-farm/non-residential	$	99,518	$	117,164	$	54,777	$	93,979
Construction/land development		42,713		48,388		24,003		39,946
Agricultural		1,039		1,232		848		943
Residential real estate loans
Residential 1-4 family		90,088		98,403		72,002		87,309
Multifamily residential		8,263		10,378		1,394		8,617

Total real estate		241,621		275,565		153,024		230,794
Consumer		22		20		17		16
Commercial and industrial		8,295		5,852		6,118		8,651
Other		1,032		1,079		732		727

Loans receivable covered by FDIC loss share	$	250,970	$	282,516	$	159,891	$	240,188

The acquired loans were grouped into pools based on common risk characteristics and were recorded at their estimated fair values, which incorporated estimated credit losses at the acquisition dates. These loan pools are systematically reviewed by the Company to determine material changes in cash flow estimates from those identified at the time of the acquisition. Techniques used in determining risk of loss are similar to the Centennial ~~Bank~~ non-covered loan portfolio, with most focus being placed on those loan pools which include the larger loan relationships and those loan pools which exhibit higher risk characteristics. As of ~~September~~June 30, ~~2014~~2015 and December 31, ~~2013, $29.0~~2014, $9.6 million and ~~$35.8~~$22.5 million, respectively, were accruing loans past due 90 days or more.

The following table presents a summary of changes in the allowance for loan losses for the non-covered and covered loan portfolios for the ~~nine~~six months ended ~~September~~June 30, ~~2014:~~2015:


	For Loans Not Covered by Loss Share			For Loans Covered by FDIC Loss Share			Total			For Loans Not Covered by Loss Share			For Loans Covered by FDIC Loss Share			Total
	(In thousands)									(In thousands)
Allowance for loan losses:
Beginning balance	$	39,022		$	4,793		$	43,815		$	52,471		$	2,540		$	55,011
Loans charged off		(7,494	)		(1,914	)		(9,408	)		(6,489	)		(772	)		(7,261	)
Recoveries of loans previously charged off		1,873			389			2,262			1,725			451			2,176

Net loans recovered (charged off)		(5,621	)		(1,525	)		(7,146	)		(4,764	)		(321	)		(5,085	)

Provision for loan losses for non-covered loans		17,294			—			17,294			8,170			—			8,170
Provision for loan losses forecasted outside of loss share		—			280			280			—			(294	)		(294	)
Provision for loan losses before benefit attributable to FDIC loss share agreements		—			(1,399	)		(1,399	)		—			2,456			2,456
Benefit attributable to FDIC loss share agreements		—			1,119			1,119
Change attributable to FDIC loss share agreements											—			(1,164	)		(1,164	)

Net provision for loan losses for covered loans		—			—			—			—			998			998
Increase in FDIC indemnification asset		—			(1,119	)		(1,119	)		—			1,164			1,164

Balance, September 30	$	50,695		$	2,149		$	52,844
Balance, June 30, 2015										$	55,877		$	4,381		$	60,258

The following tables present the balance in the allowance for loan losses for the non-covered loan portfolio for the three and ~~nine-month~~six-month periods ended ~~September~~June 30, ~~2014~~2015 and the allowance for loan losses and recorded investment in loans not covered by loss share based on portfolio segment by impairment method as of ~~September~~June 30, ~~2014.~~2015. Allocation of a portion of the allowance to one type of loans does not preclude its availability to absorb losses in other categories. Additionally, the Company’s discount for credit losses on non-covered loans acquired was ~~$148.2~~$131.7 million, ~~$174.6~~$139.7 million and ~~$77.4~~$157.7 million at ~~September~~June 30, 2015, December 31, 2014 and June 30, 2014, ~~December 31, 2013 and September 30, 2013,~~ respectively.

During the third quarter 2014 quarterly impairment testing on the estimated cash flows of the purchased credit impaired loans, the Company established two non-loss sharing pools evaluated from our Premier Bank acquisition during 2012 had experienced material projected credit deterioration and one non-covered loan pool evaluated from our Liberty acquisition during 2013 had experience a material projected credit improvement. As a result, the Company recorded a $2.9 million provision for loan losses to the allowance for loan losses related to the purchased credit impaired loans during the period ended September 30, 2014 and is recognizing $4.7 million of additional yield over the weighted average life of the loans.

   Three Months Ended September 30, 2014
   Construction/
Land
Development Other
Commercial
Real Estate Residential
Real Estate Commercial
& Industrial Consumer
& Other Unallocated    Total
   (In thousands)
Allowance for loan losses:

Beginning balance
   $ 6,657    $ 19,570    $ 10,016    $ 3,714    $ 3,864    $ 4,427       $ 48,248
Loans charged off
   (386 ) (480 ) (562 ) (416 ) (700 ) —         (2,544 )
Recoveries of loans previously charged off
   23    9    332    190    196    —         750




Net loans recovered (charged off)
   (363 ) (471 ) (230 ) (226 ) (504 ) —         (1,794 )
Provision for loan losses
   236    (800 ) 2,603    (137 ) 1,955    384       4,241




Balance, September 30
   $ 6,530    $ 18,299    $ 12,389    $ 3,351    $ 5,315    $ 4,811       $ 50,695




   Nine Months Ended September 30, 2014
   Construction/
Land
Development Other
Commercial
Real Estate Residential
Real Estate Commercial
& Industrial Consumer
& Other Unallocated    Total
   (In thousands)
Allowance for loan losses:

Beginning balance
   $ 6,282    $ 15,100    $ 8,889    $ 1,933    $ 2,563    $ 4,255       $ 39,022
Loans charged off
   (553 ) (1,148 ) (2,045 ) (1,600 ) (2,148 ) —         (7,494 )
Recoveries of loans previously charged off
   68    230    385    255    935    —         1,873




Net loans recovered (charged off)
   (485 ) (918 ) (1,660 ) (1,345 ) (1,213 ) —         (5,621 )
Provision for loan losses
   733    4,117    5,160    2,763    3,965    556       17,294




Balance, September 30
   $ 6,530    $ 18,299    $ 12,389    $ 3,351    $ 5,315    $ 4,811       $ 50,695


															Three Months Ended June 30, 2015
															Construction/ Land Development			Other Commercial Real Estate			Residential Real Estate			Commercial & Industrial			Consumer & Other			Unallocated			Total
															(In thousands)
Allowance for loan losses:
Beginning balance															$	8,722		$	17,505		$	11,284		$	6,124		$	5,310		$	3,786		$	52,731
Loans charged off																(394	)		604			(1,087	)		(641	)		(1,821	)		—			(3,339	)
Recoveries of loans previously charged off																8			700			92			205			179			—			1,184

Net loans recovered (charged off)																(386	)		1,304			(995	)		(436	)		(1,642	)		—			(2,155	)
Provision for loan losses																1,067			1,173			2,645			1,846			1,343			(2,773	)		5,301

Balance, June 30															$	9,403		$	19,982		$	12,934		$	7,534		$	5,011		$	1,013		$	55,877


															Six Months Ended June 30, 2015
															Construction/ Land Development			Other Commercial Real Estate			Residential Real Estate			Commercial & Industrial			Consumer & Other			Unallocated			Total
															(In thousands)
Allowance for loan losses:
Beginning balance															$	8,116		$	17,227		$	13,446		$	5,950		$	5,798		$	1,934		$	52,471
Loans charged off																(477	)		(198	)		(1,951	)		(1,470	)		(2,393	)		—			(6,489	)
Recoveries of loans previously charged off																66			701			249			236			473			—			1,725

Net loans recovered (charged off)																(411	)		503			(1,702	)		(1,234	)		(1,920	)		—			(4,764	)
Provision for loan losses																1,698			2,252			1,190			2,818			1,133			(921	)		8,170

Balance, June 30															$	9,403		$	19,982		$	12,934		$	7,534		$	5,011		$	1,013		$	55,877


	As of September 30, 2014														As of June 30, 2015
	Construction/ Land Development		Other Commercial Real Estate		Residential Real Estate		Commercial & Industrial		Consumer & Other		Unallocated		Total		Construction/ Land Development			Other Commercial Real Estate			Residential Real Estate			Commercial & Industrial			Consumer & Other			Unallocated			Total
	(In thousands)														(In thousands)
Allowance for loan losses:
Period end amount allocated to:
Loans individually evaluated for impairment	$	2,076	$	7,487	$	3,419	$	9	$	—	$	—	$	12,991	$	1,255		$	2,083		$	1,271		$	877		$	—		$	—		$	5,486
Loans collectively evaluated for impairment		4,394		8,435		8,842		2,981		5,315		4,811		34,778		8,148			17,899			11,663			6,657			5,011			1,013			50,391

Loans evaluated for impairment balance, September 30		6,470		15,922		12,261		2,990		5,315		4,811		47,769
Loans evaluated for impairment balance, June 30																9,403			19,982			12,934			7,534			5,011			1,013			55,877


Purchased credit impaired loans acquired		60		2,377		128		361		—		—		2,926		—			—			—			—			—			—			—

Balance, September 30	$	6,530	$	18,299	$	12,389	$	3,351	$	5,315	$	4,811	$	50,695
Balance, June 30															$	9,403		$	19,982		$	12,934		$	7,534		$	5,011		$	1,013		$	55,877


Loans receivable:
Period end amount allocated to:
Loans individually evaluated for impairment	$	24,540	$	54,385	$	22,935	$	4,084	$	300	$	—	$	106,244	$	18,714		$	59,314		$	18,240		$	6,415		$	6,572		$	—		$	109,255
Loans collectively evaluated for impairment		609,691		1,823,217		1,098,476		528,217		187,861		—		4,247,462		763,551			2,398,835			1,247,442			639,858			157,195			—			5,206,881

Loans evaluated for impairment balance, September 30		634,231		1,877,602		1,121,411		532,301		188,161		—		4,353,706
Loans evaluated for impairment balance, June 30																782,265			2,458,149			1,265,682			646,273			163,767			—			5,316,136


Purchased credit impaired loans acquired		25,876		119,468		65,862		15,405		2,698		—		229,309		14,324			101,172			53,863			12,228			1,305			—			182,892

Balance, September 30	$	660,107	$	1,997,070	$	1,187,273	$	547,706	$	190,859	$	—	$	4,583,015
Balance, June 30															$	796,589		$	2,559,321		$	1,319,545		$	658,501		$	165,072		$	—		$	5,499,028

The following tables present the balances in the allowance for loan losses for the non-covered loan portfolio for the ~~nine-month~~six-month period ended ~~September~~June 30, ~~2013~~2014 and the year ended December 31, ~~2013,~~2014, and the allowance for loan losses and recorded investment in loans not covered by loss share based on portfolio segment by impairment method as of December 31, ~~2013.~~2014. Allocation of a portion of the allowance to one type of loans does not preclude its availability to absorb losses in other categories.


															Year Ended December 31, 2014
															Construction/ Land Development			Other Commercial Real Estate			Residential Real Estate			Commercial & Industrial			Consumer & Other			Unallocated			Total
															(In thousands)
Allowance for loan losses:
Beginning balance															$	6,282		$	15,100		$	8,889		$	1,933		$	2,563		$	4,255		$	39,022
Loans charged off																(167	)		(668	)		(1,483	)		(1,184	)		(1,448	)		—			(4,950	)
Recoveries of loans previously charged off																45			221			53			65			739			—			1,123

Net loans recovered (charged off)																(122	)		(447	)		(1,430	)		(1,119	)		(709	)		—			(3,827	)
Provision for loan losses																497			4,917			2,557			2,900			2,010			172			13,053

Balance, June 30																6,657			19,570			10,016			3,714			3,864			4,427			48,248
Loans charged off																(806	)		(1,654	)		(1,566	)		(982	)		(1,347	)		—			(6,355	)
Recoveries of loans previously charged off																297			21			896			241			416			—			1,871

Net loans recovered (charged off)																(509	)		(1,633	)		(670	)		(741	)		(931	)		—			(4,484	)
Provision for loan losses																1,968			(710	)		4,100			2,977			2,865			(2,493	)		8,707

Balance, December 31															$	8,116		$	17,227		$	13,446		$	5,950		$	5,798		$	1,934		$	52,471


	As of December 31, 2013														As of December 31, 2014
	Construction/ Land Development		Other Commercial Real Estate		Residential Real Estate		Commercial & Industrial		Consumer & Other		Unallocated		Total		Construction/ Land Development			Other Commercial Real Estate			Residential Real Estate			Commercial & Industrial			Consumer & Other			Unallocated			Total
	(In thousands)														(In thousands)
Allowance for loan losses:
Period end amount allocated to:
Loans individually evaluated for impairment	$	3,826	$	8,359	$	2,347	$	5	$	—	$	—	$	14,537	$	1,477		$	3,080		$	2,183		$	6		$	—		$	—		$	6,746
Loans collectively evaluated for impairment		2,456		6,741		6,542		1,928		2,563		4,255		24,485		6,624			12,447			10,827			5,880			5,798			1,934			43,510

Loans evaluated for impairment balance, December 31		6,282		15,100		8,889		1,933		2,563		4,255		39,022		8,101			15,527			13,010			5,886			5,798			1,934			50,256


Purchased credit impaired loans acquired		—		—		—		—		—		—		—		15			1,700			436			64			—			—			2,215

Balance, December 31	$	6,282	$	15,100	$	8,889	$	1,933	$	2,563	$	4,255	$	39,022	$	8,116		$	17,227		$	13,446		$	5,950		$	5,798		$	1,934		$	52,471


Loans receivable:
Period end amount allocated to:
Loans individually evaluated for impairment	$	32,560	$	76,559	$	20,112	$	5,563	$	223	$	—	$	135,017	$	19,037		$	48,065		$	21,734		$	4,084		$	484		$	—		$	93,404
Loans collectively evaluated for impairment		500,279		1,592,343		1,027,093		484,036		164,224		—		3,767,975		659,465			1,900,472			1,131,021			650,163			169,815			—			4,510,936

Loans evaluated for impairment balance, December 31		532,839		1,668,902		1,047,205		489,599		164,447		—		3,902,992		678,502			1,948,537			1,152,755			654,247			170,299			—			4,604,340


Purchased credit impaired loans acquired		29,828		152,384		79,359		21,822		8,052		—		291,445		21,637			111,564			61,457			15,877			2,439			—			212,974

Balance, December 31	$	562,667	$	1,821,286	$	1,126,564	$	511,421	$	172,499	$	—	$	4,194,437	$	700,139		$	2,060,101		$	1,214,212		$	670,124		$	172,738		$	—		$	4,817,314

The following is an aging analysis for the non-covered loan portfolio as of ~~September~~June 30, ~~2014~~2015 and December 31, ~~2013:~~2014:


	December 31, 2013															June 30, 2015
	Loans Past Due 30-59 Days			Loans Past Due 60-89 Days		Loans Past Due 90 Days or More		Total Past Due		Current Loans		Total Loans Receivable		Accruing Loans Past Due 90 Days or More		Loans Past Due 30-59 Days		Loans Past Due 60-89 Days		Loans Past Due 90 Days or More		Total Past Due		Current Loans		Total Loans Receivable		Accruing Loans Past Due 90 Days or More
	(In thousands)															(In thousands)
Real estate:
Commercial real estate loans
Non-farm/non-residential	$	4,849		$	2,275	$	13,007	$	20,131	$	1,719,537	$	1,739,668	$	7,914	$	5,193	$	1,062	$	13,150	$	19,405	$	2,458,283	$	2,477,688	$	2,928
Construction/land development		2,206			352		5,959		8,517		554,150		562,667		4,879		1,969		66		3,155		5,190		791,399		796,589		1,392
Agricultural		1,040			1,082		89		2,211		79,407		81,618		—		314		—		31		345		81,288		81,633		31
Residential real estate loans
Residential 1-4 family		7,936			2,676		13,775		24,387		888,945		913,332		6,492		4,036		2,575		18,450		25,061		972,891		997,952		4,794
Multifamily residential		—			1,437		2		1,439		211,793		213,232		1		—		—		1,331		1,331		320,262		321,593		1

Total real estate		16,031			7,822		32,832		56,685		3,453,832		3,510,517		19,286		11,512		3,703		36,117		51,332		4,624,123		4,675,455		9,146
Consumer		717			226		224		1,167		68,403		69,570		100		342		93		621		1,056		47,264		48,320		92
Commercial and industrial		4,363			405		5,218		9,986		501,435		511,421		3,755		2,061		1,262		2,760		6,083		652,418		658,501		1,609
Agricultural and other		778			110		—		888		102,041		102,929		—		528		285		382		1,195		115,557		116,752		—
			��
Total	$	21,889		$	8,563	$	38,274	$	68,726	$	4,125,711	$	4,194,437	$	23,141	$	14,443	$	5,343	$	39,880	$	59,666	$	5,439,362	$	5,499,028	$	10,847


																December 31, 2014
																Loans Past Due 30-59 Days		Loans Past Due 60-89 Days		Loans Past Due 90 Days or More		Total Past Due		Current Loans		Total Loans Receivable		Accruing Loans Past Due 90 Days or More
																(In thousands)
Real estate:
Commercial real estate loans
Non-farm/non-residential																$	5,942	$	1,311	$	14,781	$	22,034	$	1,965,856	$	1,987,890	$	5,880
Construction/land development																	2,696		847		1,660		5,203		694,936		700,139		734
Agricultural																	307		—		34		341		71,870		72,211		34
Residential real estate loans
Residential 1-4 family																	4,680		1,494		16,077		22,251		941,739		963,990		4,128
Multifamily residential																	—		—		2,035		2,035		248,187		250,222		691

Total real estate																	13,625		3,652		34,587		51,864		3,922,588		3,974,452		11,467
Consumer																	368		149		858		1,375		55,345		56,720		579
Commercial and industrial																	1,669		549		3,933		6,151		663,973		670,124		2,825
Agricultural and other																	463		16		184		663		115,355		116,018		—

Total																$	16,125	$	4,366	$	39,562	$	60,053	$	4,757,261	$	4,817,314	$	14,871

Non-accruing loans not covered by loss share at ~~September~~June 30, ~~2014~~2015 and December 31, ~~2013~~2014 were ~~$22.4~~$29.0 million and ~~$15.1~~$24.7 million, respectively.

The following is a summary of the non-covered impaired loans as of ~~September~~June 30, ~~2014~~2015 and December 31, ~~2013:~~2014:


	September 30, 2014															June 30, 2015
	Unpaid Contractual Principal Balance			Total Recorded Investment		Allocation of Allowance for Loan Losses		Three Months Ended				Nine Months Ended											Three Months Ended				Six Months Ended
			Average Recorded Investment			Allocation of Allowance for Loan Losses		Interest Recognized		Average Recorded Investment		Interest Recognized		Unpaid Contractual Principal Balance		Total Recorded Investment			Allocation of Allowance for Loan Losses		Average Recorded Investment		Interest Recognized		Average Recorded Investment		Interest Recognized
	Unpaid Contractual Principal Balance		(In thousands)															(In thousands)
Loans without a specific valuation allowance
Real estate:
Commercial real estate loans				Total Recorded Investment
Non-farm/non-residential	$	—		$	—	$	—	$	—	$	—	$	845	$	14	$	—		$	—	$	—	$	—	$	—	$	—	$	—
Construction/land development		—			—		—		—		—		—		—		—			—		—		—		—		—		—
Agricultural		—			—		—		—		—		—		—		—			—		—		—		—		—		—
Residential real estate loans
Residential 1-4 family		6			6		—		6		—		32		2		25			25		—		13		—		8		1
Multifamily residential		—			—		—		—		—		—		—		—			—		—		—		—		—		—

Total real estate		6			6		—		6		—		877		16		25			25		—		13		—		8		1
Consumer		—			—		—		—		—		—		—		—			—		—		—		—		—		—
Commercial and industrial		—			—		—		—		—		—		—		—			—		—		—		—		—		—
Agricultural and other		—			—		—		—		—		—		—		—			—		—		—		—		—		—

Total loans without a specific valuation allowance		6			6		—		6		—		877		16		25			25		—		13		—		8		1
Loans with a specific valuation allowance
Real estate:
Commercial real estate loans
Non-farm/non-residential		45,736			42,915		7,487		39,202		363		44,028		1,156		44,185			42,276		2,083		42,568		283		42,269		559
Construction/land development		17,030			15,335		2,076		21,758		148		21,909		563		14,244			13,239		1,255		16,994		65		17,355		170
Agricultural		52			33		—		50		—		67		—		53			30		—		70		—		57		—
Residential real estate loans
Residential 1-4 family		18,409			16,197		2,236		16,797		97		16,862		350		21,108			18,580		71		16,604		149		16,420		202
Multifamily residential		4,497			4,216		1,183		4,270		47		3,965		108		3,663			3,663		1,200		3,637		4		3,867		26

Total real estate		85,724			78,696		12,982		82,077		655		86,831		2,177		83,253			77,788		4,609		79,873		501		79,968		957
Consumer		335			300		—		336		1		295		5		636			619		—		747		2		784		6
Commercial and industrial		5,758			4,084		9		4,764		32		5,262		116		6,547			5,248		877		4,612		15		4,490		48
Agricultural and other		184			184		—		192		—		96		—		382			382		—		280		4		249		4

Total loans with a specific valuation allowance		92,001			83,264		12,991		87,369		688		92,484		2,298		90,818			84,037		5,486		85,512		522		85,491		1,015
Total impaired loans
Real estate:
Commercial real estate loans
Non-farm/non-residential		45,736			42,915		7,487		39,202		363		44,873		1,170		44,185			42,276		2,083		42,568		283		42,269		559
Construction/land development		17,030			15,335		2,076		21,758		148		21,909		563		14,244			13,239		1,255		16,994		65		17,355		170
Agricultural		52			33		—		50		—		67		—		53			30		—		70		—		57		—
Residential real estate loans
Residential 1-4 family		18,415			16,203		2,236		16,803		97		16,894		352		21,133			18,605		71		16,617		149		16,428		203
Multifamily residential		4,497			4,216		1,183		4,270		47		3,965		108		3,663			3,663		1,200		3,637		4		3,867		26

Total real estate		85,730			78,702		12,982		82,083		655		87,708		2,193		83,278			77,813		4,609		79,886		501		79,976		958
Consumer		335			300		—		336		1		295		5		636			619		—		747		2		784		6
Commercial and industrial		5,758			4,084		9		4,764		32		5,262		116		6,547			5,248		877		4,612		15		4,490		48
Agricultural and other		184			184		—		192		—		96		—		382			382		—		280		4		249		4

Total impaired loans	$	92,007		$	83,270	$	12,991	$	87,375	$	688	$	93,361	$	2,314	$	90,843		$	84,062	$	5,486	$	85,525	$	522	$	85,499	$	1,016

Note: Purchased non-covered loans acquired with deteriorated credit quality are accounted for on a pooled basis under ASC 310-30. All of these pools are currently considered to be performing resulting in none of the purchased non-covered loans acquired with deteriorated credit quality being classified as non-covered impaired loans as of ~~September~~June 30, ~~2014.~~2015.


	December 31, 2013										December 31, 2014
							Year Ended										Year Ended
	Unpaid Contractual Principal Balance		Total Recorded Investment		Allocation of Allowance for Loan Losses		Average Recorded Investment		Interest Recognized		Unpaid Contractual Principal Balance		Total Recorded Investment		Allocation of Allowance for Loan Losses		Average Recorded Investment		Interest Recognized
	(In thousands)										(In thousands)
Loans without a specific valuation allowance
Real estate:
Commercial real estate loans
Non-farm/non-residential	$	1,449	$	—	$	—	$	3,958	$	177	$	—	$	—	$	—	$	676	$	14
Construction/land development		—		—		—		106		8		—		—		—		—		—
Agricultural		—		—		—		—		—		—		—		—		—		—
Residential real estate loans
Residential 1-4 family		6		6		—		1,016		34		—		—		—		25		2
Multifamily residential		—		—		—		534		1		—		—		—		—		—

Total real estate		1,455		6		—		5,614		220		—		—		—		701		16
Consumer		—		—		—		—		—		—		—		—		—		—
Commercial and industrial		—		—		—		132		6		—		—		—		—		—
Agricultural and other		—		—		—		—		—		—		—		—		—		—

Total loans without a specific valuation allowance		1,455		6		—		5,746		226		—		—		—		701		16
Loans with a specific valuation allowance
Real estate:
Commercial real estate loans
Non-farm/non-residential		56,465		54,707		8,359		55,361		2,205		44,242		41,670		3,080		43,556		1,379
Construction/land development		29,461		27,231		3,826		23,121		878		18,369		18,075		1,477		21,142		656
Agricultural		89		89		—		83		—		53		33		—		60		1
Residential real estate loans
Residential 1-4 family		19,188		16,599		1,265		13,248		373		18,052		16,051		1,065		16,701		407
Multifamily residential		2,065		2,065		1,082		3,683		100		4,614		4,327		1,118		4,037		120

Total real estate		107,268		100,691		14,532		95,496		3,556		85,330		80,156		6,740		85,496		2,563
Consumer		254		223		—		385		5		890		857		—		407		14
Commercial and industrial		7,059		5,563		5		2,503		67		5,916		4,246		6		5,059		151
Agricultural and other		—		—		—		—		—		185		185		—		114		—

Total loans with a specific valuation allowance		114,581		106,477		14,537		98,384		3,628		92,321		85,444		6,746		91,076		2,728
Total impaired loans
Real estate:
Commercial real estate loans
Non-farm/non-residential		57,914		54,707		8,359		59,319		2,382		44,242		41,670		3,080		44,232		1,393
Construction/land development		29,461		27,231		3,826		23,227		886		18,369		18,075		1,477		21,142		656
Agricultural		89		89		—		83		—		53		33		—		60		1
Residential real estate loans
Residential 1-4 family		19,194		16,605		1,265		14,264		407		18,052		16,051		1,065		16,726		409
Multifamily residential		2,065		2,065		1,082		4,217		101		4,614		4,327		1,118		4,037		120

Total real estate		108,723		100,697		14,532		101,110		3,776		85,330		80,156		6,740		86,197		2,579
Consumer		254		223		—		385		5		890		857		—		407		14
Commercial and industrial		7,059		5,563		5		2,635		73		5,916		4,246		6		5,059		151
Agricultural and other		—		—		—		—		—		185		185		—		114		—

Total impaired loans	$	116,036	$	106,483	$	14,537	$	104,130	$	3,854	$	92,321	$	85,444	$	6,746	$	91,777	$	2,744

Interest recognized on non-covered impaired loans during the three months ended ~~September~~June 30, ~~2014~~2015 and ~~2013~~2014 was approximately ~~$688,000~~$522,000 and ~~$896,000,~~$825,000, respectively. Interest recognized on non-covered impaired loans during the ~~nine~~six months ended ~~September~~June 30, ~~2014~~2015 and ~~2013~~2014 was approximately ~~$2.3~~$1.0 million and ~~$2.8~~$1.6 million, respectively. The amount of interest recognized on non-covered impaired loans on the cash basis is not materially different than the accrual basis.

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 Florida, Arkansas and Alabama.

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 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.

The Company’s classified loans include loans in risk ratings 6, 7 and 8. The following is a presentation of classified non-covered loans (excluding loans accounted for under ASC Topic 310-30) by class as of ~~September~~June 30, ~~2014~~2015 and December 31, ~~2013:~~2014:


	September 30, 2014								June 30, 2015
	Risk Rated 6		Risk Rated 7		Risk Rated 8		Classified Total		Risk Rated 6		Risk Rated 7		Risk Rated 8		Classified Total
	(In thousands)								(In thousands)
Real estate:
Commercial real estate loans
Non-farm/non-residential	$	39,804	$	26	$	—	$	39,830	$	36,189	$	—	$	—	$	36,189
Construction/land development		18,482		3		—		18,485		13,158		—		—		13,158
Agricultural		—		—		—		—		—		—		—		—
Residential real estate loans
Residential 1-4 family		15,888		62		—		15,950		16,183		33		—		16,216
Multifamily residential		3,298		—		—		3,298		3,698		—		—		3,698

Total real estate		77,472		91		—		77,563		69,228		33		—		69,261
Consumer		346		18		—		364		663		14		—		677
Commercial and industrial		2,565		5		—		2,570		3,266		24		—		3,290
Agricultural and other		209		—		—		209		378		—		—		378

Total	$	80,592	$	114	$	—	$	80,706	$	73,535	$	71	$	—	$	73,606


	December 31, 2013								December 31, 2014
	Risk Rated 6		Risk Rated 7		Risk Rated 8		Classified Total		Risk Rated 6		Risk Rated 7		Risk Rated 8		Classified Total
	(In thousands)								(In thousands)
Real estate:
Commercial real estate loans
Non-farm/non-residential	$	55,874	$	1	$	—	$	55,875	$	34,698	$	24	$	—	$	34,722
Construction/land development		19,140		—		—		19,140		16,112		—		—		16,112
Agricultural		89		—		—		89		—		—		—		—
Residential real estate loans
Residential 1-4 family		12,747		196		—		12,943		15,622		343		—		15,965
Multifamily residential		2,064		—		—		2,064		3,382		—		—		3,382

Total real estate		89,914		197		—		90,111		69,814		367		—		70,181
Consumer		454		—		—		454		903		19		—		922
Commercial and industrial		2,620		2		—		2,622		2,244		5		—		2,249
Agricultural and other		32		—		—		32		178		—		—		178
	��
Total	$	93,020	$	199	$	—	$	93,219	$	73,139	$	391	$	—	$	73,530

Loans may be classified, but not considered impaired, due to one of the following reasons: (1) The Company has established minimum dollar amount thresholds for loan impairment testing. All loans over ~~$1.0~~$2.0 million that are rated 5 – 8 are individually assessed for impairment on a quarterly basis. Loans rated 5 – 8 that fall under the threshold amount are not individually tested for impairment and therefore are not included in impaired loans; (2) of the loans that are above the threshold amount and tested for impairment, after testing, some are considered to not be impaired and are not included in impaired loans.

The following is a presentation of non-covered loans by class and risk rating as of ~~September~~June 30, ~~2014~~2015 and December 31, ~~2013:~~2014:


	September 30, 2014															June 30, 2015
	Risk Rated 1		Risk Rated 2		Risk Rated 3		Risk Rated 4		Risk Rated 5		Classified Total		Total			Risk Rated 1		Risk Rated 2		Risk Rated 3		Risk Rated 4		Risk Rated 5		Classified Total		Total
	(In thousands)															(In thousands)
Real estate:
Commercial real estate loans
Non-farm/non-residential	$	1,570	$	2,227	$	1,230,771	$	499,456	$	26,392	$	39,830	$	1,800,246		$	5,217	$	8,264	$	1,728,958	$	572,435	$	26,143	$	36,189	$	2,377,206
Construction/land development		15		119		220,666		383,392		11,554		18,485		634,231			21		401		289,703		475,084		3,898		13,158		782,265
Agricultural		—		—		54,128		22,349		879		—		77,356			—		595		45,633		34,412		303		—		80,943
Residential real estate loans
Residential 1-4 family		272		71		703,844		144,436		14,007		15,950		878,580			900		3,086		747,363		170,510		13,772		16,216		951,847
Multifamily residential		—		—		192,310		44,883		2,340		3,298		242,831			—		415		259,615		47,747		2,360		3,698		313,835

Total real estate		1,857		2,417		2,401,719		1,094,516		55,172		77,563		3,633,244			6,138		12,761		3,071,272		1,300,188		46,476		69,261		4,506,096
Consumer		15,284		20		30,637		9,535		684		364		56,524			13,993		273		22,336		10,099		133		677		47,511
Commercial and industrial		15,977		6,519		331,797		172,281		3,157		2,570		532,301			11,483		11,711		381,758		233,650		4,381		3,290		646,273
Agricultural and other		686		935		85,033		44,152		622		209		131,637			665		867		58,436		49,977		5,933		378		116,256

Total risk rated loans	$	33,804	$	9,891	$	2,849,186	$	1,320,484	$	59,635	$	80,706		4,353,706		$	32,279	$	25,612	$	3,533,802	$	1,593,914	$	56,923	$	73,606		5,316,136


Purchased credit impaired loans acquired														229,309	Purchased credit impaired loans acquired														182,892


Total non-covered loans													$	4,583,015														$	5,499,028


	December 31, 2013															December 31, 2014
	Risk Rated 1		Risk Rated 2		Risk Rated 3		Risk Rated 4		Risk Rated 5		Classified Total		Total			Risk Rated 1		Risk Rated 2		Risk Rated 3		Risk Rated 4		Risk Rated 5		Classified Total		Total
	(In thousands)															(In thousands)
Real estate:
Commercial real estate loans
Non-farm/non-residential	$	3	$	3,135	$	1,039,110	$	462,957	$	28,380	$	55,875	$	1,589,460		$	3,674	$	15,914	$	1,300,835	$	501,931	$	20,115	$	34,722	$	1,877,191
Construction/land development		54		94		198,228		303,590		11,732		19,140		532,838			15		355		241,659		415,380		4,981		16,112		678,502
Agricultural		55		—		53,633		24,901		764		89		79,442			—		610		35,539		34,469		728		—		71,346
Residential real estate loans
Residential 1-4 family		393		146		654,739		155,744		17,241		12,943		841,206			494		3,505		714,278		165,464		11,730		15,965		911,436
Multifamily residential		—		—		150,023		52,233		1,679		2,064		205,999			—		400		192,687		42,578		2,272		3,382		241,319

Total real estate		505		3,375		2,095,733		999,425		59,796		90,111		3,248,945			4,183		20,784		2,484,998		1,159,822		39,826		70,181		3,779,794
Consumer		15,566		32		42,647		7,244		848		454		66,791			14,560		215		29,238		10,543		175		922		55,653
Commercial and industrial		25,809		5,845		300,108		151,986		3,229		2,622		489,599			13,081		16,957		430,026		189,318		2,616		2,249		654,247
Agricultural and other		675		7,138		74,676		14,462		674		32		97,657			573		790		87,347		25,237		521		178		114,646

Total risk rated loans	$	42,555	$	16,390	$	2,513,164	$	1,173,117	$	64,547	$	93,219	$	3,902,992		$	32,397	$	38,746	$	3,031,609	$	1,384,920	$	43,138	$	73,530		4,604,340


Purchased credit impaired loans acquired														291,445	Purchased credit impaired loans acquired														212,974


Total non-covered loans													$	4,194,437														$	4,817,314

The following is a presentation of non-covered TDR’s by class as of ~~September~~June 30, ~~2014~~2015 and December 31, ~~2013:~~2014:


	September 30, 2014												June 30, 2015
	Number of Loans		Pre- Modification Outstanding Balance		Rate Modification		Term Modification		Rate & Term Modification		Post- Modification Outstanding Balance		Number of Loans		Pre- Modification Outstanding Balance		Rate Modification		Term Modification		Rate & Term Modification		Post- Modification Outstanding Balance
	(Dollars in thousands)												(Dollars in thousands)
Real estate:
Commercial real estate loans
Non-farm/non-residential		7	$	17,340	$	2,616	$	8,662	$	5,672	$	16,950		13	$	22,419	$	7,334	$	8,852	$	5,602	$	21,788
Construction/land development		3		8,324		5,691		1,794		—		7,485		3		3,481		1,460		1,636		—		3,096
Residential real estate loans
Residential 1-4 family		5		1,051		319		246		162		727		3		2,055		—		1,824		165		1,989
Multifamily residential		2		3,182		2,018		—		294		2,312		2		3,183		2,040		—		291		2,331

Total real estate		17		29,897		10,644		10,702		6,128		27,474		21		31,138		10,834		12,312		6,058		29,204
Commercial and industrial		1		380		—		—		322		322

Total		18	$	30,277	$	10,644	$	10,702	$	6,450	$	27,796		21	$	31,138	$	10,834	$	12,312	$	6,058	$	29,204


	December 31, 2013												December 31, 2014
	Number of Loans		Pre- Modification Outstanding Balance		Rate Modification		Term Modification		Rate & Term Modification		Post- Modification Outstanding Balance		Number of Loans		Pre- Modification Outstanding Balance		Rate Modification		Term Modification		Rate & Term Modification		Post- Modification Outstanding Balance
	(Dollars in thousands)												(Dollars in thousands)
Real estate:
Commercial real estate loans
Non-farm/non-residential		14	$	36,454	$	13,029	$	8,384	$	10,554	$	31,967		7	$	17,340	$	2,596	$	8,647	$	5,644	$	16,887
Construction/land development		3		8,324		5,811		1,794		—		7,605		2		8,213		5,671		1,668		—		7,339
Residential real estate loans
Residential 1-4 family		8		1,646		589		727		170		1,486		1		61		—		58		—		58
Multifamily residential		1		2,887		2,063		—		—		2,063		2		3,183		2,002		—		291		2,293

Total real estate		26		49,311		21,492		10,905		10,724		43,121		12		28,797		10,269		10,373		5,935		26,577
Commercial and industrial		1		380		—		—		345		345		1		380		—		—		315		315

Total		27	$	49,691	$	21,492	$	10,905	$	11,069	$	43,466		13	$	29,177	$	10,269	$	10,373	$	6,250	$	26,892

The following is a presentation of non-covered TDR’s on non-accrual status as of ~~September~~June 30, ~~2014~~2015 and December 31, ~~2013~~2014 because they are not in compliance with the modified terms:


	September 30, 2014				December 31, 2013				June 30, 2015				December 31, 2014
	Number of Loans		Recorded Balance		Number of Loans		Recorded Balance		Number of Loans		Recorded Balance		Number of Loans		Recorded Balance
	(Dollars in thousands)								(Dollars in thousands)
Real estate:
Commercial real estate loans
Construction/land development		1	$	107		—	$	—
Residential real estate loans
Residential 1-4 family		3		480		4		854		2	$	1,824		—	$	—

Total real estate		4		587		4		854		2		1,824		—		—

Total		4	$	587		4	$	854		2	$	1,824		—	$	—

During the ~~2014~~2015 quarterly impairment testing on the estimated cash flows of the covered loans, the Company established that certain pools evaluated had experienced material projected credit ~~improvement. The~~deterioration. As a result, the Company ~~has not~~ recorded ~~any~~a $998,000 net provision for loan losses to the allowance for loan losses related to the purchased credit impaired loans during the ~~three or nine-month periods~~six months ended ~~September~~June 30, ~~2014~~2015 on a net basis. The Company ~~however, did record~~also recorded a ~~$280,000 of~~negative provision for loan losses forecasted outside of loss share of $294,000 and a ~~negative~~ provision for loan loss of ~~$1.4~~$2.5 million before benefit attributable to FDIC loss share agreements. Since these loans are covered by loss share with the FDIC, the Company was able to ~~decrease~~increase the related indemnification asset by ~~$1.1~~$1.2 million.

The following tables present the balance in the allowance for loan losses for the covered loan portfolio for the three and ~~nine-month~~six-month periods ended ~~September~~June 30, ~~2014,~~2015, and the allowance for loan losses and recorded investment in loans covered by FDIC loss share based on portfolio segment by impairment method as of ~~September~~June 30, ~~2014.~~2015.


																Three Months Ended June 30, 2015
																Construction/ Land Development			Other Commercial Real Estate			Residential Real Estate			Commercial & Industrial			Consumer & Other			Unallocated		Total
																(In thousands)
Allowance for loan losses:
Beginning balance																$	675		$	887		$	1,753		$	89		$	391		$	—	$	3,795
Loans charged off																	—			—			—			—			—			—		—
Recoveries of loans previously charged off																	63			48			75			—			—			—		186

Net loans recovered (charged off)																	63			48			75			—			—			—		186
Provision for loan losses forecasted outside of loss share																	(1	)		(16	)		(1	)		19			—			—		1
Provision for loan losses before benefit attributable to FDIC loss share agreements																	216			348			55			150			(370	)		—		399
Change attributable to FDIC loss share agreements																	(194	)		(311	)		(46	)		(140	)		371			—		(320	)

Net provision for loan losses																	21			21			8			29			1			—		80
Increase in FDIC indemnification asset																	194			311			46			140			(371	)		—		320

Balance, June 30																$	953		$	1,267		$	1,882		$	258		$	21		$	—	$	4,381


																Six Months Ended June 30, 2015
																Construction/ Land Development			Other Commercial Real Estate			Residential Real Estate			Commercial & Industrial			Consumer & Other			Unallocated		Total
																(In thousands)
Allowance for loan losses:
Beginning balance																$	432		$	930		$	1,161		$	16		$	1		$	—	$	2,540
Loans charged off																	—			(691	)		(81	)		—			—			—		(772	)
Recoveries of loans previously charged off																	170			110			171			—			—			—		451

Net loans recovered (charged off)																	170			(581	)		90			—			—			—		(321	)
Provision for loan losses forecasted outside of loss share																	(230	)		(318	)		232			22			—			—		(294	)
Provision for loan losses before benefit attributable to FDIC loss share agreements																	581			1,236			399			220			20			—		2,456
Change attributable to FDIC loss share agreements																	(257	)		(531	)		(163	)		(197	)		(16	)		—		(1,164	)

Net provision for loan losses																	94			387			468			45			4			—		998
Increase in FDIC indemnification asset																	257			531			163			197			16			—		1,164

Balance, June 30																$	953		$	1,267		$	1,882		$	258		$	21		$	—	$	4,381

	As of September 30, 2014															As of June 30, 2015
	Construction/ Land Development		Other Commercial Real Estate		Residential Real Estate		Commercial & Industrial		Consumer & Other		Unallocated		Total			Construction/ Land Development			Other Commercial Real Estate			Residential Real Estate			Commercial & Industrial			Consumer & Other			Unallocated		Total
	(In thousands)															(In thousands)
Allowance for loan losses:
Period end amount allocated to:
Loans individually evaluated for impairment	$	—	$	—	$	—	$	—	$	—	$	—	$	—		$	—		$	—		$	—		$	—		$	—		$	—	$	—
Loans collectively evaluated for impairment		—		—		—		—		—		—		—			—			—			—			—			—			—		—

Loans evaluated for impairment balance, September 30		—		—		—		—		—		—		—	��
Loans evaluated for impairment balance, June 30																	—			—			—			—			—			—		—


Purchased credit impaired loans acquired		143		769		1,220		15		2		—		2,149			953			1,267			1,882			258			21			—		4,381

Balance, September 30	$	143	$	769	$	1,220	$	15	$	2	$	—	$	2,149
Balance, June 30																$	953		$	1,267		$	1,882		$	258		$	21		$	—	$	4,381


Loans receivable:
Period end amount allocated to:
Loans individually evaluated for impairment	$	—	$	—	$	—	$	—	$	—	$	—	$	—		$	—		$	—		$	—		$	—		$	—		$	—	$	—
Loans collectively evaluated for impairment		—		—		—		—		—		—		—			—			—			—			—			—			—		—

Loans evaluated for impairment balance, June 30		—		—		—		—		—		—		—			—			—			—			—			—			—		—


Purchased credit impaired loans acquired		42,713		100,557		98,351		8,295		1,054		—		250,970			24,003			55,625			73,396			6,118			749			—		159,891

Balance, September 30	$	42,713	$	100,557	$	98,351	$	8,295	$	1,054	$	—	$	250,970
Balance, June 30																$	24,003		$	55,625		$	73,396		$	6,118		$	749		$	—	$	159,891

During the 2013 quarterly impairment testing on the estimated cash flows of the covered loans, the Company established that six pools evaluated had experienced material projected credit deterioration. As a result, the Company recorded a $4.4 million provision for loan losses to the allowance for loan losses related to the purchased impaired loans during the year ended December 31, 2013. Since these loans are covered by loss share with the FDIC, the Company was able to increase the related indemnification asset by $3.5 million resulting in a net provision for loan losses of $991,000.

The following tables present the balance in the allowance for loan losses for the covered loan portfolio for the ~~nine-month~~six-month period ended ~~September~~June 30, ~~2013~~2014 and the year ended December 31, ~~2013,~~2014, and the allowance for loan losses and recorded investment in loans covered by FDIC loss share based on portfolio segment by impairment method as of December 31, ~~2013.~~2014.


	Year Ended December 31, 2013																			Year Ended December 31, 2014
	Construction/ Land Development			Other Commercial Real Estate			Residential Real Estate			Commercial & Industrial			Consumer & Other		Unallocated		Total			Construction/ Land Development			Other Commercial Real Estate			Residential Real Estate			Commercial & Industrial			Consumer & Other			Unallocated		Total
	(In thousands)																			(In thousands)
Allowance for loan losses:
Beginning balance	$	1,169		$	4,005		$	228		$	60		$	—	$	—	$	5,462		$	1,707		$	838		$	2,113		$	135		$	—		$	—	$	4,793
Loans charged off		(720	)		(3,426	)		(724	)		(157	)		—		—		(5,027	)		(97	)		(797	)		—			(157	)		—			—		(1,051	)
Recoveries of loans previously charged off		15			13			143			—			—		—		171			10			—			288			—			4			—		302

Net loans recovered (charged off)		(705	)		(3,413	)		(581	)		(157	)		—		—		(4,856	)		(87	)		(797	)		288			(157	)		4			—		(749	)
Provision for loan losses forecasted outside of loss share																					11			106			148			15			—			—		280
Provision for loan losses before benefit attributable to FDIC loss share agreements		(323	)		(30	)		717			136			—		—		500			(1,307	)		1,547			(1,658	)		22			(3	)		—		(1,399	)
Benefit attributable to FDIC loss share agreements		258			24			(573	)		(109	)		—		—		(400	)
Change attributable to FDIC loss share agreements																					1,296			(1,653	)		1,510			(37	)		3			—		1,119

Net provision for loan losses		(65	)		(6	)		144			27			—		—		100			—			—			—			—			—			—		—
Increase in FDIC indemnification asset		(258	)		(24	)		573			109			—		—		400			(1,296	)		1,653			(1,510	)		37			(3	)		—		(1,119	)

Balance, September 30		141			562			364			39			—		—		1,106
Balance, June 30																					324			1,694			891			15			1			—		2,925
Loans charged off		(185	)		—			(102	)		—			—		—		(287	)		(29	)		(1,257	)		(435	)		—			—			—		(1,721	)
Recoveries of loans previously charged off		—			—			29			—			—		—		29			122			37			273			—			—			—		432

Net loans recovered (charged off)		(185	)		—			(73	)		—			—		—		(258	)		93			(1,220	)		(162	)		—			—			—		(1,289	)
Provision for loan losses forecasted outside of loss share																					361			483			58			1			1			—		904
Provision for loan losses before benefit attributable to FDIC loss share agreements		1,751			276			1,822			96			—		—		3,945			(346	)		(27	)		374			—			(1	)		—		—
Benefit attributable to FDIC loss share agreements		(1,376	)		20			(1,592	)		(106	)		—		—		(3,054	)
Change attributable to FDIC loss share agreements																					346			28			(374	)		—			—			—		—

Net provision for loan losses		375			296			230			(10	)		—		—		891			361			484			58			1			—			—		904
Increase in FDIC indemnification asset		1,376			(20	)		1,592			106			—		—		3,054			(346	)		(28	)		374			—			—			—		—

Balance, December 31	$	1,707		$	838		$	2,113		$	135		$	—	$	—	$	4,793		$	432		$	930		$	1,161		$	16		$	1		$	—	$	2,540


	As of December 31, 2013																			As of December 31, 2014
	Construction/ Land Development			Other Commercial Real Estate			Residential Real Estate			Commercial & Industrial			Consumer & Other		Unallocated		Total			Construction/ Land Development			Other Commercial Real Estate			Residential Real Estate			Commercial & Industrial			Consumer & Other			Unallocated		Total
	(In thousands)																			(In thousands)
Allowance for loan losses:
Period end amount allocated to:
Loans individually evaluated for impairment	$	—		$	—		$	—		$	—		$	—	$	—	$	—		$	—		$	—		$	—		$	—		$	—		$	—	$	—
Loans collectively evaluated for impairment		—			—			—			—			—		—		—			—			—			—			—			—			—		—

Loans evaluated for impairment balance, December 31		—			—			—			—			—		—		—			—			—			—			—			—			—		—


Purchased credit impaired loans acquired		1,707			838			2,113			135			—		—		4,793			432			930			1,161			16			1			—		2,540

Balance, December 31	$	1,707		$	838		$	2,113		$	135		$	—	$	—	$	4,793		$	432		$	930		$	1,161		$	16		$	1		$	—	$	2,540


Loans receivable:
Period end amount allocated to:
Loans individually evaluated for impairment	$	—		$	—		$	—		$	—		$	—	$	—	$	—		$	—		$	—		$	—		$	—		$	—		$	—	$	—
Loans collectively evaluated for impairment		—			—			—			—			—		—		—			—			—			—			—			—			—		—

Loans evaluated for impairment balance, December 31		—			—			—			—			—		—		—			—			—			—			—			—			—		—


Purchased credit impaired loans acquired		48,388			118,396			108,781			5,852			1,099		—		282,516			39,946			94,922			95,926			8,651			743			—		240,188

Balance, December 31	$	48,388		$	118,396		$	108,781		$	5,852		$	1,099	$	—	$	282,516		$	39,946		$	94,922		$	95,926		$	8,651		$	743		$	—	$	240,188

Changes in the carrying amount of the accretable yield for purchased credit impaired loans acquired were as follows for the ~~nine-month~~six-month period ended ~~September~~June 30, ~~2014~~2015 for the Company’s covered and non-covered acquisitions:


	Accretable Yield			Carrying Amount of Loans			Accretable Yield			Carrying Amount of Loans
	(In thousands)						(In thousands)
Balance at beginning of period	$	119,981		$	573,961		$	114,707		$	453,162
Reforecasted future interest payments for loan pools		7,351			—			7,701			—
Accretion recorded to interest income		(48,077	)		48,077			(20,810	)		20,810
Adjustment to yield		39,580			—
Reclassification out of purchased credit impaired loans⁽¹⁾								(28,595	)		(56,272	)
Transfers to foreclosed assets held for sale		—			(11,518	)		—			(11,991	)
Payments received, net		—			(130,241	)		—			(62,926	)

Balance at end of period	$	118,835		$	480,279		$	73,003		$	342,783

The non-covered purchased credit impaired loans acquired during the 2015 Doral Florida acquisition were deemed immaterial and as a result were not included in the table above.

The loan pools were evaluated by the Company and are currently forecasted to have a slower run-off than originally expected. As a result, the Company has reforecast the total accretable yield expectations for those loan pools by ~~$7.4~~$7.7 million. This updated forecast does not change the expected ~~weighted average~~weighted-average yields on the loan pools.

During the third quarter 2014 impairment testing, there were non-loss sharing pools evaluated by the Company which were determined to have a material projected credit improvement. As a result of this improvement, the Company will recognize approximately $4.7 million as an adjustment to yield over the weighted average life of the loans ($1.1 million was recognized during the third quarter of 2014).

During the first nine months of 2014, there were FDIC loss-sharing pools evaluated by the Company which were determined to have a material projected credit improvement. As a result of this improvement, the Company will recognize approximately $34.9 million as an adjustment to yield over the weighted average life of the loans. Improvements in credit quality decrease the basis in the related indemnification assets. This positive event will reduce the indemnification asset by approximately $25.6 million and increase the FDIC true-up liability by $2.2 million. The $25.6 million will be amortized over the weighted average life of the loans or the life of the shared-loss agreements, whichever is shorter. The amortization will be shown as a reduction to FDIC indemnification non-interest income. The $2.2 million will be expensed over the remaining true-up measurement date as other non-interest expense. This will result in approximately $6.9 million of pre-tax net income being recognized going forward which may or may not be symmetrical depending on the weighted average life of the loans.

On January 1, 2015, Centennial Insurance Agency sold the insurance book of business of the former Town and Country Insurance to Stephens Insurance, LLC of Little Rock. This disposal was completed at the Company’s book value with no gain or loss. The net profit on this book of business was immaterial.

Changes in the carrying amount and accumulated amortization of the Company’s goodwill and core deposits and other intangibles at ~~September~~June 30, ~~2014~~2015 and December 31, ~~2013,~~2014, were as follows:

The carrying basis and accumulated amortization of core deposits and other intangibles at ~~September~~June 30, ~~2014~~2015 and December 31, ~~2013~~2014 were:


	September 30, 2014			December 31, 2013			June 30, 2015			December 31, 2014
	(In thousands)						(In thousands)
Gross carrying basis	$	45,697		$	43,524		$	47,901		$	46,781
Accumulated amortization		(24,693	)		(21,226	)		(28,085	)		(25,856	)

Net carrying amount	$	21,004		$	22,298		$	19,816		$	20,925

Core deposit and other intangible amortization expense was approximately ~~$1.2~~$1.1 million ~~and $802,000~~ for both the three-months ended ~~September~~June 30, ~~2014~~2015 and ~~2013, respectively.~~2014. Core deposit and other intangible amortization expense was approximately ~~$3.5~~$2.2 million and ~~$2.4~~$2.3 million for the ~~nine-months~~six-months ended ~~September~~June 30, ~~2014~~2015 and ~~2013,~~2014, respectively. Including all of the mergers completed as of ~~September~~June 30, ~~2014,~~2015, HBI’s estimated amortization expense of core deposits and other intangibles for each of the years ~~2014~~2015 through ~~2018~~2019 is approximately: ~~2014—$4.5~~2015 - $4.0 million; ~~2015—$3.8~~2016 - $2.8 million; ~~2016—$2.5~~2017 - $2.7 million; ~~2017—$2.4~~2018 - $2.6 million; ~~2018—$2.3~~2019 - $2.5 million.

The carrying amount of the Company’s goodwill was ~~$313.3~~$322.7 million and ~~$301.7~~$325.4 million at ~~September~~June 30, ~~2014~~2015 and December 31, ~~2013,~~2014, respectively. Goodwill is tested annually for impairment during the fourth quarter. 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.

Other assets consists primarily of FDIC claims receivable, equity securities without a readily determinable fair value and other miscellaneous assets. As of ~~September~~June 30, ~~2014~~2015 and December 31, ~~2013~~2014 other assets were ~~$86.4~~$103.9 million and ~~$81.2~~$93.7 million, respectively.

An indemnification asset was created when the Company acquired FDIC covered loans. The indemnification asset represents the carrying amount of the right to receive payments from the FDIC for losses incurred on specified assets acquired from failed insured depository institutions or otherwise purchased from the FDIC that are covered by loss sharing agreements with the FDIC. When the Company experiences a loss on the covered loans and subsequently requests reimbursement of the loss from the FDIC, the indemnification asset is reduced by the FDIC reimbursable amount. A corresponding claim receivable is consequently recorded in other assets until the cash is received from the FDIC. The FDIC claims receivable was ~~$12.8~~$9.0 million and ~~$19.1~~$14.0 million at ~~September~~June 30, ~~2014~~2015 and December 31, ~~2013,~~2014, respectively.

The Company has equity securities without readily determinable fair values. These equity securities are outside the scope of ASC Topic 320,Investments-Debt and Equity Securities. They include items such as stock holdings in Federal Home Loan Bank, Federal Reserve Bank, Bankers’ Bank and other miscellaneous holdings. The equity securities without a readily determinable fair value were ~~$63.9~~$79.9 million and ~~$52.6~~$66.7 million at ~~September~~June 30, ~~2014~~2015 and December 31, ~~2013,~~2014, respectively, and are accounted for at cost.

The aggregate amount of time deposits with a minimum denomination of $250,000 was $357.2 million and $272.5 million at June 30, 2015 and December 31, 2014, respectively. The aggregate amount of time deposits with a minimum denomination of $100,000 was ~~$696.8~~$776.7 million and ~~$877.4~~$705.4 million at ~~September~~June 30, ~~2014~~2015 and December 31, ~~2013,~~2014, respectively. Interest expense applicable to certificates in excess of $100,000 totaled ~~$1.1~~$1.3 million and ~~$766,000~~$1.1 million for the three months ended ~~September~~June 30, ~~2014~~2015 and ~~2013,~~2014, respectively. Interest expense applicable to certificates in excess of $100,000 totaled ~~$3.3~~$2.6 million and ~~$2.8~~$2.3 million for the ~~nine~~six months ended ~~September~~June 30, ~~2014~~2015 and ~~2013,~~2014, respectively. As of ~~September~~June 30, ~~2014~~2015 and December 31, ~~2013,~~2014, brokered deposits were ~~$45.2~~$82.0 million and ~~$100.4~~$33.6 million, respectively.

Deposits totaling approximately ~~$950.0~~$848.9 million and $1.02 billion at ~~September~~June 30, ~~2014~~2015 and December 31, ~~2013,~~2014, respectively, were public funds obtained primarily from state and political subdivisions in the United States.

At ~~September~~June 30, ~~2014~~2015 and December 31, ~~2013,~~2014, securities sold under agreements to repurchase totaled ~~$160.9~~$150.7 million and ~~$161.0~~$176.5 million, respectively. For the three-month periods ended ~~September~~June 30, ~~2014~~2015 and ~~2013,~~2014, securities sold under agreements to repurchase daily ~~weighted average~~weighted-average totaled ~~$150.2~~$168.3 million and ~~$73.9~~$136.4 million, respectively. For the ~~nine-month~~six-month periods ended ~~September~~June 30, ~~2014~~2015 and ~~2013,~~2014, securities sold under agreements to repurchase daily ~~weighted average~~weighted-average totaled ~~$145.3~~$173.9 million and ~~$72.1~~$142.9 million, respectively.

The Company’s Federal Home Loan Bank (“FHLB”) borrowed funds were ~~$713.6~~$866.9 million and ~~$350.7~~$698.0 million at ~~September~~June 30, ~~2014~~2015 and December 31, ~~2013,~~2014, respectively. At ~~September~~June 30, ~~2014, $520.0~~2015, $25.0 million and ~~$193.6~~$841.9 million of the outstanding balance were issued as short-term and long-term advances, respectively. At December 31, ~~2013, $130.3~~2014, $515.0 million and ~~$220.4~~$183.0 million of the outstanding balances were ~~issued as~~ short-term and long-term advances, respectively. The FHLB advances mature from the current year to 2025 with fixed interest rates ranging from ~~0.105%~~0.13% to ~~5.960%~~5.96% and are secured by loans and investments securities. Expected maturities will differ from contractual maturities because FHLB may have the right to call or HBI may have the right to prepay certain obligations.

Additionally, the Company had ~~$172.0 million and $191.0~~$144.0 million at ~~September~~both June 30, ~~2014~~2015 and December 31, ~~2013, respectively,~~2014 in letters of credit under a FHLB blanket borrowing line of credit, which are used to collateralize public deposits at ~~September~~June 30, ~~2014~~2015 and December 31, ~~2013,~~2014, respectively.

Subordinated debentures at ~~September~~June 30, ~~2014~~2015 and December 31, ~~2013~~2014 consisted of guaranteed payments on trust preferred securities with the following components:


	As of September 30, 2014		As of December 31, 2013		As of June 30, 2015		As of December 31, 2014
	(In thousands)				(In thousands)
Subordinated debentures, issued in 2006, due 2036, fixed rate of 6.75% during the first five years and at a floating rate of 1.85% above the three-month LIBOR rate, reset quarterly, thereafter, currently callable without penalty	$	3,093	$	3,093	$	3,093	$	3,093
Subordinated debentures, issued in 2004, due 2034, fixed rate of 6.00% during the first five years and at a floating rate of 2.00% above the three-month LIBOR rate, reset quarterly, thereafter, currently callable without penalty		15,464		15,464		15,464		15,464
Subordinated debentures, issued in 2005, due 2035, fixed rate of 5.84% during the first five years and at a floating rate of 1.45% above the three-month LIBOR rate, reset quarterly, thereafter, currently callable without penalty		25,774		25,774		25,774		25,774
Subordinated debentures, issued in 2004, due 2034, fixed rate of 4.29% during the first five years and at a floating rate of 2.50% above the three-month LIBOR rate, reset quarterly, thereafter, currently callable without penalty		16,495		16,495		16,495		16,495

Total	$	60,826	$	60,826	$	60,826	$	60,826

The Company holds $60.8 million of trust preferred securities which are currently callable without penalty based on the terms of the specific agreements. The trust preferred securities are tax-advantaged issues that qualify for Tier 1 capital treatment subject to certain limitations. Distributions on these securities are included in interest expense. Each of the trusts is a statutory business trust organized for the sole purpose of issuing trust securities and investing the proceeds in the Company’s subordinated debentures, the sole asset of each trust. The trust preferred securities of each trust represent preferred beneficial interests in the assets of the respective trusts and are subject to mandatory redemption upon payment of the subordinated debentures held by the trust. The Company wholly owns the common securities of each trust. Each trust’s ability to pay amounts due on the trust preferred securities is solely dependent upon the Company making payment on the related subordinated debentures. The Company’s obligations under the subordinated securities and other relevant trust agreements, in aggregate, constitute a full and unconditional guarantee by the Company of each respective trust’s obligations under the trust securities issued by each respective trust.

The following is a summary of the components of the provision (benefit) for income taxes for the three and ~~nine-month~~six-month periods ended ~~September 30:~~June 30, 2015 and 2014:


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014		2013		2015		2014		2015		2014
	(In thousands)								(In thousands)
Current:
Federal	$	8,191	$	6,635	$	26,048	$	17,691	$	16,456	$	7,825	$	28,530	$	17,857
State		1,627		1,342		5,174		3,563		3,269		1,554		5,667		3,547

Total current		9,818		7,977		31,222		21,254		19,725		9,379		34,197		21,404


Deferred:
Federal		4,329		2,171		13,142		7,994		179		5,873		3,224		8,813
State		860		442		2,610		1,587		35		1,166		640		1,750

Total deferred		5,189		2,613		15,752		9,581		214		7,039		3,864		10,563

Provision for income taxes	$	15,007	$	10,590	$	46,974	$	30,835
Income tax expense									$	19,939	$	16,418	$	38,061	$	31,967

The reconciliation between the statutory federal income tax rate and effective income tax rate is as follows for the three and ~~nine-month~~six-month periods ended ~~September 30:~~June 30, 2015 and 2014:


													Three Months Ended						Six Months Ended
	Three Months Ended September 30,						Nine Months Ended September 30,						June 30,						June 30,
	2014			2013			2014			2013			2015			2014			2015			2014
Statutory federal income tax rate		35.00	%		35.00	%		35.00	%		35.00	%		35.00	%		35.00	%		35.00	%		35.00	%
Effect of nontaxable interest income		(2.21	)		(2.01	)		(2.06	)		(2.06	)		(1.89	)		(1.96	)		(1.96	)		(1.99	)
Cash value of life insurance		(0.27	)		(0.34	)		(0.24	)		(0.25	)		(0.19	)		(0.22	)		(0.20	)		(0.23	)
State income taxes, net of federal benefit		3.92			4.01			3.92			3.97			4.02			3.93			4.02			3.92
Other		(1.03	)		(0.08	)		(0.52	)		(0.13	)		0.09			(0.14	)		0.06			(0.26	)

Effective income tax rate		35.41	%		36.58	%		36.10	%		36.53	%		37.03	%		36.61	%		36.92	%		36.44	%

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:


	September 30, 2014		December 31, 2013		June 30, 2015		December 31, 2014
	(In thousands)				(In thousands)
Deferred tax assets:
Allowance for loan losses	$	20,623	$	17,213	$	23,636	$	21,578
Deferred compensation		2,363		3,230		2,163		2,781
Stock options		371		277		1,655		1,428
Real estate owned		4,466		11,145		1,724		3,257
Loan discounts		30,163		65,639		22,410		25,807
Tax basis premium/discount on acquisitions		19,408		20,671		16,261		19,121
Unrealized loss on securities available-for-sale		—		2,673
Investments		2,672		2,568		2,669		2,692
Other		8,578		6,992		7,906		7,721

Gross deferred tax assets		88,644		130,408		78,424		84,385

Deferred tax liabilities:
Accelerated depreciation on premises and equipment		2,265		3,616		2,846		2,249
Unrealized gain on securities available-for-sale		3,445		—		3,799		4,524
Core deposit intangibles		5,340		5,650		5,167		5,382
Indemnification asset		6,222		29,074		1,549		3,823
FHLB dividends		1,602		1,602		1,659		1,602
Other		1,700		1,054		1,316		1,578

Gross deferred tax liabilities		20,574		40,996		16,336		19,158

Net deferred tax assets	$	68,070	$	89,412	$	62,088	$	65,227

The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction and the states of Arkansas, Alabama and ~~Florida.~~Florida and will be filing one with the state of New York during 2016. With a few exceptions, the Company is no longer subject to U.S. federal and state tax examinations by tax authorities for years before 2010.

~~Early in the fourth quarter of 2014,~~ During 2015, the State of ~~Florida commenced an~~Florida’s examination of the Company’s Florida State income tax ~~return~~returns for the 2010, 2011, 2012 and ~~2012~~2013 tax ~~years. The Company does not anticipate the examination to result in a material~~years was completed with no change to ~~its~~the financial position.

The Company has a stock option and performance incentive plan known as the Amended and Restated 2006 Stock Option and Performance 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. The Plan provides for the granting of incentive nonqualified options to purchase stock or for the issuance of restricted shares up to 4,644,000 shares of common stock in the Company. At ~~September~~June 30, ~~2014,~~2015, the Company has approximately ~~1,483,000~~1,300,000 shares of common stock remaining available for grants or issuance under the plan and approximately ~~2,475,000~~2,174,000 shares reserved for issuance of common stock.

The intrinsic value of the stock options outstanding and stock options vested at ~~September~~June 30, ~~2014~~2015 was ~~$18.3~~$17.2 million and ~~$16.0 million, respectively. The intrinsic value of the stock options exercised during the three and nine-month periods ended September 30, 2014 was approximately $646,000 and $1.2~~$13.9 million, respectively. Total unrecognized compensation cost, net of income tax benefit, related to non-vested awards, which are expected to be recognized over the vesting periods, was approximately ~~$1.4~~$2.3 million as of ~~September~~June 30, ~~2014.~~2015. For the first ~~nine~~six months of ~~2014,~~2015, the Company has expensed ~~$241,000~~$233,000 for the non-vested awards.

The table below summarizes the transactions under the Company’s stock option plans at ~~September~~June 30, ~~2014~~2015 and December 31, ~~2013~~2014 and changes during the ~~nine-month~~six-month period and year then ended:


	For the Nine Months Ended September 30, 2014					For the Year Ended December 31, 2013					For the Six Months Ended June 30, 2015					For the Year Ended December 31, 2014
	Shares (000)			Weighted Average Exercisable Price		Shares (000)			Weighted Average Exercisable Price		Shares (000)			Weighted- Average Exercisable Price		Shares (000)			Weighted- Average Exercisable Price
Outstanding, beginning of year		966		$	9.57		871		$	6.66		905		$	11.80		966		$	9.57
Granted		70			33.54		184			21.24		158			32.64		70			33.54
Forfeited		—			—		(3	)		8.60
Forfeited/Expired												(1	)		4.34		(11	)		30.89
Exercised		(44	)		4.76		(86	)		5.01		(188	)		5.65		(120	)		4.77

Outstanding, end of period		992			11.48		966			9.57		874			16.91		905			11.80

Exercisable, end of period		715		$	6.97		710		$	6.20		515		$	9.63		645		$	7.52

Stock-based compensation expense for stock-based compensation awards granted is based on the ~~grant date~~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. The weighted-average fair value of options granted during the ~~nine~~six months ended ~~September~~June 30, ~~2014~~2015 was ~~$10.73~~$8.53 per share. The weighted-average fair value of options granted during the year ended December 31, ~~2013~~2014 was ~~$4.50~~$10.73 per share. 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.


	For the Nine Months Ended September 30, 2014			For the Year Ended December 31, 2013			For the Three Months Ended June 30, 2015			For the Year Ended December 31, 2014
Expected dividend yield		0.89	%		1.42	%		1.54	%		0.89	%
Expected stock price volatility		30.94	%		22.09	%		28.00	%		30.94	%
Risk-free interest rate		2.31	%		1.33	%		1.67	%		2.31	%
Expected life of options		6.5 years			6.5 years			6.5 years			6.5 years

The following is a summary of currently outstanding and exercisable options at ~~September~~June 30, ~~2014:~~2015:

The table below summarized the activity for the Company’s restricted stock issued and outstanding at ~~September~~June 30, ~~2014~~2015 and December 31, ~~2013~~2014 and changes during the period and year then ended:


	As of September 30, 2014			As of December 31, 2013			As of June 30, 2015			As of December 31, 2014
	(In thousands)						(In thousands)
Beginning of year		256			269			257			256
Issued		43			35			110			43
Vested		(30	)		(32	)		(23	)		(30	)
Forfeited		(2	)		(16	)		(1	)		(12	)

End of period		267			256			343			257

Amount of expense for nine months and twelve months ended, respectively	$	1,155		$	1,086
Amount of expense for three months and twelve months ended, respectively							$	1,005		$	1,524

On January 18, 2013, 18,000 shares of restricted common stock were issued to each non-employee member of the Board of Directors and 4,000 shares of restricted common stock to a regional president of the Company’s bank subsidiary for a total issuance of 22,000 shares of restricted common stock. The restricted stock issued will vest equally each year over three years beginning on the first anniversary of the issuance.

On June 4, 2013, 12,666 shares of restricted common stock were issued to a regional president of the Company’s bank subsidiary. Of these issued shares, 9,666 shares will vest equally each year over three years beginning on the first anniversary of the issuance. The remaining 3,000 shares are subject to performance based vesting (“2012 Performance Shares”). The 2012 Performance Shares are set up to “cliff” vest on the third annual anniversary of the date that the performance goal is met. As of September 30, 2013, the performance goal was met when the Company averaged $0.3125 diluted earnings per share for the past four consecutive quarters or total diluted earnings per share of $1.25 during the same period. In accordance with the vesting terms of the 2012 Performance Shares agreements, the issued shares are due to fully vest on September 30, 2016.

On January 17, 2014, the Company granted 40,000 shares of the Company’s restricted common stock to the Chairman, which will vest in three equal annual installments beginning on January 17, 2015, plus 3,000 restricted shares of HBI’s common stock to a regional president of the Company’s bank subsidiary, which will “cliff” vest on January 17, 2017.

On June 23, 2014, the Company granted 500 shares of HBI’s restricted common stock to an employee, which will vest in five equal annual installments beginning on June 23, 2015.

On January 16, 2015, the Company granted 60,000 shares of the Company’s restricted common stock to the Chairman, 9,000 shares of restricted common stock to nine non-employee members of the Board of Directors and 3,992 shares of restricted common stock to a group of employees of the Company’s bank subsidiary for a total issuance of 72,992 shares of restricted common stock. The restricted stock issued will “cliff” vest on January 16, 2018.

On May 28, 2015, the Company ~~did not utilize~~granted a total of 37,000 shares of the Company’s restricted common stock to a group of employees of the Company’s bank subsidiary. Of these issued shares, 18,500 shares will vest equally each year over three years beginning on the third anniversary of the grant. The remaining 18,500 shares are subject to performance based vesting (“2015 Performance Shares”). The 2015 Performance Shares are set up to vest over three years beginning on the third anniversary of the date that the performance goal is met. The performance goal will be met when the Company averaged $0.625 diluted earnings per share for four consecutive quarters or total diluted earnings per share of $2.50 during the same period.

During the first six months of 2015, the Company utilized a portion of its previously approved stock repurchase ~~program during the first nine months of 2014.~~program. This program authorized the repurchase of 2,376,000 shares of the Company’s common stock. During first quarter of 2015, the Company repurchased a total of 67,332 shares with a weighted-average stock price of $29.89 per share. No shares were repurchased during the second quarter of 2015. The 2015 earnings were used to fund the repurchases. Shares repurchased to date under the program total ~~1,510,896~~1,578,228 shares. The remaining balance available for repurchase is ~~865,104~~797,772 shares at ~~September~~June 30, ~~2014.~~2015.

The table below shows the components of non-interest expense for the three and ~~nine~~six months ended ~~September~~June 30, ~~2014~~2015 and ~~2013:~~2014:


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014		2013		2015		2014		2015		2014
	(In thousands)								(In thousands)
Salaries and employee benefits	$	19,368	$	12,981	$	57,114	$	38,890	$	22,056	$	18,813	$	41,446	$	37,746
Occupancy and equipment		6,234		4,010		18,711		11,498		6,678		6,251		12,727		12,477
Data processing expense		1,801		1,114		5,387		3,855		3,063		1,793		5,482		3,586
Other operating expenses:
Advertising		673		363		1,776		1,176		657		581		1,436		1,103
Merger and acquisition expenses		3,772		1,034		4,727		1,063		—		106		1,417		955
Amortization of intangibles		1,153		802		3,467		2,406		1,100		1,147		2,229		2,314
Electronic banking expense		1,307		926		3,957		2,749		1,299		1,312		2,531		2,650
Directors’ fees		236		188		669		588		281		206		576		433
Due from bank service charges		200		136		604		437		286		205		501		404
FDIC and state assessment		972		684		3,144		1,991		1,172		1,058		2,568		2,172
Insurance		657		572		1,853		1,693		617		582		1,283		1,196
Legal and accounting		510		227		1,346		943		706		419		1,153		836
Other professional fees		716		404		1,806		1,367		560		583		1,048		1,090
Operating supplies		468		309		1,455		984		509		515		943		987
Postage		323		212		1,002		650		295		327		604		679
Telephone		548		291		1,465		885		470		463		974		917
Other expense		3,879		2,462		12,311		7,258		3,501		4,259		7,045		8,432

Total other operating expenses		15,414		8,610		39,582		24,190		11,453		11,763		24,308		24,168

Total non-interest expense	$	42,817	$	26,715	$	120,794	$	78,433	$	43,250	$	38,620	$	83,963	$	77,977

The Company’s primary market areas are in Arkansas, Florida, South Alabama and ~~South Alabama.~~New York City. The Company primarily grants loans to customers located within these geographical areas 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.

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 loan losses and certain concentrations of credit risk are reflected in Note 6, while deposit concentrations are reflected in Note 9.

Although the Company has a diversified loan portfolio, at ~~September~~June 30, ~~2014~~2015 and December 31, ~~2013,~~2014, non-covered commercial real estate loans represented ~~58.0%~~61.0% and ~~56.8%~~57.3% of non-covered loans, respectively, and ~~277.2%~~316.1% and ~~283.5%~~271.9% of total stockholders’ equity, respectively. Non-covered residential real estate loans represented ~~25.9%~~24.0% and ~~26.9%~~25.2% of non-covered loans and ~~123.8%~~124.3% and ~~134.0%~~119.6% of total stockholders’ equity at ~~September~~June 30, ~~2014~~2015 and December 31, ~~2013,~~2014, respectively.

Approximately ~~86.6%~~80.9% of the Company’s loans as of ~~September~~June 30, ~~2014,~~2015, are to ~~the~~ borrowers in Alabama, Arkansas and Florida, the three states in which the Company has its ~~primary market areas.~~branch locations. Additionally, the Company has ~~84.5%~~85.3% of its loans as real estate loans primarily in Arkansas, Florida and South Alabama.

Although general economic conditions ~~nationally and locally~~ in our market areas have improved, both nationally and locally, over the past three years and ~~show~~have shown signs of continued improvement, financial institutions still face circumstances and challenges which, in some cases, have resulted and could potentially result, in large declines in the fair values of investments and other assets, constraints on liquidity and significant credit quality problems, including severe volatility in the valuation of real estate and other collateral supporting loans. The financial statements have been prepared using values and information currently available to the Company.

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

In the ordinary course of business, the Company makes various commitments and incurs certain contingent liabilities to fulfill the financing needs of their 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 ~~September~~June 30, ~~2014~~2015 and December 31, ~~2013,~~2014, commitments to extend credit of ~~$775.8 million~~$1.03 billion and ~~$623.5~~$851.8 million, 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 ~~credit worthiness~~creditworthiness of the borrower, some of which are long-term. 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 ~~September~~June 30, ~~2014~~2015 and December 31, ~~2013,~~2014, is ~~$22.9~~$21.5 million and ~~$21.4~~$23.2 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.

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 first ~~nine~~six months of ~~2014,~~2015, the Company requested approximately ~~$61.4~~$48.6 million in regular dividends from its banking subsidiary. This dividend is equal to approximately ~~71.5%~~72.6% of ~~our~~the Company’s banking subsidiary’s first ~~nine~~six months earnings.

In July 2013, the Federal Reserve Board and the other federal bank regulatory agencies issued a final rule to revise their risk-based and leverage capital requirements and their method for calculating risk-weighted assets to make them consistent with the agreements that were reached by the Basel Committee on Banking Supervision in “Basel III: A Global Regulatory Framework for More Resilient Banks and Banking Systems” and certain provisions of the Dodd-Frank Act (“Basel III”). Basel III applies to all depository institutions, bank holding companies with total consolidated assets of $500 million or more, and savings and loan holding companies. Among other things, the rule establishes a new minimum “common equity Tier 1 capital” requirement of 4.5% of risk-weighted assets, raises the minimum “Tier 1 risk-based capital” requirement to 6% of risk-weighted assets and assigns higher risk weightings (150%) to exposures that are more than 90 days past due or are on non-accrual status and certain commercial real estate facilities that finance the acquisition, development or construction of real property.

Basel III permanently grandfathers trust preferred securities and other non-qualifying capital instruments that were issued and outstanding as of May 19, 2010 in the Tier 1 capital of bank holding companies with total consolidated assets of less than $15 billion as of December 31, 2009. The rule phases out of Tier 1 capital these non-qualifying capital instruments issued before May 19, 2010 by all other bank holding companies. Basel III also limits a banking organization’s capital distributions and certain discretionary bonus payments if the banking organization does not hold a “capital conservation buffer” of 2.5% of “common equity tier 1 capital” to risk-weighted assets, which is in addition to the amount necessary to meet its minimum risk-based capital requirements. Basel III became effective for the Company and its bank subsidiary on January 1, 2015. The capital conservation buffer requirement will be phased in beginning January 1, 2016. The phase-in period ends on January 1, 2019 when the full capital conservation buffer requirement becomes effective.

Basel III amended the prompt corrective action rules to incorporate a “common equity Tier 1 capital” requirement and to raise the capital requirements for certain capital categories. In order to be adequately capitalized for purposes of the prompt corrective action rules, a banking organization will be required to have at least a 4.5% “common equity Tier 1 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. ~~The~~Under Basel III, the criteria for a well-capitalized institution ~~are:~~are now: a 6.5% “common equity Tier 1 risk-based capital” ratio, a 5% “Tier 1 leverage capital” ratio, ~~a 6%~~an 8% “Tier 1 risk-based capital” ratio, and a 10% “total risk-based capital” ratio. As of ~~September~~June 30, ~~2014,~~2015, the Bank met the capital standards for a well-capitalized institution. The Company’s “common equity Tier 1 risk-based capital” ratio, “Tier 1 leverage capital” ratio, “Tier 1 risk-based capital” ratio, and “total risk-based capital” ratio were ~~10.22%~~10.73%, ~~12.42%~~10.37%, 11.60%, and ~~13.39%~~12.49%, respectively, as of ~~September~~June 30, ~~2014.~~2015.

In connection with the Doral Florida acquisition, accounted for using the purchase method, the Company acquired approximately $39.3 million in assets, assumed $467.6 million in liabilities, issued no equity and received net funds of $429.9 million during the first quarter of 2015. As a result, the Company recorded a bargain purchase gain of $1.6 million.

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


	Nine Months Ended September 30,				June 30,
	2014		2013		2015		2014
	(In thousands)				(In thousands)
Interest paid	$	14,323	$	10,337	$	9,738	$	9,511
Income taxes paid		16,650		16,875		31,210		9,850
Assets acquired by foreclosure		14,238		12,522		11,991		10,718

Fair value is the price that would be received to sell 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 value:

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 does not have any Level 1 securities. Primarily all of the Company’s securities are considered to be Level 2 securities. These 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. As of ~~September~~June 30, ~~2014~~2015 and December 31, ~~2013,~~2014, Level 3 securities were immaterial. In addition, there were no material transfers between hierarchy levels during ~~2014~~2015 and ~~2013.~~2014.

The Corporation 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.

Impaired loans that are collateral dependent are the only material financial assets valued on a non-recurring basis which are held by the Company at fair value. Loan impairment is reported when full payment under the loan terms is not expected. Impaired loans are carried at the net realizable value of the collateral if the loan is collateral dependent. A portion of the allowance for loan losses is allocated to impaired loans if the value of such loans is deemed to be less than the unpaid balance. If these allocations cause the allowance for loan losses to require an increase, such increase is reported as a component of the provision for loan losses. The fair value of loans with specific allocated losses was ~~$70.3~~$78.6 million and ~~$91.9~~$78.7 million as of ~~September~~June 30, ~~2014~~2015 and December 31, ~~2013,~~2014, respectively. This valuation is considered Level 3, consisting of appraisals of underlying collateral. The Company reversed approximately ~~$183,000~~$255,000 and ~~$147,000~~$459,000 of accrued interest receivable when non-covered impaired loans were put on non-accrual status during the three months ended ~~September~~June 30, ~~2014~~2015 and ~~2013,~~2014, respectively. The Company reversed approximately ~~$746,000~~$306,000 and ~~$453,000~~$563,000 of accrued interest receivable when non-covered impaired loans were put on non-accrual status during the ~~nine~~six months ended ~~September~~June 30, ~~2014~~2015 and ~~2013,~~2014, respectively.

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 loan losses. Additionally, valuations are periodically performed by management and any subsequent reduction in value is recognized by a charge to income. The fair value of foreclosed assets held for sale is estimated using Level 3 inputs based on appraisals of underlying collateral. As of ~~September~~June 30, ~~2014~~2015 and December 31, ~~2013,~~2014, the fair value of foreclosed assets held for sale not covered by loss share, less estimated costs to sell, was ~~$19.4~~$16.5 million and ~~$29.9~~$17.0 million, 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 20% to 50% for commercial and residential real estate collateral.

The following methods and assumptions were used by the Company in estimating fair values of financial instruments as disclosed in these notes:

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 — These securities consist primarily of 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 not covered by loss share, net of non-covered 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.

Loans receivable covered by FDIC loss share, net of allowance— Fair values for loans are based on a discounted cash flow methodology that ~~considered~~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 ~~was amortizing and current discount rates.~~is amortizing. Loans ~~were~~are grouped together according to similar characteristics and ~~were~~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.

FDIC indemnification asset — Although this asset is a contractual receivable from the FDIC, there is no effective interest rate. The Bank will collect this asset over the next several years. The amount ultimately collected will depend on the timing and amount of collections and charge-offs on the acquired assets covered by the loss sharing agreement. While this asset was recorded at its estimated fair value at acquisition date, it is not practicable to complete a fair value analysis on a quarterly or annual basis. This would involve preparing a fair value analysis of the entire portfolio of loans and foreclosed assets covered by the loss sharing agreement on a quarterly or annual basis in order to estimate the fair value of the FDIC indemnification asset.

Accrued interest receivable — — The carrying amount of accrued interest receivable approximates its 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 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.

Accrued interest payable — The carrying amount of accrued interest payable approximates its fair value.

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~~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.

The following table presents the estimated fair values of the Company’s financial instruments. The fair values of certain of these instruments were calculated by discounting expected cash flows, which involves significant judgments by management and uncertainties. Fair value is the estimated amount at which financial assets or liabilities could be exchanged in a current transaction between willing parties other than in a forced or liquidation sale. Because no market exists for certain of these financial instruments and because management does not intend to sell these financial instruments, the Company does not know whether the fair values shown below represent values at which the respective financial instruments could be sold individually or in the aggregate.

   September 30, 2014
   Carrying
Amount    Fair Value    Level
   (In thousands)
Financial assets:

Cash and cash equivalents
   $ 137,483       $ 137,483       1
Federal funds sold
   44,275       44,275       1
Investment securities – held-to-maturity
   296,036       300,023       2
Loans receivable not covered by loss share, net of non-covered
impaired loans and allowance
   4,462,041       4,449,341       3
Loans receivable covered by FDIC loss share, net of allowance
   248,821       248,821       3
FDIC indemnification asset
   42,104       42,104       3
Accrued interest receivable
   23,366       23,366       1
Financial liabilities:

Deposits:

Demand and non-interest bearing
   $ 1,170,441       $ 1,170,441       1
Savings and interest-bearing transaction accounts
   2,830,829       2,830,829       1
Time deposits
   1,276,001       1,273,212       3
Federal funds purchased
   —         —         N/A
Securities sold under agreements to repurchase
   160,895       160,895       1
FHLB borrowed funds
   713,553       721,163       2
Accrued interest payable
   1,108       1,108       1
Subordinated debentures
   60,826       60,826       3


	December 31, 2013					June 30, 2015
	Carrying Amount		Fair Value		Level	Carrying Amount		Fair Value		Level
	(In thousands)					(In thousands)
Financial assets:
Cash and cash equivalents	$	165,534	$	165,534	1	$	204,411	$	204,411		1
Federal funds sold		4,275		4,275	1		—		—		1
Investment securities – held-to-maturity		114,621		113,901	2		336,993		340,017		2
Loans receivable not covered by loss share, net of non-covered impaired loans and allowance		4,063,469		4,053,098	3		5,364,575		5,361,353		3
Loans receivable covered by FDIC loss share, net of allowance		277,723		277,723	3		155,510		155,510		3
FDIC indemnification asset		89,611		89,611	3		15,874		15,874		3
Accrued interest receivable		22,944		22,944	1		24,447		24,447		1

Financial liabilities:
Deposits:
Demand and non-interest bearing	$	991,161	$	991,161	1	$	1,406,051	$	1,406,051		1
Savings and interest-bearing transaction accounts		2,792,423		2,792,423	1		3,099,522		3,099,522		1
Time deposits		1,609,462		1,606,664	3		1,372,463		1,366,208		3
Federal funds purchased		—		—	N/A		—		—		N/A
Securities sold under agreements to repurchase		160,984		160,984	1		150,746		150,746		1
FHLB borrowed funds		350,661		357,674	2		866,907		872,521		2
Accrued interest payable		1,252		1,252	1		1,054		1,054		1
Subordinated debentures		60,826		60,826	3		60,826		60,826		3

~~In January 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-04,~~~~Receivables: Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure~~ (Topic 310-40). ASU 2014-04 clarifies that an in substance repossession or foreclosure occurs upon either the creditor obtaining legal title to the residential real estate property or the borrower conveying all interest in the residential real estate property to the creditor to satisfy that loan through completion of a deed in lieu of foreclosure or through a similar legal agreement. The amendments are effective for annual periods, and interim reporting periods within those annual periods, beginning after December 15, 2014. The amendments may be adopted using either a modified retrospective transition method or a prospective transition method. Early adoption is permitted. Adoption of ASU 2014-04 is not expected to have a significant effect on the Company’s financial statements.

~~In January 2014, the FASB issued ASU No. 2014-01,~~~~Accounting for Investments in Affordable Housing Projects~~ (Topic 323). ASU 2014-01 revises the necessary criteria that need to be met in order for an entity to account for investments in affordable housing projects net of the provision for income taxes. It also changes the method of recognition from an effective amortization approach to a proportional amortization approach. Additional disclosures were also set forth in this update. The amendments are effective for annual periods, and interim reporting periods within those annual periods, beginning after December 15, 2014. The amendments are required to be applied retrospectively to all periods presented. Early adoption is permitted. Adoption of ASU 2014-01 is not expected to have a significant effect on the Company’s financial statements.

In June 2014, the FASB issued ASU No. 2014-12,Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period, impacting FASB ASC 860,Transfers and Servicing. Generally, an award with a performance target requires an employee also render service once the performance target is achieved. In some cases, however, the terms of an award may provide that the performance target could be achieved after an employee completes the requisite service period. The amendments in this update require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. An entity should apply this guidance as it relates to awards with performance conditions that affect vesting to account for such awards. As such, the performance target should not be reflected in estimating the grant-date fair value of the award. Compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period for which the service has already been rendered. The amendments in this update become effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. ~~We are~~The Company is currently evaluating the impact of adopting the new guidance on the consolidated financial statements, but it is not expected to have a significant effect on the Company’s financial statements.

In August 2014, the FASB issued ASU No. 2014-14,Classification of Certain Government-Guaranteed Mortgage Loans upon Foreclosure, impacting FASB ASC 310-40,Receivables – Troubled Debt Restructuring by Creditors. This update affects creditors that hold government-guaranteed mortgage loans. The amendments in this update require that a mortgage loan be derecognized and that a separate other receivable be recognized if the following conditions are met: (1) the loan has a government guarantee that is not separable from the loan before foreclosure; (2) at the time of foreclosure, the creditor has the intent to convey the real estate property to the guarantor and make a claim on the guarantee, and the creditor has the ability to recover under the claim; (3) at the time of foreclosure, the claim that is determined on the basis of the fair value of the real estate is fixed. Upon foreclosure, the separate other receivable should be measured based on the amount of the loan balance (principal and interest) expected to be recovered from the guarantor. The amendments in this update become effective for annual periods and interim periods within those annual periods beginning after December 15, 2014. ~~We are currently evaluating the impact of adopting~~The Company has adopted the new guidance on the consolidated financial statements, ~~but it is not expected~~which has made no impact to ~~have a significant effect on~~ the Company’s financial statements.

Presently, the Company is not aware of any changes from the Financial Accounting Standards Board that will have a material impact on the Company’s present or future financial statements.

~~Business Combination – Broward Financial Holdings, Inc.~~ ~~– Subsequent to September 30, 2014, on October 23, 2014,~~On June 17, 2015, the Company ~~completed its acquisition of Broward Financial Holdings, Inc. (“BFHI”), parent company of Broward Bank of Commerce (“Broward”), pursuant to~~and Centennial, entered into a ~~previously announced~~ definitive agreement and plan of merger ~~whereby a wholly-owned acquisition subsidiary~~with Florida Business BancGroup, Inc. (“~~Acquisition Sub II”~~FBBI”), parent company of ~~HBI merged with and into BFHI, resulting in BFHI becoming a wholly-owned subsidiary of HBI. Immediately thereafter, Broward was merged into Centennial~~Bay Cities Bank (“~~Centennial”~~Bay Cities”). to merge FBBI into HBI and Bay Cities into Centennial. Under the terms of the ~~Agreement and Plan~~agreement, shareholders of ~~Merger dated July 30, 2014 by and among~~FBBI will receive proceeds from the transaction of approximately $101.6 million as a combination of both HBI ~~Centennial, BFHI, Broward and Acquisition Sub II, HBI issued approximately 1,021,000 shares of its~~ common stock ~~valued at $29,754,001 as of October 23, 2014, plus $3,306,000~~and cash split 80% and 20%, respectively.

FBBI currently operates six branch locations and a loan production office in ~~cash~~the Tampa Bay area and in exchange for all outstanding shares of BFHI common stock. HBI has also agreed to pay the BFHI shareholders at an undetermined date up to approximately $751,000 in additional consideration. The amount and timing of the additional payment, if any, will depend on future payments received or losses incurred by Centennial from certain current Broward loans. At this point, the Company anticipates it will record a fair value of zero for the potential additional consideration.

~~Prior to the acquisition, Broward operated two banking locations in Fort Lauderdale,~~Sarasota, Florida. As of ~~acquisition date, Broward~~June 30, 2015, FBBI had approximately ~~$180.2~~$573.2 million in total assets, ~~$119.2~~$402.0 million in ~~total~~ loans and ~~$145.0~~$495.6 million in deposits.

AsThe acquisition is expected to close in the fourth quarter of ~~the acquisition date, BFHI’s common equity totaled $20,407,000~~2015 and ~~the Company paid a purchase price~~is subject to ~~the BFHI shareholders of $33,060,001 for the Broward acquisition. As a result, the Company paid a multiple of 1.62 of Broward’s book value per share~~FBBI shareholder approval, regulatory approvals and ~~tangible book value per share.~~other customary conditions.

We have reviewed the accompanying condensed consolidated balance sheet of Home BancShares, Inc. (the Company) as of ~~September~~June 30, ~~2014, and~~2015, the related condensed consolidated statements of income and comprehensive income for the ~~three-month~~three and ~~nine-month~~six-month periods ended ~~September~~June 30, 2015 and 2014 and ~~2013 and condensed consolidated~~the related statements of stockholders’ equity and cash flows for the ~~nine-month~~six-month periods ended ~~September~~June 30, ~~2014~~2015 and ~~2013.~~2014. These interim financial statements are the responsibility of the Company’s management.

We conducted our reviews in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our reviews, we are not aware of any material modifications that should be made to the condensed consolidated financial statements referred to above for them to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet as of December 31, ~~2013,~~2014, and the related consolidated statements of income, comprehensive income, stockholders’ equity and cash flows for the year then ended (not presented herein); and in our report dated February ~~28, 2014,~~27, 2015, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, ~~2013,~~2014, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

Item 2:

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with our Form 10-K, filed with the Securities and Exchange Commission on February ~~28, 2014,~~27, 2015, which includes the audited financial statements for the year ended December 31, ~~2013.~~2014.Unless the context requires otherwise, the terms “Company”, “us”, “we”, and “our” refer to Home BancShares, Inc. on a consolidated basis.

We are a bank holding company headquartered in Conway, Arkansas, offering a broad array of financial services through our ~~wholly owned~~wholly-owned bank subsidiary, Centennial Bank ~~(“Centennial”~~(sometimes referred to as “Centennial” or the “Bank”). As of ~~September~~June 30, ~~2014,~~2015, we had, on a consolidated basis, total assets of ~~$7.20~~$8.07 billion, loans receivable, net of ~~$4.78~~$5.60 billion, total deposits of ~~$5.28~~$5.88 billion, and stockholders’ equity of ~~$958.7 million.~~$1.06 billion.

We generate most of our revenue from interest on loans and investments, service charges, and mortgage banking income. Deposits and FHLB borrowed funds are our primary source of funding. Our largest expenses are interest on our funding sources, salaries and related employee benefits and occupancy and equipment. We measure our performance by calculating our return on average common equity, return on average assets and net interest margin. We also measure our performance by our efficiency ratio, which is calculated by dividing non-interest expense less amortization of core deposit intangibles by the sum of net interest income on a tax equivalent basis and non-interest income.


	As of or for the Three Months						As of or for the Nine Months						As of or for the Three Months						As of or for the Six Months
	Ended September 30,						Ended September 30,						Ended June 30,						Ended June 30,
	2014			2013			2014			2013			2015			2014			2015			2014
	(Dollars in thousands, except per share data)												(Dollars in thousands, except per share data)
Total assets	$	7,196,371		$	4,161,306		$	7,196,371		$	4,161,306		$	8,074,382		$	6,666,140		$	8,074,382		$	6,666,140
Loans receivable not covered by loss share		4,583,015			2,378,838			4,583,015			2,378,838			5,499,028			4,133,109			5,499,028			4,133,109
Loans receivable covered by FDIC loss share		250,970			308,072			250,970			308,072			159,891			263,157			159,891			263,157
Allowance for loan losses		52,844			38,748			52,844			38,748			60,258			51,173			60,258			51,173
FDIC claims receivable		12,781			31,168			12,781			31,168			8,992			15,783			8,992			15,783
Total deposits		5,277,271			3,248,818			5,277,271			3,248,818			5,878,036			5,192,009			5,878,036			5,192,009
Total stockholders’ equity		958,681			545,142			958,681			545,142			1,061,701			897,235			1,061,701			897,235
Net income		27,371			18,363			83,137			53,570			33,906			28,429			65,025			55,766
Basic earnings per share		0.41			0.33			1.27			0.96			0.50			0.44			0.96			0.86
Diluted earnings per share		0.41			0.33			1.26			0.95			0.50			0.43			0.96			0.85
Diluted earnings per share excluding intangible amortization⁽¹⁾		0.42			0.33			1.29			0.97			0.51			0.44			0.98			0.87
Annualized net interest margin – FTE		5.26	%		5.41	%		5.41	%		5.25	%		5.00	%		5.50	%		4.97	%		5.49	%
Efficiency ratio		45.70			45.67			42.95			45.56			40.39			41.09			40.88			41.58
Annualized return on average assets		1.56			1.80			1.63			1.73			1.72			1.70			1.70			1.67
Annualized return on average common equity		11.58			13.63			12.48			13.53			12.98			12.96			12.66			12.98

Impairment testing on the estimated cash flows of the purchased credit impaired loan pools is performed each quarter. Because the economy has improved since the impaired loans were acquired, quite often the impairment test has revealed ~~there was~~ a projected credit improvement in certain loan pools. As a result of these improvements, the Company is recognizing additional adjustments to yield over the ~~weighted average~~weighted-average life of the loans. When there are improvements in credit quality for covered loans, it decreases the basis in the related indemnification asset and increases our FDIC true-up liability. These positive events are reducing the indemnification asset and increasing our FDIC true-up liability. The indemnification asset reduction is being amortized over the ~~weighted average~~weighted-average life of the shared-loss agreements. This amortization is being shown as a reduction to FDIC indemnification non-interest income. The true-up liability is being expensed over the remaining true-up measurement date as other non-interest expense.

Tables 2 and 3 summarize the recognition of these positive events and the financial impact to the three and ~~nine month~~six-month periods ended ~~September~~June 30, ~~2014~~2015 and ~~2013:~~2014:


							Additional Adjustment to Yield		Reduction of Indemnification Asset		Increase of FDIC True-up Liability
	Additional Adjustment to Yield		Reduction of Indemnification Asset		Increase of FDIC True-up Liability		(In thousands)
	(In thousands)
Periods Tested:
Prior to 2013	$	5,022	$	3,876	$	502
March 31, 2013		15,566		12,453		1,657
June 30, 2013		—		—		—
September 30, 2013		—		—		—
December 31, 2013		14,061		8,389		1,331
Prior to 2014							$	34,649	$	24,718	$	3,490
March 31, 2014		11,432		8,346		1,143		11,432		8,346		1,143
June 30, 2014		23,428		17,330		1,128		23,428		17,330		1,128
September 30, 2014⁽¹⁾		4,720		—		—		13,769		8,141		1,003
December 31, 2014								—		—		—
March 31, 2015								—		—		—
June 30, 2015								—		—		—

Total	$	74,229	$	50,394	$	5,761	$	83,278	$	58,535	$	6,764

Table 3: Financial Impact for the Three and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2014~~2015 and ~~2013~~2014

Results of Operations for Three Months Ended ~~September~~June 30, ~~2014~~2015 and ~~2013~~2014

Our net income increased ~~$9.0~~$5.5 million, or ~~49.1%~~19.3%, to ~~$27.4~~$33.9 million for the three-month period ended ~~September~~June 30, ~~2014,~~2015, from ~~$18.4~~$28.4 million for the same period in ~~2013.~~2014. On a diluted earnings per share basis, our earnings were ~~$0.41~~$0.50 and ~~$0.33~~$0.43 per share for the three-month periods ended ~~September~~June 30, ~~2014~~2015 and ~~2013, respectively. Excluding the $3.8 million and $1.0 million of merger expenses associated with the~~ 2014, acquisition of Florida Tradition Bank (“Traditions”) and the 2013 acquisition of Liberty Bancshares, Inc. (“Liberty”), respectively, diluted earnings per share for the third quarter of 2014 and 2013 were $0.45 per share and $0.34, respectively. The ~~$10.7~~$5.5 million increase in net income ~~excluding merger expenses~~ is primarily associated with ~~the $32.3 million of~~ additional net interest income primarily resulting from our ~~2013 acquisition~~2014 and 2015 acquisitions plus a decrease in provision for loan losses in second quarter of ~~Liberty~~2015 and ~~2014 acquisition~~reduced amortization of ~~Traditions plus~~ the ~~additional accretion income from our previous FDIC covered loan acquisitions.~~indemnification asset when compared to the same period in 2014. These improvements were partially offset by a modest increase in the costs associated with the asset growth from our ~~Liberty~~2014 and ~~Traditions~~2015 acquisitions ~~$3.8 million of additional amortization~~and the opening of the ~~indemnification asset plus an increase in provision for~~Centennial Commercial Finance Group (“Centennial CFG”) loan ~~losses of $4.2 million in third quarter of 2014~~production office when compared to the same period in ~~2013.~~2014.

Each quarter we perform credit impairment tests on the loans acquired in our FDIC loss-sharing and non-loss-sharing acquisitions. The second quarter of 2015 quarterly impairment testing noted a slight decline in asset quality in eight of our covered loan pools which resulted in a net covered provision for loan loss of $80,000. Conversely, during 2014 and 2013, the quarterly impairment testing projected material credit improvements. As a result of these credit improvements, $83.3 million of adjustments to yield were determined to be recognized over the weighted-average life of the loans. The recognition of these additional credit improvements has begun to slow down. Plus, the accretion income on the portfolio acquired in our acquisition of Liberty Bancshares, Inc. (“Liberty”) in 2013 has begun to slow down. As result, there was a decline of recognized accretion yield from the second quarter of 2014 to the second quarter of 2015. Consequently, yields on loans and net interest margin for the quarter just ended are reduced when compared to the second quarter of 2014.

The effective yield on non-covered loans for the three months ended June 30, 2015 and 2014 was 5.63% and 6.08%, respectively. The effective yield on covered loans for the three months ended June 30, 2015 and 2014 was 18.40% and 19.38%, respectively. Our annualized net interest margin, on a fully taxable equivalent basis, was ~~5.26%~~5.00% for the three months ended ~~September~~June 30, ~~2014,~~2015, compared to ~~5.41%~~5.50% for the same period in 2013. The numerous purchased credit impaired loan pools which have been determined to have material projected credit improvement as a result of the quarterly impairment testing and the acquisitions of Liberty and Traditions have significantly changed the mix and metrics on the net interest margin since December 31, 2012. Although there have been many changes since 2012, the Company continues to remain focused on expanding its net interest margin through opportunities such as improved pricing on interest-bearing deposits.2014.

Our annualized return on average assets was ~~1.56%~~1.72% for the three months ended ~~September~~June 30, ~~2014,~~2015, compared to ~~1.80%~~1.70% for the same period in ~~2013.~~2014. Our annualized return on average common equity was ~~11.58%~~12.98% for the three months ended ~~September~~June 30, ~~2014,~~2015, compared to ~~13.63%~~12.96% for the same period in 2013, respectively. Excluding merger expenses, our return on average assets was 1.69% for the three-month period ended September 30, 2014, compared to 1.86% for the same period in 2013. The slight declines in our profitably ratios from 2013 to 2014 are primarily related to the2014. Our acquisitions ~~of Liberty and Traditions which~~ have historically performed below our profitability ratios. ~~While we~~We have been making notable progress in improving the performance of the ~~former Liberty~~acquired franchises. As a result, there was little to no change in our return on average assets and ~~Traditions operations, they have not been brought up~~return on average common equity from 2014 to ~~the historical performance metrics of our Company.~~2015.

Our efficiency ratio was ~~45.70%~~40.39% for the three months ended ~~September~~June 30, ~~2014,~~2015, compared to ~~45.67%~~41.09% for the same period in ~~2013.~~2014. For the ~~third~~second quarter of ~~2014,~~2015, our core efficiency ratio was ~~41.88%~~40.30% which is improved from the ~~44.76%~~41.56% reported for ~~third~~second quarter of ~~2013.~~2014. The improvement in the core efficiency ratio is primarily associated with additional net interest income resulting from our ~~2013 acquisition of Liberty~~2014 and ~~2014 acquisition of Traditions~~2015 acquisitions offset by ~~a modest~~an increase in costs associated with the asset growth from our ~~acquisitions.~~2014 and 2015 acquisitions and opening the Centennial CFG loan production office. Core efficiency ratio is calculated by dividing non-interest expense less amortization of core deposit intangibles by the sum of net interest income on a tax equivalent basis and non-interest income excluding non-fundamental items such as merger expenses and/or gains and losses.

Additional information and analysis for our earnings can be found in Table 21 of our Non-GAAP Financial ~~Measurement~~Measurements section of the Management Discussion and Analysis.

Results of Operations for ~~Nine~~Six Months Ended ~~September~~June 30, ~~2014~~2015 and ~~2013~~2014

Our net income increased ~~$29.6~~$9.3 million, or ~~55.2%~~16.6%, to ~~$83.1~~$65.0 million for the ~~nine-month~~six-month period ended ~~September~~June 30, ~~2014,~~2015, from ~~$53.6~~$55.8 million for the same period in ~~2013.~~2014. On a diluted earnings per share basis, our earnings were ~~$1.26~~$0.96 and ~~$0.95~~$0.85 per share for the ~~nine-month~~six-month periods ended ~~September~~June 30, ~~2014~~2015 and ~~2013,~~2014, respectively. Excluding the ~~$4.7~~$1.6 million ~~and $1.1~~of one-time gain on acquisition offset by $1.4 million of merger expenses associated with the ~~2014~~ acquisition of ~~Traditions~~Doral Bank’s Florida Panhandle operations (“Doral Florida”), net income was $64.9 million and ~~the 2013 acquisition of Liberty, respectively,~~ diluted earnings per share for the ~~nine~~first six months ~~ended September 30, 2014 and 2013 were $1.31~~of 2015 remained $0.96 per share. Excluding the $955,000 of merger expenses associated with the acquisition of Liberty, net income was $56.3 million, or $0.86 diluted earnings per share, ~~and $0.96, respectively.~~for the first six months of 2014. The ~~$31.8~~$8.6 million increase in net income excluding merger expenses and acquisition gain is primarily associated with ~~the $98.1 million of~~ additional net interest income primarily resulting from our ~~2013 acquisition~~2014 and 2015 acquisitions plus a decrease in provision for loan losses in the first six months of ~~Liberty~~2015 and ~~2014 acquisition~~reduced amortization of ~~Traditions and~~ the ~~additional accretion income from our previous FDIC covered loan acquisitions. Furthermore, there was $267,000 of additional net gains from~~indemnification asset when compared to the ~~sale of SBA loans, sale of premises & equipment, investment securities and OREO.~~same period in 2014. These improvements were partially offset by a modest increase in the costs associated with the asset growth from our ~~Liberty~~2014 and ~~Traditions~~2015 acquisitions ~~$10.9 million of additional amortization~~and the opening of the ~~indemnification asset plus an increase in provision for~~Centennial CFG loan ~~losses of $16.4 million in the first nine months of 2014~~production office when compared to the same period in ~~2013.~~

Each quarter we perform credit impairment tests on the loans acquired in our FDIC loss-sharing and non-loss-sharing acquisitions. During 2015, the quarterly impairment testing noted a slight decline in asset quality in thirteen of our covered loan pools which resulted in a net covered provision for loan loss of $998,000. Conversely, during 2014 and 2013, the quarterly impairment testing projected material credit improvements. As a result of these credit improvements, $83.3 million of adjustments to yield were determined to be recognized over the weighted-average life of the loans. The recognition of these additional credit improvements has begun to slow down. Plus, the accretion income on the Liberty portfolio has begun to slow down. As result, there was a decline of recognized accretion yield from the first six months of 2014 to the first six months of 2015. Consequently, yields on loans and net interest margin for the six months just ended are reduced when compared to the first six months of 2014.

The effective yield on non-covered loans for the six months ended June 30, 2015 and 2014 was 5.64% and 6.17%, respectively. The effective yield on covered loans for the six months ended June 30, 2015 and 2014 was 16.26% and 17.67%, respectively. Our annualized net interest margin, on a fully taxable equivalent basis, was ~~5.41%~~4.97% for the ~~nine~~six months ended ~~September~~June 30, ~~2014,~~2015, compared to ~~5.25%~~5.49% for the same period in 2013. The numerous purchased credit impaired loan pools which have been determined to have material projected credit improvement as a result of the quarterly impairment testing and the acquisitions of Liberty and Traditions have significantly changed the mix and metrics on the net interest margin since December 31, 2012. Although there have been many changes since 2012, the Company continues to remain focused on expanding its net interest margin through opportunities such as improved pricing on interest-bearing deposits.2014.

Our annualized return on average assets was ~~1.63%~~1.70% for the ~~nine~~six months ended ~~September~~June 30, ~~2014,~~2015, compared to ~~1.73%~~1.67% for the same period in ~~2013.~~2014. Our annualized return on average assets excluding merger expenses and gain on acquisition was 1.69% for the six months ended June 30, 2015, compared to 1.68% for the same period in 2014. Our annualized return on average common equity was ~~12.48%~~12.66% for the ~~nine~~six months ended ~~September~~June 30, ~~2014,~~2015, compared to ~~13.53%~~12.98% for the same period in ~~2013, respectively. Excluding merger expenses, our~~2014. Our annualized return on average ~~assets~~common equity excluding merger expenses and gain on acquisition was ~~1.69%~~12.64% for the ~~nine-month period~~six months ended ~~September~~June 30, ~~2014,~~2015, compared to ~~1.75%~~13.11% for the same period in ~~2013. The slight declines in our profitably ratios from 2013 to 2014 are primarily related to the~~2014. Our acquisitions ~~of Liberty and Traditions which~~ have historically performed below our profitability ratios. ~~While we~~We have been making notable progress in improving the performance of the ~~Liberty and Traditions franchise, they have not been brought up~~acquired franchises. As a result, there was little to ~~the historical performance metrics of~~no change in our ~~Company.~~return on average assets from 2014 to 2015. Conversely, there was a decline in our return on average common equity from 2014 to 2015 due to capital generation from our retained earnings.

Our efficiency ratio was ~~42.95%~~40.88% for the ~~nine~~six months ended ~~September~~June 30, ~~2014,~~2015, compared to ~~45.56%~~41.58% for the same period in ~~2013.~~2014. For the first ~~nine~~six months of ~~2014,~~2015, our core efficiency ratio was ~~41.61%~~40.55% which is improved from the ~~45.63%~~41.48% reported for the first ~~nine~~six months of ~~2013.~~2014. The improvement in the core efficiency ratio is primarily associated with additional net interest income ~~and other non-interest income~~ resulting from our ~~2013 acquisition of Liberty~~2014 and ~~2014 acquisition of Traditions~~2015 acquisitions offset by ~~a modest~~an increase in costs associated with the asset growth from our ~~acquisitions.~~2014 and 2015 acquisitions and the opening of the Centennial CFG loan production office. Core efficiency ratio is calculated by dividing non-interest expense less amortization of core deposit intangibles by the sum of net interest income on a tax equivalent basis and non-interest income excluding non-fundamental items such as merger expenses and/or gains and losses.

Additional information and analysis for our earnings can be found in Table 21 of our Non-GAAP Financial ~~Measurement~~Measurements section of the Management Discussion and Analysis.

Financial Condition as of and for the Period Ended ~~September~~June 30, ~~2014~~2015 and December 31, ~~2013~~2014

Our total assets as of ~~September~~June 30, ~~2014~~2015 increased ~~$384.5~~$671.1 million to ~~$7.20~~$8.07 billion from the ~~$6.81~~$7.40 billion reported as of December 31, ~~2013.~~2014. Our loan portfolio not covered by loss share increased by ~~$388.6~~$681.7 million to ~~$4.58~~$5.50 billion as of ~~September~~June 30, ~~2014,~~2015, from ~~$4.19~~$4.82 billion as of December 31, ~~2013.~~2014. This increase is primarily associated with the ~~recent~~first quarter of 2015 acquisition of ~~$241.6~~$37.9 million of ~~Traditions~~Doral Florida non-covered loans, net of the $4.3 million discount, the first quarter of 2015 migration of $56.3 million net covered loans to non-covered status, the second quarter of 2015 acquisition of $289.1 million in national commercial real estate loans plus ~~$146.9~~$298.5 million of organic loan growth since December 31, ~~2013.~~2014. Our loan portfolio covered by loss share decreased by ~~$31.5~~$80.3 million to ~~$251.0~~$159.9 million as of ~~September~~June 30, ~~2014,~~2015, from ~~$282.5~~$240.2 million as of December 31, ~~2013.~~2014. This decrease is primarily associated with the first quarter 2015 migration of $56.3 million net covered loans to non-covered status plus normal pay-downs and payoffs. Stockholders’ equity increased ~~$117.7~~$46.4 million to ~~$958.7 million~~$1.06 billion as of ~~September~~June 30, ~~2014,~~2015, compared to ~~$841.0 million~~$1.02 billion as of December 31, ~~2013.~~2014. The annualized improvement in stockholders’ equity for the first ~~nine~~six months of ~~2014~~2015 was ~~18.7%~~9.2%. The increase in stockholders’ equity is primarily associated with the ~~$39.5 million of common stock issued to the Traditions shareholders combined with the $92.6~~$63.9 million of comprehensive income less the ~~$16.4~~$16.9 million of dividends paid for the first ~~nine~~six months of ~~2014.~~2015.

As of ~~September~~June 30, ~~2014,~~2015, our non-performing non-covered loans increased to ~~$41.0~~$39.9 million, or ~~0.90%~~0.73%, of total non-covered loans from ~~$38.3~~$39.6 million, or ~~0.91%~~0.82%, of total non-covered loans as of December 31, ~~2013.~~2014. The allowance for loan losses for non-covered loans as a percent of non-performing non-covered loans increased to ~~123.57%~~140.11% as of ~~September~~June 30, ~~2014,~~2015, compared to ~~101.95%~~132.63% as of December 31, ~~2013.~~2014. Non-performing non-covered loans in Arkansas were ~~$24.4~~$25.6 million at ~~September~~June 30, ~~2014~~2015 compared to ~~$17.9~~$24.5 million as of December 31, ~~2013.~~2014. Non-performing non-covered loans in Florida were ~~$16.3~~$13.6 million at ~~September~~June 30, ~~2014~~2015 compared to ~~$20.3~~$14.8 million as of December 31, ~~2013.~~2014. Non-performing non-covered loans in Alabama were ~~$410,000~~$686,000 at ~~September~~June 30, ~~2014~~2015 compared to ~~$7,000~~$302,000 as of December 31, ~~2013.~~2014.

As of ~~September~~June 30, ~~2014,~~2015, our non-performing non-covered assets improved to ~~$60.4~~$56.4 million, or ~~0.88%~~0.71%, of total non-covered assets from ~~$68.4~~$56.5 million, or ~~1.07%~~0.79%, of total non-covered assets as of December 31, ~~2013.~~2014. Non-performing non-covered assets in Arkansas were ~~$39.3~~$37.5 million at ~~September~~June 30, ~~2014~~2015 compared to ~~$43.5~~$39.2 million as of December 31, ~~2013.~~2014. Non-performing non-covered assets in Florida were ~~$20.7~~$18.2 million at ~~September~~June 30, ~~2014~~2015 compared to ~~$24.9~~$17.0 million as of December 31, ~~2013.~~2014. Non-performing non-covered assets in Alabama were ~~$425,000~~$701,000 at ~~September~~June 30, ~~2014~~2015 compared to ~~$7,000~~$317,000 as of December 31, ~~2013.~~2014.

Overview. We prepare our consolidated financial statements based on the selection of certain accounting policies, generally accepted accounting principles and customary practices in the banking industry. These policies, in certain areas, require us to make significant estimates and assumptions. Our accounting policies are described in detail in the notes to our consolidated financial statements ~~in Note 1~~included as part of ~~the audited consolidated financial statements included in our Form 10-K, filed with the Securities and Exchange Commission.~~this document.

We consider a policy critical if (i) the accounting estimate requires assumptions about matters that are highly uncertain at the time of the accounting estimate; and (ii) different estimates that could reasonably have been used in the current period, or changes in the accounting estimate that are reasonably likely to occur from period to period, would have a material impact on our financial statements. Using these criteria, we believe that the accounting policies most critical to us are those associated with our lending practices, including the accounting for the allowance for loan losses, ~~acquisition accounting for covered loans and the related indemnification asset, investments,~~ foreclosed assets, ~~held for sale,~~investments, intangible assets, income taxes and stock options.

Investments – ~~Available-for-Sale.~~Available-for-sale. Securities available-for-sale 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.

Investments – Held-to-Maturity. Securities held-to-maturity, which include any security for which the Company has 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 and accreted, respectively, to interest income using the constant yield method over the period to maturity.

Loans Receivable Not Covered by Loss Share and Allowance for Loan Losses. Except for loans acquired during our acquisitions, substantially all of our loans receivable not covered by loss share are reported at their outstanding principal balance adjusted for any charge-offs, as it is management’s intent to hold them for the foreseeable future or until maturity or payoff, except for mortgage loans held for sale. Interest income on loans is accrued over the term of the loans based on the principal balance outstanding.

The allowance for loan losses is established through a provision for loan losses charged against income. The allowance represents an amount that, in management’s judgment, will be adequate to absorb probable credit losses on identifiable loans that may become uncollectible and probable credit losses inherent in the remainder of the loan portfolio. The amounts of provisions for loan losses are based on management’s analysis and evaluation of the loan portfolio for identification of problem credits, internal and external factors that may affect collectability, relevant credit exposure, particular risks inherent in different kinds of lending, current collateral values and other relevant factors.

The allowance consists of allocated and general components. The allocated component relates to loans that are classified as impaired. For those loans that are classified as impaired, an allowance is established when the discounted cash flows, collateral value or observable market price of the impaired loan is lower than the carrying value of that loan. The general component covers non-classified loans and is based on historical charge-off experience and expected loss given default derived from the Bank’s internal risk rating process. Other adjustments may be made to the allowance for pools of loans after an assessment of internal or external influences on credit quality that are not fully reflected in the historical loss or risk rating data.

Loans considered impaired, under FASB ASC 310-10-35, are loans for which, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. The Company applies this policy even if delays or shortfalls in payment are expected to be insignificant. The aggregate amount of impairment of loans is utilized in evaluating the adequacy of the allowance for loan losses and amount of provisions thereto. Losses on impaired loans are charged against the allowance for loan losses when in the process of collection it appears likely that such losses will be realized. The accrual of interest on impaired 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.

Groups of loans with similar risk characteristics are collectively evaluated for impairment based on the group’s historical loss experience adjusted for changes in trends, conditions and other relevant factors that affect repayment of the loans.

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 loan 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 loan 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 required payments for at least six months, and we reasonably expect to collect all principal and interest.

Acquisition Accounting, Acquired Loans and ~~the~~ Related Indemnification Asset.The Company accounts for its acquisitions under ASC Topic 805,Business Combinations, which requires the use of the acquisition method of accounting. All identifiable assets acquired, including loans, are recorded at fair value. No allowance for loan losses related to the acquired loans is recorded on the acquisition date as the fair value of the loans acquired incorporates assumptions regarding credit risk. All loans acquired are recorded at fair value in accordance with the fair value methodology prescribed in ASC Topic 820. For covered acquired loans fair value is exclusive of the shared-loss agreements with the Federal Deposit Insurance Corporation ~~(FDIC)~~(“FDIC”). The fair value estimates associated with the loans include estimates related to expected prepayments and the amount and timing of undiscounted expected principal, interest and other cash flows.

Over the life of the purchased credit impaired loans acquired, the Company continues to estimate cash flows expected to be collected on pools of loans sharing common risk characteristics, which are treated in the aggregate when applying various valuation techniques. The Company evaluates at each balance sheet date whether the present value of its pools of loans determined using the effective interest rates has decreased and if so, recognizes a provision for loan loss in its consolidated statement of income. For any increases in cash flows expected to be collected, the Company adjusts the amount of accretable yield recognized on a prospective basis over the pool’s remaining life.

Because the FDIC will reimburse the Company for certain acquired loans should the Company experience a loss, an indemnification asset is recorded at fair value at the acquisition date. The indemnification asset is recognized at the same time as the indemnified loans, and measured on the same basis, subject to collectability or contractual limitations. The shared-loss agreements on the acquisition date reflect the reimbursements expected to be received from the FDIC, using an appropriate discount rate, which reflects counterparty credit risk and other uncertainties.

For our FDIC-assisted transactions, shared-loss agreements continue to be measured on the same basis as the related indemnified loans. Because the acquired loans are subject to the accounting prescribed by ASC Topic 310, subsequent changes to the basis of the shared-loss agreements also follow that model. Deterioration in the credit quality of the loans (immediately recorded as an adjustment to the allowance for loan losses) would immediately increase the basis of the shared-loss agreements, with the offset recorded through the consolidated statement of income as a reduction of the provision for loan losses. Increases in the credit quality or cash flows of loans (reflected as an adjustment to yield and accreted into income over the weighted-average remaining life of the loans) decrease the basis of the shared-loss agreements, with such decrease being amortized into income over 1) the same period or 2) the life of the shared-loss agreements, whichever is shorter. Loss assumptions used in the basis of the indemnified loans are consistent with the loss assumptions used to measure the indemnification asset. Fair value accounting incorporates into the fair value of the indemnification asset an element of the time value of money, which is accreted back into income over the life of the shared-loss agreements.

Upon the determination of an incurred loss, the indemnification asset will be reduced by the amount owed by the FDIC. A corresponding claim receivable is recorded until cash is received from the FDIC.

Foreclosed Assets Held for Sale.Real estate and personal properties acquired through or in lieu of loan foreclosure are to be sold and are initially recorded at fair value at the date of foreclosure, establishing a new cost basis. Valuations are periodically performed by management, and the real estate and personal properties are carried at fair value less ~~cost~~costs to sell. Gains and losses from the sale of other real estate and personal properties are recorded in non-interest income, and expenses used to maintain the properties are included in non-interest expenses.

Intangible Assets. Intangible assets consist of goodwill and core deposit intangibles. Goodwill represents the excess purchase price over the fair value of net assets acquired in business acquisitions. The core deposit intangible represents the excess intangible value of acquired deposit customer relationships as determined by valuation specialists. The core deposit intangibles are being amortized over 48 to ~~121~~120 months on a straight-line basis. Goodwill is not amortized but rather is evaluated for impairment on at least an annual basis. We perform an annual impairment test of goodwill and core deposit intangibles as required by FASB ASC 350,~~Intangibles—~~Intangibles - Goodwill and Other, in the fourth quarter.

Income Taxes. The Company accounts for income taxes in accordance with income tax accounting guidance (ASC 740,Income Taxes). The income tax accounting guidance results in two components of income tax expense: current and deferred. Current income tax expense reflects taxes to be paid or refunded for the current period by applying the provisions of the enacted tax law to the taxable income or excess of deductions over revenues. The Company determines deferred income taxes using the liability (or balance sheet) method. Under this method, the net deferred tax asset or liability is based on the tax effects of the differences between the book and tax bases of assets and liabilities, and enacted changes in tax rates and laws are recognized in the period in which they occur.

Deferred income tax expense results from changes in deferred tax assets and liabilities between periods. Deferred tax assets are recognized if it is more likely than not, based on the technical merits, that the tax position will be realized or sustained upon examination. The term “more likely than not” means a likelihood of more than 50 percent; the terms “examined” and “upon examination” also include resolution of the related appeals or litigation processes, if any. A tax position that meets the more-likely-than-not recognition threshold is initially and subsequently measured as the largest amount of tax benefit that has a greater than 50 percent likelihood of being realized upon settlement with a taxing authority that has full knowledge of all relevant information. The determination of whether or not a tax position has met the more-likely-than-not recognition threshold considers the facts, circumstances and information available at the reporting date and is subject to ~~the~~ management’s judgment. Deferred tax assets are reduced by a valuation allowance if, based on the weight of evidence available, it is more likely than not that some portion or all of a deferred tax asset will not be realized.

The Company and its subsidiary file consolidated tax returns. Its subsidiary provides for income taxes on a separate return basis, and remits to the Company amounts determined to be currently payable.

Stock Options. In accordance with FASB ASC 718,~~Compensation—~~Compensation - Stock Compensation,and FASB ASC 505-50,Equity-Based Payments to Non-Employees, the fair value of each option award is estimated on the date of grant. The Company recognizes compensation expense for the grant-date fair value of the option award over the vesting period of the award.

On April 1, 2015, the Company’s wholly-owned bank subsidiary, Centennial, entered into an agreement with AM PR LLC, an affiliate of J.C. Flowers & Co. (collectively, the “Seller”) to purchase a pool of national commercial real estate loans totaling approximately $289.1 million for a purchase price of 99% of the total principal value of the acquired loans. The purchase of the loans was completed on April 1, 2015. The acquired loans were originated by the former Doral Bank within its Doral Property Finance portfolio (“DPF Portfolio”) and were transferred to the Seller by Banco Popular of Puerto Rico (“Popular”) upon its acquisition of the assets and liabilities of Doral Bank from the FDIC, as receiver for the failed Doral Bank. This pool of loans is now housed in a division of Centennial known as the Centennial CFG. The Centennial CFG is responsible for servicing the acquired loan pool and originating new loan production.

In connection with this acquisition of loans, the Company opened a loan production office on April 23, 2015 in New York City. Through the loan production office, Centennial CFG plans to build out a national lending platform focusing on commercial real estate plus commercial and industrial loans.

On February 27, 2015, the Company’s banking subsidiary, Centennial, acquired all the deposits and substantially all the assets of Doral Florida through an alliance agreement with Popular who was the successful lead bidder with the FDIC on the failed Doral Bank of San Juan, Puerto Rico. The acquisition provided the Company with loans of approximately $37.9 million net of loan discounts, deposits of approximately $466.3 million, plus a $428.2 million cash settlement to balance the transaction. There is no loss-share with the FDIC in the acquired assets.

Prior to the acquisition, Doral Florida operated five branch locations in Panama City, Panama City Beach and Pensacola, Florida plus a loan production office in Tallahassee, Florida. At the time of acquisition, Centennial operated 29 branch locations in the Florida Panhandle. As a result, the Company closed all five branch locations during the July 2015 systems conversion and returned the facilities back to the FDIC.

See Note 2 “Business Combinations” in the Notes to Consolidated Financial Statements for an additional discussion regarding the acquisition of Doral Florida.

On October 23, 2014, the Company completed its acquisition of Broward Financial Holdings, Inc. (“~~BFHI”~~Broward”), parent company of Broward Bank of Commerce, ~~(“Broward”),~~ pursuant to a previously announced definitive agreement and plan of merger whereby a wholly-owned acquisition subsidiary (“Acquisition Sub II”) of HBI merged with and into ~~BFHI,~~Broward, resulting in ~~BFHI~~Broward becoming a wholly-owned subsidiary of HBI. Immediately thereafter, Broward Bank of Commerce was merged into Centennial. Under the terms of the Agreement and Plan of Merger dated July 30, 2014 by and among HBI, Centennial, ~~BFHI,~~ Broward, Broward Bank of Commerce and Acquisition Sub II, HBI issued ~~approximately 1,021,000~~1,020,824 shares of its common stock valued at ~~$29,754,001~~approximately $30.2 million as of October 23, 2014, plus ~~$3,306,000~~$3.3 million in cash in exchange for all outstanding shares of ~~BFHI~~Broward common stock. HBI has also agreed to pay the ~~BFHI~~Broward shareholders at an undetermined date up to approximately $751,000 in additional consideration. The amount and timing of the additional payment, if any, will depend on future payments received or losses incurred by Centennial from certain current Broward Bank of Commerce loans. At June 30, 2015 and December 31, 2014, the Company had recorded a fair value of zero for the potential additional consideration.

Prior to the acquisition, Broward Bank of Commerce operated two banking locations in Fort Lauderdale, Florida. AsIncluding the effects of ~~acquisition date,~~the purchase accounting adjustments, Broward had approximately ~~$180.2~~$184.4 million in total assets, ~~$119.2~~$121.1 million in total loans after $3.0 million of loan discounts, and ~~$145.0~~$134.2 million in deposits.

As of the acquisition date, ~~BFHI’s~~Broward’s common equity totaled ~~$20,407,000~~$20.4 million and the Company paid a purchase price to the ~~BFHI~~Broward shareholders of ~~$33,060,001~~approximately $33.6 million for the Broward acquisition. As a result, the Company paid a multiple of 1.62 of Broward’s book value per share and tangible book value per share.

~~The Company expects to complete the Broward acquisition systems conversion the weekend of November 14, 2014.~~

See Note ~~23 “Subsequent Events”~~2 “Business Combinations” in the ~~Condensed~~ Notes to Consolidated Financial Statements for an additional discussion ~~for~~regarding the acquisition of Broward.

On July 17, 2014, the Company completed ~~its~~the acquisition of all of the issued and outstanding shares of common stock of Florida Traditions ~~pursuant to a previously announced definitive agreement~~Bank (“Traditions”) and ~~plan of merger whereby~~merged Traditions ~~merged with and~~ into Centennial. Under the terms of the Agreement and Plan of Merger dated April 25, 2014, by and among ~~HBI,~~the Company, Centennial, and Traditions, ~~HBI issued 1,316,072 shares~~the shareholders of ~~its~~Traditions received approximately $39.5 million of the Company’s common stock valued at ~~approximately $39.5 million as~~the time of ~~July 17, 2014,~~closing, in exchange for all outstanding shares of Traditions common stock.

Prior to the acquisition, Traditions operated eight banking locations in Central Florida, including its main office in Dade City, Florida. AsIncluding the effects of ~~acquisition date,~~the purchase accounting adjustments, Traditions had ~~$297.6~~$310.5 million in total assets, $241.6 million in loans after $8.5 million of loan discounts, and $267.3 million in deposits.

The transaction was accretive to the Company’s book value per common share and tangible book value per common ~~share.~~share by $0.31 per share and $0.21 per share, respectively.

See Note 2 “Business Combinations” in the ~~Condensed~~ Notes to Consolidated Financial Statements for an additional discussion ~~for~~regarding the acquisition of Traditions.

On October 24, 2013, Home BancShares, Inc. acquired all of the issued and outstanding shares of common stock of Liberty Bancshares, Inc., parent company of Liberty Bank of Arkansas (“Liberty Bank”). Under the terms of the agreement, shareholders of Liberty received $290.1 million of HBI common stock plus $30.0 million in cash. Also on October 24, 2013, Liberty Bank was merged into Centennial Bank. We also repurchased all of Liberty’s SBLF preferred stock held by the U.S. Treasury shortly after the closing. The merger significantly increased the Company’s deposit market share in Arkansas making it the second largest bank holding company headquartered in Arkansas.

Prior to the acquisition, Liberty operated 46 banking offices located in Northeast Arkansas, Northwest Arkansas and Western Arkansas. Including the effects of the purchase accounting adjustments, Centennial Bank acquired approximately $2.82 billion in assets, approximately $1.73 billion in loans including loan discounts and approximately $2.13 billion of deposits.

~~See Note 2 “Business Combinations” in the Condensed Notes to Consolidated Financial Statements for an additional discussion for the acquisition of Liberty Bank.~~

In conjunction with the 2010 FDIC-assisted transactions, the Company entered into loss share agreements with the FDIC. These agreements cover realized losses on loans, foreclosed real estate and certain other assets. These loss share assets are measured separately from the loan portfolios because they are not contractually embedded in the loans and are not transferable with the loans should the Company choose to dispose of them. Fair values at the acquisition dates were estimated based on projected cash flows available for loss-share based on the credit adjustments estimated for each loan pool and the loss share percentages. The loss share assets are also separately measured from the related loans and foreclosed real estate and recorded as FDIC indemnification assets on the Consolidated Balance Sheets. Subsequent to the acquisition date, reimbursements received from the FDIC for actual incurred losses will reduce the loss share assets. Reductions to expected credit losses, to the extent such reductions to expected credit losses are the result of an improvement to the actual or expected cash flows from the covered assets, will also reduce the loss share assets. Increases in expected credit losses will require an increase to the allowance for loan losses and a corresponding increase to the loss share assets. As the loss share agreements approach the various expiration dates there could be unexpected volatility as future expected loan losses might become projected to occur outside of the loss share coverage reimbursement window.

During the first quarter of 2015, the five-year covered loan loss-share agreements on the commercial real estate and commercial and industrial loans acquired through the FDIC-assisted acquisitions of Old Southern and Key West concluded. Since the five-year covered loan loss-share has ended, the pools have been reevaluated and are no longer deemed to have a material projected credit impairment. As such, the remaining loans in these pools are performing and have been reclassified out of purchased credit impaired loans and are included in non-covered loans as of June 30, 2015.

Table 4 summarizes the activity in the Company’s FDIC indemnification asset during the periods indicated:


	Three Months Ended June 30,						Six Months Ended June 30,
	2015			2014			2015			2014
	(Dollars in thousands)
Beginning balance	$	19,435		$	73,348		$	28,409		$	89,611
Incurred claims for FDIC covered credit losses		(1,679	)		(11,219	)		(7,541	)		(22,738	)
FDIC indemnification accretion/(amortization)		(2,202	)		(6,622	)		(6,158	)		(11,366	)
Reduction in provision for loan losses:
Benefit attributable to FDIC loss share agreements		320			1,119			1,164			1,119

Ending balance	$	15,874		$	56,626		$	15,874		$	56,626

Our purchase and assumption agreements in connection with our 2010 FDIC-assisted acquisitions allow the FDIC to recover a portion of the loss share funds previously paid out under the indemnification agreements in the event losses fail to reach the expected loss under a claw back provision. Should the markets associated with any of the banks we acquired through FDIC-assisted transactions perform better than initially projected, the Bank is required to pay this clawback (or “true-up”) payment to the FDIC on a specified date following the tenth anniversary of such acquisition (the “True-Up Measurement Date”).

Specifically, in connection with the Old Southern and Key West acquisitions, such “true-up” payments would be equal to 50% of the excess, if any, of (i) 20% of a stated threshold of $110.0 million in the case of Old Southern and $23.0 million in the case of Key West, less (ii) the sum of (A) 25% of the asset premium (discount) plus (B) 25% of the Cumulative Shared Loss Payments (defined as the aggregate of all of the payments made or payable to Centennial ~~Bank~~ minus the aggregate of all of the payments made or payable to the FDIC) plus (C) the Period Servicing Amounts for any twelve-month period prior to and ending on the True-Up Measurement Date (defined as the product of the simple average of the principal amount of shared loss loans and shared loss assets (other than shared loss securities) at the beginning and end of such period times 1%).

In connection with the Coastal-Bayside, Wakulla and Gulf State acquisitions, the “true-up” payments would be equal to 50% of the excess, if any, of (i) 20% of an intrinsic loss estimate of $121.0 million in the case of Coastal, $24.0 million in the case of Bayside, $73.0 million in the case of Wakulla and $35.0 million in the case of Gulf State, less (ii) the sum of (A) 20% of the net loss amount (the sum of all losses less the sum of all recoveries on covered assets) plus (B) 25% of the asset premium (discount) plus (C) 3.5% of the total loans subject to loss sharing under the loss sharing agreements as specified in the schedules to the agreements.

The amount of FDIC-assisted acquisitions true-up accrued at ~~September~~June 30, ~~2014~~2015 and December 31, ~~2013~~2014 was ~~$9.0~~$10.2 million and ~~$8.0~~$9.4 million, respectively.

We intend to continue opening new (commonly referred to asde novo) branches in our current markets and in other attractive market areas if opportunities arise. ~~During the third quarter of 2014, the Company opened one de novo branch in Naples, Florida and acquired eight branches through the acquisition of Traditions.~~ In an effort to achieve efficiencies primarily from the ~~recent~~ acquisitions prior to 2015, the Company closed ~~or merged~~one Arkansas location during the second quarter of 2015 and has plans to close two Arkansas, one Alabama and two Florida locations during the third quarter of ~~2014.~~2015.

During 2014, we initiated a branch efficiency study. Since that time, we have gathered data and evaluated over 40 branch locations across the Company. The ~~recent acquisition~~branch efficiency study considers many variables, such as proximity to other branches, deposits, transactions, market share and profitability. The results of ~~Broward has added two Florida locations~~the evaluation have narrowed our current focus to approximately eleven branch locations. Throughout the ~~Company’s footprint. After~~remainder of the ~~Broward transaction, the~~year, it is expected we will announce strategic consolidations where it improves efficiency in certain markets. These closures are expected to result in closing expenses.

The Company currently has 82 branches in Arkansas, 6159 branches in Florida and 7 branches in ~~Alabama.~~Alabama and has opened a loan production office in New York City.

For Three and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2014~~2015 and ~~2013~~2014

Our net income increased ~~$9.0~~$5.5 million, or ~~49.1%~~19.3%, to ~~$27.4~~$33.9 million for the three-month period ended ~~September~~June 30, ~~2014,~~2015, from ~~$18.4~~$28.4 million for the same period in ~~2013.~~2014. On a diluted earnings per share basis, our earnings were ~~$0.41~~$0.50 and ~~$0.33~~$0.43 per share for the three-month periods ended ~~September~~June 30, ~~2014~~2015 and ~~2013, respectively. Excluding the $3.8 million and $1.0 million of merger expenses associated with the~~ 2014, acquisition of Florida Tradition Bank (“Traditions”) and the 2013 acquisition of Liberty Bancshares, Inc. (“Liberty”), respectively, diluted earnings per share for the third quarter of 2014 and 2013 were $0.45 per share and $0.34, respectively. The ~~$10.7~~$5.5 million increase in net income ~~excluding merger expenses~~ is primarily associated with ~~the $32.3 million of~~ additional net interest income primarily resulting from our ~~2013 acquisition~~2014 and 2015 acquisitions plus a decrease in provision for loan losses in second quarter of ~~Liberty~~2015 and ~~2014 acquisition~~reduced amortization of ~~Traditions plus~~ the ~~additional accretion income from our previous FDIC covered loan acquisitions.~~indemnification asset when compared to the same period in 2014. These improvements were partially offset by a modest increase in the costs associated with the asset growth from our ~~Liberty~~2014 and ~~Traditions~~2015 acquisitions ~~$3.8 million of additional amortization~~and the opening of the ~~indemnification asset plus an increase in provision for~~Centennial CFG loan ~~losses of $4.2 million in third quarter of 2014~~production office when compared to the same period in ~~2013.~~2014.

Our net income increased ~~$29.6~~$9.3 million, or ~~55.2%~~16.6%, to ~~$83.1~~$65.0 million for the ~~nine-month~~six-month period ended ~~September~~June 30, ~~2014,~~2015, from ~~$53.6~~$55.8 million for the same period in ~~2013.~~2014. On a diluted earnings per share basis, our earnings were ~~$1.26~~$0.96 and ~~$0.95~~$0.85 per share for the ~~nine-month~~six-month periods ended ~~September~~June 30, ~~2014~~2015 and ~~2013,~~2014, respectively. Excluding the ~~$4.7~~$1.6 million ~~and $1.1~~of one-time gain on acquisition offset by $1.4 million of merger expenses associated with the ~~2014~~ acquisition of ~~Traditions~~Doral Florida, net income was $64.9 million and ~~the 2013 acquisition of Liberty, respectively,~~ diluted earnings per share for the ~~nine~~first six months ~~ended September 30, 2014 and 2013 were $1.31~~of 2015 remained $0.96 per share. Excluding the $955,000 of merger expenses associated with the acquisition of Liberty, net income was $56.3 million, or $0.86 diluted earnings per share, ~~and $0.96, respectively.~~for the first six months of 2014. The ~~$31.8~~$8.5 million increase in net income excluding merger expenses and acquisition gain is primarily associated with ~~the $98.1 million of~~ additional net interest income primarily resulting from our ~~2013 acquisition~~2014 and 2015 acquisitions plus a decrease in provision for loan losses in the first six months of ~~Liberty~~2015 and ~~2014 acquisition~~reduced amortization of ~~Traditions and~~ the ~~additional accretion income from our previous FDIC covered loan acquisitions. Furthermore, there was $267,000 of additional net gains from~~indemnification asset when compared to the ~~sale of SBA loans, sale of premises & equipment, investment securities and OREO.~~same period in 2014. These improvements were partially offset by a modest increase in the costs associated with the asset growth from our ~~Liberty~~2014 and ~~Traditions~~2015 acquisitions ~~$10.9 million of additional amortization~~and the opening of the ~~indemnification asset plus an increase in provision for~~Centennial CFG loan ~~losses of $16.4 million in the first nine months of 2014~~production office when compared to the same period in ~~2013.~~2014.

Net interest income, our principal source of earnings, is the difference between the interest income generated by earning assets and the total interest cost of the deposits and borrowings obtained to fund those assets. Factors affecting the level of net interest income include the volume of earning assets and interest-bearing liabilities, yields earned on loans and investments, ~~and~~ rates paid on deposits and other borrowings, the level of non-performing loans and the amount of non-interest-bearing liabilities supporting earning assets. Net interest income is analyzed in the discussion and tables below on a fully taxable equivalent basis. The adjustment to convert certain income to a fully taxable equivalent basis consists of dividing tax-exempt income by one minus the combined federal and state income tax rate (39.225% for the three and ~~nine-month~~six-month periods ended ~~September~~June 30, ~~2014~~2015 and ~~2013)~~2014).

The Federal Reserve Board sets various benchmark rates, including the Federal Funds rate, and thereby influences the general market rates of interest, including the deposit and loan rates offered by financial institutions. The Federal Funds rate, which is the cost to banks of immediately available overnight funds, was lowered on December 16, 2008 to a historic low of 0.25% to 0% where it has remained since that time.

Each quarter we perform credit impairment tests on the loans acquired in our FDIC loss-sharing and non-loss-sharing acquisitions. The second quarter of 2015 quarterly impairment testing noted a slight decline in asset quality in eight of our covered loan pools which resulted in a net covered provision for loan loss of $80,000. Conversely, during 2014 and 2013, the quarterly impairment testing projected material credit improvements. As a result of these credit improvements, $83.3 million of adjustments to yield were determined to be recognized over the weighted-average life of the loans. The recognition of these additional credit improvements has begun to slow down. Plus, the accretion income on the portfolio acquired in our acquisition of Liberty in 2013 has begun to slow down. As result, there was a decline of recognized accretion yield from the second quarter of 2014 to the second quarter of 2015. Consequently, yields on loans and net interest margin for the quarter just ended are reduced when compared to the second quarter of 2014.

The effective yield on non-covered loans for the three months ended ~~September~~June 30, 2015 and 2014 was 5.63% and ~~2013 was 5.84% and 5.88%~~6.08%, respectively. The effective yield on non-covered loans for the ~~nine~~six months ended ~~September~~June 30, 2015 and 2014 was 5.64% and ~~2013 was 6.06% and 6.01%~~6.17%, respectively. The effective yield on covered loans for the three months ended ~~September~~June 30, 2015 and 2014 was 18.40% and ~~2013 was 17.23% and 12.76%~~19.38%, respectively. The effective yield on covered loans for the ~~nine~~six months ended ~~September~~June 30, 2015 and 2014 was 16.26% and ~~2013 was 17.53% and 11.23%~~17.67%, respectively.

During the 2014 quarterly impairment tests on the estimated cash flows of purchased credit impaired loans, the Company established certain loan pools of this type were determined to have a materially projected credit improvement. As a result of this improvement, the Company will recognize approximately $39.6 million as an additional adjustment to yield over the weighted average life of the loans. Since our first covered loan acquisition in 2010, the Company has identified a total of $74.2 million of adjustments to yield during the quarterly impairment tests. For the three and nine months ended September 30, 2014 and 2013, the Company recognized $7.9 million and $21.2 million for 2014 and $4.1 million and $9.4 million for 2013 of additional accretion income related to the positive results of the impairment tests.

Net interest income on a fully taxable equivalent basis increased ~~$32.9~~$7.7 million, or ~~69.4%~~9.6%, to ~~$80.3~~$87.3 million for the three-month period ended ~~September~~June 30, ~~2014,~~2015, from ~~$47.4~~$79.7 million for the same period in ~~2013.~~2014. This increase in net interest income was the result of ~~a $34.9~~an $8.0 million increase in interest income ~~offset by~~combined with a ~~$2.0 million~~$319,000 increase in interest expense. The ~~$34.9~~$8.0 million increase in interest income was primarily the result of a higher level of earning assets offset by lower yields on our loans. The ~~$2.0 million~~$319,000 increase in interest expense for the three-month period ended ~~September~~June 30, ~~2014,~~2015, is primarily the result of an increase in ~~the volume~~higher level of our ~~average interest-bearing transaction~~interest bearing liabilities from our 2014 and ~~savings deposits, average time deposits and FHLB borrowings primarily associated with the~~2015 acquisitions ~~of Liberty and Traditions~~ offset by our interest bearing liabilities repricing in the lower interest rate environment. The higher level of our interest bearing liabilities resulted in an increase in interest expense of approximately ~~$2.7 million.~~$809,000. The repricing of our interest bearing liabilities in the lower interest rate environment resulted in a ~~$695,000~~$490,000 decrease in interest expense.

Net interest income on a fully taxable equivalent basis increased ~~$99.9~~$10.0 million, or ~~72.0%~~6.3%, to ~~$238.6~~$168.3 million for the ~~nine-month~~six-month period ended ~~September~~June 30, ~~2014,~~2015, from ~~$138.7~~$158.3 million for the same period in ~~2013.~~2014. This increase in net interest income was the result of a ~~$104.2~~$10.3 million increase in interest income ~~offset by~~combined with a ~~$4.3 million~~$289,000 increase in interest expense. The ~~$104.2~~$10.3 million increase in interest income was primarily the result of a higher level of earning assets ~~combined with higher~~offset by lower yields on our loans. The ~~$4.3 million~~$289,000 increase in interest expense for the ~~nine-month~~three-month period ended ~~September~~June 30, ~~2014,~~2015, is primarily the result of an increase in ~~the volume~~higher level of our ~~average interest-bearing transaction~~interest bearing liabilities from our 2014 and ~~savings deposits, average time deposits and FHLB borrowings primarily associated with the~~2015 acquisitions ~~of Liberty and Traditions~~ offset by our interest bearing liabilities repricing in the lower interest rate environment. The higher level of our interest bearing liabilities resulted in an increase in interest expense of approximately ~~$7.7~~$1.2 million. The repricing of our interest bearing liabilities in the lower interest rate environment resulted in a ~~$3.4 million~~$929,000 decrease in interest expense.

Net interest margin, on a fully taxable equivalent basis, was ~~5.26%~~5.00% and ~~5.41%~~4.97% for the three and ~~nine~~six months ended ~~September~~June 30, ~~2014~~2015, respectively, compared to ~~5.41%~~5.50% and ~~5.25%~~5.49% for the same ~~periods~~period in 2013, respectively. The numerous pools which have been determined to have material projected credit improvement as a result of the quarterly impairment testing and the acquisition of Liberty and Traditions have significantly changed the mix and metrics on the net interest margin since December 31, 2012. Although there have been many changes since 2012, the Company continues to remain focused on expanding its net interest margin through opportunities such as improved pricing on interest-bearing deposits.2014.

Additional information and analysis for our net interest margin can be found in Tables 22 through 24 of our Non-GAAP Financial ~~Measurement~~Measurements section of the Management Discussion and Analysis.

Tables 5 and 6 reflect an analysis of net interest income on a fully taxable equivalent basis for the three and ~~nine-month~~six-month periods ended ~~September~~June 30, ~~2014~~2015 and ~~2013,~~2014, as well as changes in fully taxable equivalent net interest margin for the three and ~~nine-month~~six-month periods ended ~~September~~June 30, ~~2014,~~2015, compared to the same period in ~~2013.~~2014.


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013			2015			2014			2015			2014
	(Dollars in thousands)												(Dollars in thousands)
Interest income	$	83,401		$	49,176		$	247,827		$	145,409		$	90,311		$	82,586		$	174,192		$	164,426
Fully taxable equivalent adjustment		1,729			1,073			4,944			3,199			1,879			1,624			3,734			3,215

Interest income – fully taxable equivalent		85,130			50,249			252,771			148,608			92,190			84,210			177,926			167,641
Interest expense		4,796			2,826			14,179			9,869			4,862			4,543			9,672			9,383

Net interest income – fully taxable equivalent	$	80,334		$	47,423		$	238,592		$	138,739		$	87,328		$	79,667		$	168,254		$	158,258


Yield on earning assets – fully taxable equivalent		5.57	%		5.73	%		5.73	%		5.62	%		5.28	%		5.82	%		5.26	%		5.82	%
Cost of interest-bearing liabilities		0.39			0.41			0.39			0.46			0.36			0.38			0.36			0.39
Net interest spread – fully taxable equivalent		5.18			5.32			5.34			5.16			4.92			5.44			4.90			5.43
Net interest margin – fully taxable equivalent		5.26			5.41			5.41			5.25			5.00			5.50			4.97			5.49


	Three Months Ended September 30, 2014 vs. 2013			Nine Months Ended September 30, 2014 vs. 2013			Three Months Ended June 30, 2015 vs. 2014			Six Months Ended June 30, 2015 vs. 2014
	(In thousands)						(In thousands)
Increase (decrease) in interest income due to change in earning assets	$	36,390		$	103,053		$	18,086		$	29,245
Increase (decrease) in interest income due to change in earning asset yields		(1,509	)		1,110			(10,106	)		(18,960	)
(Increase) decrease in interest expense due to change in interest-bearing liabilities		(2,665	)		(7,666	)		(809	)		(1,218	)
(Increase) decrease in interest expense due to change in interest rates paid on interest-bearing liabilities		695			3,356			490			929

Increase (decrease) in net interest income	$	32,911		$	99,853		$	7,661		$	9,996

Table 7 shows, for each major category of earning assets and interest-bearing liabilities, the average amount outstanding, the interest income or expense on that amount and the average rate earned or expensed for the three and ~~nine-month~~six-month periods ended ~~September~~June 30, ~~2014~~2015 and ~~2013,~~2014, respectively. The table also shows the average rate earned on all earning assets, the average rate expensed on all interest-bearing liabilities, the net interest spread and the net interest margin for the same periods. The analysis is presented on a fully taxable equivalent basis. Non-accrual loans were included in average loans for the purpose of calculating the rate earned on total loans.


	Three Months Ended September 30,														Three Months Ended June 30,
	2014							2013							2015							2014
	Average Balance		Income / Expense		Yield / Rate			Average Balance		Income / Expense		Yield / Rate			Average Balance		Income / Expense		Yield / Rate			Average Balance		Income / Expense		Yield / Rate
	(Dollars in thousands)														(Dollars in thousands)
ASSETS
Earnings assets
Interest-bearing balances due from banks	$	40,723	$	20		0.19	%	$	40,756	$	19		0.18	%	$	84,443	$	44		0.21	%	$	54,726	$	29		0.21	%
Federal funds sold		13,604		7		0.20			4,411		2		0.18			4,355		3		0.28			23,349		12		0.21
Investment securities – taxable		1,044,732		4,905		1.86			579,867		2,645		1.81			1,082,113		5,130		1.90			1,038,011		4,762		1.84
Investment securities – non-taxable		302,859		4,174		5.47			183,341		2,462		5.33			327,088		4,543		5.57			287,679		3,889		5.42
Loans receivable		4,661,600		76,024		6.47			2,668,421		45,121		6.71			5,507,405		82,470		6.01			4,403,767		75,518		6.88

Total interest-earning assets		6,063,518		85,130		5.57			3,476,796		50,249		5.73			7,005,404	$	92,190		5.28			5,807,532	$	84,210		5.82

Non-earning assets		907,407							569,829							895,317							914,388

Total assets	$	6,970,925						$	4,046,625						$	7,900,721						$	6,721,920


LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities
Interest-bearing liabilities
Savings and interest-bearing transaction accounts	$	2,835,267	$	1,376		0.19	%	$	1,691,077	$	637		0.15	%	$	3,149,490	$	1,576		0.20	%	$	2,808,856	$	1,227		0.18	%
Time deposits		1,315,772		1,867		0.56			832,149		1,173		0.56			1,418,803		1,735		0.49			1,380,249		1,868		0.54

Total interest-bearing deposits		4,151,039		3,243		0.31			2,523,226		1,810		0.28			4,568,293		3,311		0.29			4,189,105		3,095		0.30

Federal funds purchased		2,364		2		0.34			1,511		3		0.79			213		1		1.88			110		—		0.00
Securities sold under agreement to repurchase		150,239		186		0.49			73,924		87		0.47			168,314		163		0.39			136,444		168		0.49
FHLB borrowed funds		494,650		1,035		0.83			144,467		910		2.50			677,108		1,053		0.62			376,326		952		1.01
Subordinated debentures		60,826		330		2.15			3,093		16		2.05			60,826		334		2.20			60,826		328		2.16

Total interest-bearing liabilities		4,859,118		4,796		0.39			2,746,221		2,826		0.41			5,474,754		4,862		0.36			4,762,811		4,543		0.38

Non-interest bearing liabilities
Non-interest bearing deposits		1,148,923							738,526							1,344,580							1,054,233
Other liabilities		25,090							27,315							33,622							24,832

Total liabilities		6,033,131							3,512,062							6,852,956							5,841,876
Stockholders’ equity		937,794							534,563							1,047,765							880,044

Total liabilities and stockholders’ equity	$	6,970,925						$	4,046,625						$	7,900,721						$	6,721,920

Net interest spread						5.18	%						5.32	%						4.92	%						5.44	%
Net interest income and margin			$	80,334		5.26	%			$	47,423		5.41	%			$	87,328		5.00	%			$	79,667		5.50	%


	Nine Months Ended September 30,														Six Months Ended June 30,
	2014							2013							2015							2014
	Average Balance		Income / Expense		Yield / Rate			Average Balance		Income / Expense		Yield / Rate			Average Balance		Income / Expense		Yield / Rate			Average Balance		Income / Expense		Yield / Rate
	(Dollars in thousands)														(Dollars in thousands)
ASSETS
Earnings assets
Interest-bearing balances due from banks	$	52,741	$	73		0.19	%	$	108,646	$	203		0.25	%	$	117,883	$	135		0.23	%	$	58,849	$	53		0.18	%
Federal funds sold		22,746		35		0.21			10,060		15		0.20			9,792		11		0.23			27,393		28		0.21
Investment securities – taxable		1,029,496		14,137		1.84			571,375		7,538		1.76			1,081,864		10,673		1.99			1,021,752		9,232		1.82
Investment securities – non-taxable		292,349		11,852		5.42			173,796		7,275		5.60			327,534		9,047		5.57			287,007		7,678		5.39
Loans receivable		4,498,643		226,674		6.74			2,672,088		133,577		6.68			5,289,205		158,060		6.03			4,415,814		150,650		6.88

Total interest-earning assets		5,895,975		252,771		5.73			3,535,965		148,608		5.62			6,826,278	$	177,926		5.26			5,810,815	$	167,641		5.82

Non-earning assets		923,800							592,438							895,978							933,324

Total assets	$	6,819,775						$	4,128,403						$	7,722,256						$	6,744,139


LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities
Interest-bearing liabilities
Savings and interest-bearing transaction accounts	$	2,809,963	$	3,882		0.18	%	$	1,747,040	$	2,191		0.17	%	$	3,095,483	$	3,050		0.20	%	$	2,797,102	$	2,506		0.18	%
Time deposits		1,407,255		5,840		0.55			906,015		4,233		0.62			1,377,623		3,519		0.52			1,453,755		3,973		0.55

Total interest-bearing deposits		4,217,218		9,722		0.31			2,653,055		6,424		0.32			4,473,106		6,569		0.30			4,250,857		6,479		0.31

Federal funds purchased		1,001		2		0.27			510		3		0.79			666		2		0.61			308		—		0.00
Securities sold under agreement to repurchase		145,348		536		0.49			72,078		253		0.47			173,906		335		0.39			142,862		350		0.49
FHLB borrowed funds		416,531		2,933		0.94			135,093		2,926		2.90			658,284		2,103		0.64			376,823		1,898		1.02
Subordinated debentures		60,826		986		2.17			11,023		263		3.19			60,826		663		2.20			60,826		656		2.17

Total interest-bearing liabilities		4,840,924		14,179		0.39			2,871,759		9,869		0.46			5,366,788		9,672		0.36			4,831,676		9,383		0.39

Non-interest bearing liabilities
Non-interest bearing deposits		1,068,626							704,123							1,286,275							1,029,004
Other liabilities		19,642							22,967							33,502							16,873

Total liabilities		5,929,192							3,598,849							6,686,565							5,877,553
Stockholders’ equity		890,583							529,554							1,035,691							866,586

Total liabilities and stockholders’ equity	$	6,819,775						$	4,128,403						$	7,722,256						$	6,744,139

Net interest spread						5.34	%						5.16	%						4.90	%						5.43	%
Net interest income and margin			$	238,592		5.41	%			$	138,739		5.25	%			$	168,254		4.97	%			$	158,258		5.49	%

Table 8 shows changes in interest income and interest expense resulting from changes in volume and changes in interest rates for the three and ~~nine-month~~six-month periods ended ~~September~~June 30, ~~2014~~2015 compared to the same periods in ~~2013,~~2014, on a fully taxable basis. The changes in interest rate and volume have been allocated to changes in average volume and changes in average rates, in proportion to the relationship of absolute dollar amounts of the changes in rates and volume.


	Three Months Ended September 30, 2014 over 2013								Nine Months Ended September 30, 2014 over 2013									Three Months Ended June 30, 2015 over 2014									Six Months Ended June 30, 2015 over 2014
	Volume		Yield/Rate			Total			Volume			Yield/Rate			Total			Volume			Yield/Rate			Total			Volume			Yield/Rate			Total
	(In thousands)																	(In thousands)
Increase (decrease) in:
Interest income:
Interest-bearing balances due from banks	$	—	$	1		$	1		$	(86	)	$	(44	)	$	(130	)	$	15		$	—		$	15		$	65		$	17		$	82
Federal funds sold		5		—			5			20			—			20			(12	)		3			(9	)		(20	)		3			(17	)
Investment securities – taxable		2,180		80			2,260			6,279			320			6,599			206			162			368			563			878			1,441
Investment securities – non-taxable		1,645		67			1,712			4,813			(236	)		4,577			545			109			654			1,112			257			1,369
Loans receivable		32,560		(1,657	)		30,903			92,027			1,070			93,097			17,332			(10,380	)		6,952			27,525			(20,115	)		7,410

Total interest income		36,390		(1,509	)		34,881			103,053			1,110			104,163			18,086			(10,106	)		7,980			29,245			(18,960	)		10,285


Interest expense:
Interest-bearing transaction and savings deposits		518		221			739			1,449			242			1,691			159			190			349			281			263			544
Time deposits		686		8			694			2,124			(517	)		1,607			51			(184	)		(133	)		(202	)		(252	)		(454	)
Federal funds purchased		2		(3	)		(1	)		3			(4	)		(1	)		1			—			1			1			1			2
Securities sold under agreement to repurchase		95		4			99			269			14			283			35			(40	)		(5	)		68			(83	)		(15	)
FHLB borrowed funds		1,051		(926	)		125			2,989			(2,982	)		7			563			(462	)		101			1,070			(865	)		205
Subordinated debentures		313		1			314			832			(109	)		723			—			6			6			—			7			7

Total interest expense		2,665		(695	)		1,970			7,666			(3,356	)		4,310			809			(490	)		319			1,218			(929	)		289


Increase (decrease) in net interest income	$	33,725	$	(814	)	$	32,911		$	95,387		$	4,466		$	99,853		$	17,277		$	(9,616	)	$	7,661		$	28,027		$	(18,031	)	$	9,996

Our management assesses the adequacy of the allowance for loan losses by applying the provisions of FASB ASC 310-10-35. Specific allocations are determined for loans considered to be impaired and loss factors are assigned to the remainder of the loan portfolio to determine an appropriate level in the allowance for loan losses. The allowance is increased, as necessary, by making a provision for loan losses. The specific allocations for impaired loans are assigned based on an estimated net realizable value after a thorough review of the credit relationship. The potential loss factors associated with the remainder of the loan portfolio are based on an internal net loss experience, as well as management’s review of trends within the portfolio and related industries.

While general economic trends have improved, ~~recently,~~ we cannot be certain that the current economic conditions will considerably improve in the near future. Recent and ongoing events at the national and international levels can create uncertainty in the financial markets. Despite these economic uncertainties, we continue to follow our historically conservative procedures for lending and evaluating the provision and allowance for loan losses. Our practice continues to be primarily traditional real estate lending with strong loan-to-value ratios.

Generally, commercial, commercial real estate, and residential real estate loans are assigned a level of risk at origination. Thereafter, these loans are reviewed on a regular basis. The periodic reviews generally include loan payment and collateral status, the borrowers’ financial data, and key ratios such as cash flows, operating income, liquidity, and leverage. A material change in the ~~borrower’s~~borrowers’ credit analysis can result in an increase or decrease in the loan’s assigned risk grade. Aggregate dollar volume by risk grade is monitored on an on-going basis.

Our management reviews certain key loan quality indicators on a monthly basis, including current economic conditions, delinquency trends and ratios, portfolio mix changes, and other information management deems necessary. This review process provides a degree of objective measurement that is used in conjunction with periodic internal evaluations. To the extent that this review process yields differences between estimated and actual observed losses, adjustments are made to the loss factors used to determine the appropriate level of the allowance for loan losses.

Our Company is primarily a real estate lender in the markets we serve. As such, we are subject to declines in asset quality when real estate prices fall during a recession. The recession in the latter years of the last decade harshly impacted the real estate market in Florida. The economic conditions particularly in our Florida market have improved recently, although not to pre-recession levels. Our Arkansas ~~markets’ economies have~~market’s economy has been fairly stable over the past several years with no boom or bust. As a result, the Arkansas economy fared better with its real estate values during this time period.

The provision for loan losses represents management’s determination of the amount necessary to be charged against the current period’s earnings, to maintain the allowance for loan losses at a level that is considered adequate in relation to the estimated risk inherent in the loan portfolio.

Each quarter we perform credit impairment tests on the loans acquired in our FDIC loss-sharing and non-loss-sharing acquisitions. During our second quarter 2015 impairment testing, no pools were determined to have a material projected credit improvement. The second quarter 2015 impairment testing noted a slight decline in asset quality in eight of our covered loan pools which resulted in a net covered provision for loan loss of $80,000. The quarterly 2015 impairment testing during the first six months of 2015 noted a slight decline in asset quality in thirteen of our covered loan pools which resulted in a net covered provision for loan loss of $998,000. There was zero provision for covered loans for the three and ~~nine~~six months ended ~~September~~June 30, ~~2014 and the three months ended September 30, 2013. There was $100,000 provision for covered loans for the nine months ended September 30, 2013.~~

The $100,000 of provision for loan losses for the nine months ended September 30, 2013 is a result of the quarterly 2013 impairment testing on the estimated cash flows of the covered loans. This testing established that the pools evaluated had experienced material projected credit deterioration. As a result of this projection, we recorded a $500,000 provision for loan losses to the allowance for loan losses related to the purchased impaired loans during the nine months ended September 30, 2013. Since these loans are covered by loss share with the FDIC, we were able to increase the related indemnification asset by $400,000 resulting in a net provision for loan losses of $100,000.2014.

There was ~~$4.2~~$5.3 million and ~~$17.3~~$8.2 million of provision for non-covered loans for the three and ~~nine~~six months ended ~~September~~June 30, ~~2014.~~2015, respectively. There was ~~zero~~$6.1 million and ~~$750,000~~$13.1 million of provision for non-covered loans for the three and ~~nine~~six months ended ~~September~~June 30, ~~2013.~~2014, respectively.

The Company experienced ~~a $4.2~~an $814,000 and $4.9 million ~~increase~~decrease in the provision for loan losses for non-covered loans during the ~~three~~second quarter and six months ~~ended September 30, 2014~~of 2015 versus the ~~same period in 2013. The Company experienced a $16.5 million increase in the provision for loan losses for non-covered loans during the nine~~second quarter and six months ~~ended September 30,~~of 2014, ~~versus the same period in 2013. Included in the 2014 three and nine-month periods was $2.9 million of provision for loan losses associated with purchased credit impaired loans acquired.~~respectively. This expected ~~increase~~decrease is ~~not an indication of a decline in asset quality, but~~ primarily a reflection of a slowdown in the migration of the acquired Liberty ~~(and other acquired)~~ loans from ~~purchased loan~~purchased-loan accounting treatment to ~~originated~~originated-loan accounting treatment offset by provisioning for second quarter 2015 organic loan ~~accounting treatment.~~ growth.

Based upon current accounting guidance, the allowance for loan losses is not carried over in an acquisition. As a result, ~~virtually~~ none of the ~~Liberty footprint~~acquired loans had any allocation of the allowance for loan losses at ~~year end.~~merger date. This is the result of all loans acquired ~~on October 24, 2013 from Liberty~~ being recorded at fair value in accordance with the fair value methodology prescribed in ASC Topic 820. AsHowever, as the acquired loans ~~mature~~payoff or renew and ~~are renewed as~~the acquired footprint originates new ~~credits, management evaluates~~loan production, it is necessary to establish an allowance which represents an amount that, in management’s judgment, will be adequate to absorb credit losses. Traditionally, there is a large migration of these loans during the ~~credit risk associated with these new credit decisions and determines the required allowance~~first year after acquisition, which can create an elevated provision for loan ~~loss for these new originated loans using~~losses as was the case during 2014 with respect to the Liberty acquisition. The allowance for loan loss methodology for all originated loans as disclosed in Note 1 to the Notes to Consolidated Financial Statements in our Form ~~10-K.~~10-K was used for these loans. Our current or historical provision levels should not be relied upon as a predictor or indicator of future levels going forward.

Total non-interest income was ~~$10.8~~$17.0 million and ~~$34.6~~$31.7 million for the three and ~~nine-month~~six-month periods ended ~~September~~June 30, ~~2014, respectively,~~2015, compared to ~~$9.3~~$11.5 million and ~~$28.1~~$23.7 million for the same ~~periods~~period in ~~2013,~~2014, respectively. Our recurring non-interest income includes service charges on deposit accounts, other service charges and fees, trust fees, mortgage lending, insurance, title fees, increase in cash value of life insurance, dividends and FDIC indemnification accretion/amortization.

Table 9 measures the various components of our non-interest income for the three and ~~nine-month~~six-month periods ended ~~September~~June 30, ~~2014~~2015 and ~~2013,~~2014, respectively, as well as changes for the three and ~~nine-month~~six-month periods ended ~~September~~June 30, ~~2014~~2015 compared to the same periods in ~~2013.~~2014.


	Three Months Ended											Nine Months Ended											Three Months Ended													Six Months Ended
	September 30,						2014 Change					September 30,						2014 Change					June 30,						2015 Change from 2014							June 30,							2015 Change from 2014
	2014			2013			from 2013					2014			2013			from 2013					2015			2014									2015				2014				2015 Change from 2014
	(Dollars in thousands)																						(Dollars in thousands)
Service charges on deposit accounts	$	6,275		$	4,072		$	2,203		54.1	%	$	18,379		$	11,869		$	6,510		54.8	%	$	6,056		$	6,193		2015 Change from 2014	$	(137	)		(2.2	)%		$	11,474			$	12,104		$	(630	)		(5.2	)%
Other service charges and fees		5,977			3,671			2,306		62.8			17,641			10,587			7,054		66.6			6,499			5,978			521			8.7				12,715				11,664			1,051			9.0
Trust fees		306			15			291		1,940.0			1,065			51			1,014		1,988.2			1,186			323			863			267.2				1,618				759			859			113.2
Mortgage lending income		1,901			1,527			374		24.5			5,215			4,518			697		15.4			2,955			1,801			1,154			64.1				4,887				3,314			1,573			47.5
Insurance commissions		984			519			465		89.6			3,334			1,642			1,692		103.0			640			934			(294	)		(31.5	)			1,207				2,350			(1,143	)		(48.6	)
Income from title services		59			156			(97	)	(62.2	)		162			401			(239	)	(59.6	)		36			53			(17	)		(32.1	)			70				103			(33	)		(32.0	)
Increase in cash value of life insurance		322			203			119		58.6			891			601			290		48.3			295			281			14			5.0				603				569			34			6.0
Dividends from FHLB, FRB, Bankers’ bank & other		389			179			210		117.3			1,206			755			451		59.7			419			501			(82	)		(16.4	)			834				817			17			2.1
Gain on sale of SBA loans		183			79			104		131.6			183			135			48		35.6
Gain on acquisitions																								—			—			—			—				1,635				—			1,635			100.0
Gain (loss) on sale of premises and equipment, net		(35	)		303			(338	)	(111.6	)		419			712			(293	)	(41.2	)		21			445			(424	)		(95.3	)			29				454			(425	)		(93.6	)
Gain (loss) on OREO, net		529			777			(248	)	(31.9	)		1,927			1,304			623		47.8			(263	)		859			(1,122	)		(130.6	)			230				1,398			(1,168	)		(83.5	)
Gain (loss) on securities, net		—			—			—		—			—			111			(111	)	(100.0	)		—			—			—			—				4				—			4			100.0
FDIC indemnification accretion/(amortization), net		(6,947	)		(3,177	)		(3,770	)	118.7			(18,313	)		(7,452	)		(10,861	)	145.7			(2,202	)		(6,622	)		4,420			(66.7	)			(6,158	)			(11,366	)		5,208			(45.8	)
Other income		888			994			(106	)	(10.7	)		2,442			2,914			(472	)	(16.2	)		1,385			793			592			74.7				2,549				1,554			995			64.0

Total non-interest income	$	10,831		$	9,318		$	1,513		16.2	%	$	34,551		$	28,148		$	6,403		22.7	%	$	17,027		$	11,539		$	5,488			47.6	%		$	31,697			$	23,720		$	7,977			33.6	%

Non-interest income increased ~~$1.5~~$5.5 million, or ~~16.2%~~47.6%, to ~~$10.8~~$17.0 million for the three-month period ended ~~September~~June 30, ~~2014~~2015 from ~~$9.3~~$11.5 million for the same period in ~~2013.~~2014. Non-interest income increased ~~$6.4~~$8.0 million, or ~~22.7%~~33.6%, to ~~$34.6~~$31.7 million for the ~~nine-month~~six-month period ended ~~September~~June 30, ~~2014~~2015 from ~~$28.1~~$23.7 million for the same period in ~~2013.~~2014. Non-interest income excluding gain on acquisitions increased $6.3 million, or 26.7%, to $30.1 million for the six months ended June 30, 2015 from $23.7 million for the same period in 2014.

~~The~~Excluding gain on acquisitions, the primary factors that resulted in this increase were improvements related to ~~service charges on deposits,~~ other service charges and fees, trust fees, mortgage lending, amortization on our FDIC indemnification asset and other income offset by a decrease in service charges on deposits, insurance, net changes in sale of premises and equipment gains and losses, and net changes in OREO gains and ~~losses offset by changes in gains and losses on sale of premises and equipment and an increase in amortization on our FDIC indemnification asset.~~losses.

Additional details for the three months ended ~~September~~June 30, ~~2014~~2015 on some of the more significant changes are as follows:

~~Additional details for the nine months ended September 30, 2014 on some of the more significant changes are as follows:~~

~~The Company is currently in negotiations with the FDIC regarding the remaining loss share agreements~~ associated with ~~the Key West Bank~~a loan ~~portfolio acquired~~recovery on ~~March 26, 2010. At this point, the Company has not reached an agreement with the~~one of our FDIC to buy out the Key West Bank loss share. Pursuant to the terms of the loss sharing agreements, the FDIC is obligated to reimburse Centennial Bank for 80% of losses in the first loss tranche up to $23.0 million and for 95% of losses in excess of $23.0 million with respect to covered assets. Centennial Bank is obligated to reimburse the FDIC for 80% of recoveries with respect to losses for which the FDIC paid Centennial Bank 80% reimbursement under the loss sharing agreements, and for 95% of recoveries with respect to losses for which the FDIC paid 95% reimbursement under the loss sharing agreements. Additionally, a significant portion of the Key West Bank loanstransactions. We were ~~30 year original maturity loans.~~

The Company has evaluated the Key West Bank loans acquired and believes there has been a material projected credit improvement. As a result of this improvement, the Company will be recognizing an adjustment to yield over the weighted average life of the loans. Improvements in credit quality also decrease the basis in the related indemnification asset and increase the FDIC true-up liability. The reduction in the indemnification asset will be amortized over the weighted average life of the shared-loss agreement. The FDIC true-up liability will be expensed over the remaining true-up measurement date as other non-interest expense.

As of September 30, 2014, the Company has an indemnification asset of $7.3 million remaining for the Key West Bank loans acquired. If this transaction with the FDIC were to occur, it would create a one-time acceleration of the indemnification asset plus the negotiated settlement for the true-up liability less any cash payment received by the FDIC. While there is no guarantee we can reach an agreement with the FDIC, if the Company were to reach an agreement with the FDIC during the fourth quarter of 2014 to buy out the loss share agreements, we do not believe the cash payment from the FDIC would be significant. As a result, this transaction could create a negative third quarter 2014 financial impact to earnings for the Company in the range of $6.0 million to $8.0 million on a pre-tax basis. However, there would be approximately $8.5 million positive adjustment to yield remaining to be recognized as accretion interest income over the weighted average life of the loans over the next 21 years. Since the weighted average life of the loans is long term, the positive accretion to be recognized as an adjustment to interest income will be more than offset by the shorter term amortization of the indemnification asset and FDIC true-up expense.

~~Since the Company was not~~ able to reach an agreement with the FDIC to buy out the Key West Bank loss share during the third quarter, we began accreting the credit improvement ($186,000) and amortized the indemnification asset ($1.1 million) and recordedcollect a ~~true-up expense ($41,000) similar to the other impairment tests we have completed in the past. Therefore, it created a negative third quarter 2014 financial impact to earnings for the Company~~recovery of approximately ~~$1.0~~$2.2 million ~~on a pre-tax basis.~~

If we are not able to reach an agreement with the FDIC during the fourth quarter of 2014, it will once again create a negative financial impact to earnings for the Company of approximately $1.0 million on a pre-tax basis. This $1.0 million negative financial impact could continue through the first quarter of 2015. Beginning in the second quarter of 2015 ~~only~~on a loan that was charged-off prior to the ~~ten-year loss~~acquired bank being closed by the FDIC. Our agreement with the FDIC requires us to share ~~agreement will remain.~~80% of these type recoveries with the FDIC and we are able to retain the remaining 20%. As a result, we recorded approximately $417,000 in other income for this recovery. The remaining increase in other income is primarily associated with the ~~negative financial impact~~2014 and 2015 acquisitions.

Additional details for the six months ended June 30, 2015 on some of the more significant changes are as follows:

Non-interest expense consists of salaries and employee benefits, occupancy and equipment, data processing, and other expenses such as advertising, merger and acquisition expenses, amortization of intangibles, electronic banking expense, FDIC and state assessment, insurance, ~~other professional~~legal and accounting fees and ~~legal and accounting~~other professional fees.

Table 10 below sets forth a summary of non-interest expense for the three and ~~nine-month~~six-month periods ended ~~September~~June 30, ~~2014~~2015 and ~~2013,~~2014, as well as changes for the three and ~~nine-month~~six-month periods ended ~~September~~June 30, ~~2014~~2015 compared to the same ~~period~~periods in ~~2013.~~2014.


	Three Months Ended								Nine Months Ended								Three Months Ended									Six Months Ended
	September 30,				2014 Change				September 30,				2014 Change				June 30,				2015 Change from 2014					June 30,				2015 Change from 2014
	2014		2013		from 2013				2014		2013		from 2013				2015		2014		2015 Change from 2014					2015		2014		2015 Change from 2014
	(Dollars in thousands)																(Dollars in thousands)
Salaries and employee benefits	$	19,368	$	12,981	$	6,387	49.2	%	$	57,114	$	38,890	$	18,224	46.9	%	$	22,056	$	18,813	$	3,243		17.2	%	$	41,446	$	37,746	$	3,700		9.8	%
Occupancy and equipment		6,234		4,010		2,224	55.5			18,711		11,498		7,213	62.7			6,678		6,251		427		6.8			12,727		12,477		250		2.0
Data processing expense		1,801		1,114		687	61.7			5,387		3,855		1,532	39.7			3,063		1,793		1,270		70.8			5,482		3,586		1,896		52.9
Other operating expenses:
Advertising		673		363		310	85.4			1,776		1,176		600	51.0			657		581		76		13.1			1,436		1,103		333		30.2
Merger and acquisition expenses		3,772		1,034		2,738	264.8			4,727		1,063		3,664	344.7			—		106		(106	)	(100.0	)		1,417		955		462		48.4
Amortization of intangibles		1,153		802		351	43.8			3,467		2,406		1,061	44.1			1,100		1,147		(47	)	(4.1	)		2,229		2,314		(85	)	(3.7	)
Electronic banking expense		1,307		926		381	41.1			3,957		2,749		1,208	43.9			1,299		1,312		(13	)	(1.0	)		2,531		2,650		(119	)	(4.5	)
Directors’ fees		236		188		48	25.5			669		588		81	13.8			281		206		75		36.4			576		433		143		33.0
Due from bank service charges		200		136		64	47.1			604		437		167	38.2			286		205		81		39.5			501		404		97		24.0
FDIC and state assessment		972		684		288	42.1			3,144		1,991		1,153	57.9			1,172		1,058		114		10.8			2,568		2,172		396		18.2
Insurance		657		572		85	14.9			1,853		1,693		160	9.5			617		582		35		6.0			1,283		1,196		87		7.3
Legal and accounting		510		227		283	124.7			1,346		943		403	42.7			706		419		287		68.5			1,153		836		317		37.9
Other professional fees		716		404		312	77.2			1,806		1,367		439	32.1			560		583		(23	)	(3.9	)		1,048		1,090		(42	)	(3.9	)
Operating supplies		468		309		159	51.5			1,455		984		471	47.9			509		515		(6	)	(1.2	)		943		987		(44	)	(4.5	)
Postage		323		212		111	52.4			1,002		650		352	54.2			295		327		(32	)	(9.8	)		604		679		(75	)	(11.0	)
Telephone		548		291		257	88.3			1,465		885		580	65.5			470		463		7		1.5			974		917		57		6.2
Other expense		3,879		2,462		1,417	57.6			12,311		7,258		5,053	69.6			3,501		4,259		(758	)	(17.8	)		7,045		8,432		(1,387	)	(16.4	)

Total non-interest expense	$	42,817	$	26,715	$	16,102	60.3	%	$	120,794	$	78,433	$	42,361	54.0	%	$	43,250	$	38,620	$	4,630		12.0	%	$	83,963	$	77,977	$	5,986		7.7	%

Non-interest expense for the three months ended June 30, 2015 was $43.3 million compared to $38.6 million for the three months ended June 30, 2014. Non-interest expense, excluding merger expenses, ~~increased $13.4 million, or 52.0%, to $39.0~~was $43.3 million for the ~~three-month period~~three months ended ~~September~~June 30, ~~2014, from $25.7~~2015 compared to $38.5 million for the same ~~period~~quarter in ~~2013.~~2014. Non-interest expense for the six months ended June 30, 2015 was $84.0 million compared to $78.0 million for the six months ended June 30, 2014. Non-interest expense, excluding merger expenses, ~~increased $38.7 million, or 50.0%, to $116.1~~was $82.5 million for the ~~nine-month period~~six months ended ~~September~~June 30, ~~2014, from $77.4~~2015 compared to $77.0 million for the same ~~period~~quarter in ~~2013. These increases primarily result from additional~~2014.

The change in non-interest expense ~~associated with~~this quarter and the six months was 12.0% and 7.7%, respectively, when compared to a year ago due to the completion of the 2014 and 2015 acquisitions and the opening of ~~Liberty~~the Centennial CFG loan production office. While the cost of doing business in New York City is significantly higher than our Arkansas, Florida and ~~Traditions during 2013 and 2014, respectively.~~Alabama markets, the Company is still committed to cost-saving measures while achieving our goals of growing the Company.

The ~~provision for~~ income ~~taxes~~tax expense increased ~~$4.4~~$3.5 million, or ~~41.7%~~21.4%, to ~~$15.0~~$19.9 million for the three-month period ended ~~September~~June 30, ~~2014,~~2015, from ~~$10.6~~$16.4 million as of ~~September~~June 30, ~~2013.~~2014. The ~~provision for~~ income ~~taxes~~tax expense increased ~~$16.1~~$6.1 million, or ~~52.3%~~19.1%, to ~~$47.0~~$38.1 million for the ~~nine-month~~six-month period ended ~~September~~June 30, ~~2014,~~2015, from ~~$30.8~~$32.0 million as of ~~September~~June 30, ~~2013.~~2014. The effective income tax rate was ~~35.41%~~37.03% and ~~36.10%~~36.92% for the three and ~~nine-month~~six-month periods ended ~~September~~June 30, ~~2014,~~2015, compared to ~~36.58%~~36.61% and ~~36.53%~~36.44% for the same periods in ~~2013.~~2014, respectively. The primary cause of the increase in taxes is the result of our higher earnings ~~combined with~~at our marginal tax rate of 39.225% ~~less the tax-free income associated with the acquisition of Liberty and Traditions.~~.

Financial Condition as of and for the Period Ended ~~September~~June 30, ~~2014~~2015 and December 31, ~~2013~~2014

On April 1, 2015, the Company acquired a pool of national commercial real estate loans from J.C. Flowers & Co. LLC totaling approximately $289.1 million. The Company produced approximately $279.9 million of organic non-covered loan growth since March 31, 2015, of which $223.7 million is associated with loan originations in the legacy footprint with the remaining $56.2 million being associated with Centennial CFG.

During the first quarter of 2015, the five-year loss share agreements on the commercial real estate and commercial and industrial loans acquired through the FDIC-assisted acquisitions of Old Southern and Key West concluded. As a result, $56.3 million of these loans including their associated discounts previously classified as covered loans have migrated to non-covered loans status.

Our non-covered loan portfolio averaged ~~$4.40~~$5.34 billion and ~~$2.35~~$4.14 billion during the three-month periods ended ~~September~~June 30, ~~2014~~2015 and ~~2013,~~2014, respectively. Our non-covered loan portfolio averaged ~~$4.23~~$5.10 billion and ~~$2.33~~$4.15 billion during the ~~nine-month~~six-month periods ended ~~September~~June 30, ~~2014~~2015 and ~~2013,~~2014, respectively. Non-covered loans were ~~$4.58~~$5.50 billion as of ~~September~~June 30, ~~2014~~2015 compared to ~~$4.19~~$4.82 billion as of December 31, ~~2013,~~2014, which is a ~~$388.6~~$681.7 million, or ~~12.4%~~28.5%, annualized increase. Excluding the acquisition of ~~Traditions,~~Doral Florida, the migration of Old Southern and Key West loans from loans covered by FDIC loss share to loans not covered by loss share status, and the acquisition of national commercial real estate loans, the loans increased ~~$146.9~~$298.5 million or an annualized increase of ~~4.7%~~12.5%.

The most significant components of the non-covered loan portfolio were commercial real estate, residential real estate, consumer, and commercial and industrial loans. These non-covered loans are primarily originated within our market areas of Arkansas, Florida, ~~and~~ South Alabama and New York, and are generally secured by residential or commercial real estate or business or personal property within our market areas. Non-covered loans were ~~$3.37~~approximately $3.42 billion, ~~$1.04~~$1.51 billion, $229.0 million and ~~$179.8~~$345.4 million as of ~~September~~June 30, ~~2014~~2015 in Arkansas, Florida, Alabama and ~~Alabama,~~New York, respectively.

As of ~~September~~June 30, ~~2014,~~2015, we had ~~$342.5~~$358.2 million of construction land development loans which were collateralized by land. This consisted of ~~$201.9~~$219.5 million for raw land and ~~$140.6~~$138.7 million for land with commercial and or residential lots.

Table 11 presents our loan balances not covered by loss share by category as of the dates indicated.


	As of		As of		As of		As of
	September 30, 2014		December 31, 2013		June 30, 2015		December 31, 2014
	(In thousands)				(In thousands)
Real estate:
Commercial real estate loans:
Non-farm/non-residential	$	1,918,827	$	1,739,668	$	2,477,688	$	1,987,890
Construction/land development		660,107		562,667		796,589		700,139
Agricultural		78,243		81,618		81,633		72,211
Residential real estate loans:
Residential 1-4 family		935,547		913,332		997,952		963,990
Multifamily residential		251,726		213,232		321,593		250,222

Total real estate		3,844,450		3,510,517		4,675,455		3,974,452
Consumer		57,821		69,570		48,320		56,720
Commercial and industrial		547,706		511,421		658,501		670,124
Agricultural		64,875		37,129		72,766		48,833
Other		68,163		65,800		43,986		67,185

Loans receivable not covered by loss share	$	4,583,015	$	4,194,437	$	5,499,028	$	4,817,314

As of acquisition date, the Company evaluated $1.61 billion of net loans ($1.67 billion gross loans less $62.1 million discount) purchased in conjunction with the acquisition of Liberty in accordance with the provisions of FASB ASC Topic 310-20,Nonrefundable Fees and Other Costs. As of ~~September~~June 30, ~~2014,~~2015, the net loan balance of the Liberty ASC Topic 310-20 purchased loans is ~~$1.17 billion~~$920.1 million ($~~1.21 billion~~944.3 million gross loans less ~~$37.7~~$24.2 million discount). The fair value discount is being accreted into interest income over the ~~weighted average~~weighted-average life of the loans using a constant yield method.

As of acquisition date, the Company evaluated $120.5 million of net loans ($162.4 million gross loans less $41.9 million discount) purchased in conjunction with the acquisition of Liberty in accordance with the provisions of FASB ASC Topic 310-30,Loans and Debt Securities Acquired with Deteriorated Credit Quality. As of ~~September~~June 30, ~~2014,~~2015, the net loan balance of the Liberty ASC Topic 310-30 purchased loans is ~~$91.6~~$77.5 million ($~~131.4~~112.7 million gross loans less ~~$39.8~~$35.2 million discount). These purchased non-covered loans are considered impaired if there is evidence of credit deterioration since origination and if it is probable that not all contractually required payments will be collected. During the latter part of the second quarter of 2014 the Company received a $6.0 million unexpected recovery from one large commercial loan that was significantly charged down ~~significantly~~ prior to the acquisition date. Since the Liberty impaired loans are accounted for on a pool basis, this recovery is increasing the yield on the impaired loans over the ~~weighted average~~weighted-average life of the loans in the pool going forward by $4.7 million.

Non-Covered Commercial Real Estate Loans. WeIn our market areas, we originate non-farm and non-residential loans, ~~(primarily~~which are primarily secured by commercial real ~~estate),~~estate, and construction/land development loans and agricultural loans, which are generally secured by real ~~estate located in our market areas.~~estate. Our commercial mortgage loans are generally collateralized by first liens on real estate and amortized over a 15 to 25 year period with balloon payments due at the end of one to five years. These loans are generally underwritten by assessing cash flow (debt service coverage), primary and secondary ~~source~~sources of repayment, the financial strength of any guarantor, the strength of the tenant (if any), the borrower’s liquidity and leverage, management experience, ownership structure, economic conditions, ~~and~~ industry specific trends and collateral. Generally, we will loan up to 85% of the value of improved property, 65% of the value of raw land and 75% of the value of land to be acquired and developed. A first lien on the property and assignment of lease is required if the collateral is rental property, with second lien positions considered on a case-by-case basis.

As of ~~September~~June 30, ~~2014,~~2015, non-covered commercial real estate loans totaled ~~$2.66~~$3.36 billion, or ~~58.0%~~61.0% of our non-covered loan portfolio, which is comparable to ~~$2.38~~$2.76 billion, or ~~56.8%~~57.3% of our non-covered loan portfolio, as of December 31, ~~2013.~~2014. Our Arkansas, Florida, Alabama and ~~Alabama~~New York non-covered commercial real estate loans were ~~$1.92~~$1.95 billion, ~~$638.1~~$970.0 million, $145.4 million and ~~$103.8~~$288.8 million at ~~September~~June 30, ~~2014,~~2015, respectively.

Non-Covered Residential Real Estate Loans. We originate one to four family, owner occupied residential mortgage loans, which are generally secured by property located in our primary market areas. The majority of our non-covered residential mortgage loans consist of loans secured by owner occupied, single family residences. Non-covered residential real estate loans generally have a loan-to-value ratio of up to 90%. These loans are underwritten by giving consideration to the borrower’s ability to pay, stability of employment or source of income, debt-to-income ratio, credit history and loan-to-value ratio.

As of ~~September~~June 30, ~~2014,~~2015, non-covered residential real estate loans totaled ~~$1.19~~$1.32 billion, or ~~25.9%~~24.0% of our non-covered loan portfolio, compared to ~~$1.13~~$1.21 billion, or ~~26.9%~~25.2% of our non-covered loan portfolio, as of December 31, ~~2013.~~2014. Our Arkansas, Florida, Alabama and ~~Alabama~~New York non-covered residential real estate loans were ~~$850.0~~$839.8 million, ~~$283.2~~$365.3 million, $57.9 million and ~~$54.1~~$56.5 million at ~~September~~June 30, ~~2014,~~2015, respectively.

Non-Covered Consumer Loans. Our non-covered consumer loan portfolio is composed of secured and unsecured loans originated by our banks. The performance of consumer loans will be affected by the local and regional economies as well as the rates of personal bankruptcies, job loss, divorce and other individual-specific characteristics.

As of ~~September~~June 30, ~~2014,~~2015, our non-covered consumer loan portfolio totaled ~~$57.8~~$48.3 million, or ~~1.3%~~0.9% of our total non-covered loan portfolio, compared to the ~~$69.6~~$56.7 million, or ~~1.7%~~1.2% of our non-covered loan portfolio as of December 31, ~~2013.~~2014. Our Arkansas, Florida and Alabama non-covered consumer loans were ~~$41.2~~$32.4 million, ~~$15.2~~$14.7 million and ~~$1.4~~$1.2 million at ~~September~~June 30, ~~2014,~~2015, respectively. There were no consumer loans outstanding in New York as of June 30, 2015.

Non-Covered Commercial and Industrial Loans. Commercial and industrial loans are made for a variety of business purposes, including working capital, inventory, equipment and capital expansion. The terms for commercial loans are generally one to seven years. Commercial loan applications must be supported by current financial information on the borrower and, where appropriate, by adequate collateral. Commercial loans are generally underwritten by addressing cash flow (debt service coverage), primary and secondary sources of repayment, the financial strength of any guarantor, the borrower’s liquidity and leverage, management experience, ownership structure, economic conditions, ~~and~~ industry specific trends and collateral. The ~~loan to value~~loan-to-value ratio depends on the type of collateral. Generally speaking, accounts receivable are financed at between 50% and 80% of accounts receivable less than 60 days past due. Inventory financing will range between 50% and 60% (with no work in process) depending on the borrower and nature of inventory. We require a first lien position for those loans.

As of ~~September~~June 30, ~~2014,~~2015, non-covered commercial and industrial loans outstanding totaled ~~$547.7~~$658.5 million, or 12.0% of our non-covered loan portfolio, which is comparable to ~~$511.4~~$670.1 million, or ~~12.2%~~13.9% of our non-covered loan portfolio, as of December 31, ~~2013.~~2014. Our Arkansas, Florida and Alabama non-covered commercial and industrial loans were ~~$438.1~~$482.8 million, ~~$89.5~~$151.5 million and ~~$20.1~~$24.2 million at ~~September~~June 30, ~~2014,~~2015, respectively. There were no commercial and industrial loans outstanding in New York as of June 30, 2015.


	Loans Receivable Not Covered by Loss Share		Loans Receivable Covered by FDIC Loss Share		Total Loans Receivable		Loans Receivable Not Covered by Loss Share		Loans Receivable Covered by FDIC Loss Share		Total Loans Receivable
	(In thousands)						(In thousands)
Real estate:
Commercial real estate loans
Non-farm/non-residential	$	1,918,827	$	99,518	$	2,018,345	$	2,477,688	$	54,777	$	2,532,465
Construction/land development		660,107		42,713		702,820		796,589		24,003		820,592
Agricultural		78,243		1,039		79,282		81,633		848		82,481
Residential real estate loans
Residential 1-4 family		935,547		90,088		1,025,635		997,952		72,002		1,069,954
Multifamily residential		251,726		8,263		259,989		321,593		1,394		322,987

Total real estate		3,844,450		241,621		4,086,071		4,675,455		153,024		4,828,479
Consumer		57,821		22		57,843		48,320		17		48,337
Commercial and industrial		547,706		8,295		556,001		658,501		6,118		664,619
Agricultural		64,875		—		64,875		72,766		—		72,766
Other		68,163		1,032		69,195		43,986		732		44,718

Total	$	4,583,015	$	250,970	$	4,833,985	$	5,499,028	$	159,891	$	5,658,919

We classify our non-covered problem loans into three categories: past due loans, special mention loans and classified loans (accruing and non-accruing).

When management determines that a loan is no longer performing, and that collection of interest appears doubtful, the loan is placed on non-accrual status. Loans that are 90 days past due are placed on non-accrual status unless they are adequately secured and there is reasonable assurance of full collection of both principal and interest. Our management closely monitors all loans that are contractually 90 days past due, treated as “special mention” or otherwise classified or on non-accrual status.

We have non-covered loans acquired with deteriorated credit quality in our ~~September~~June 30, ~~2014~~2015 financial statements as a result of our historical acquisitions plus the migration of ~~Heritage, Premier and Liberty.~~loans covered by FDIC loss share to loans not covered by loss share status. The credit metrics most heavily impacted by our acquisitions of acquired non-covered loans with deteriorated credit quality were the following credit quality indicators listed in Table 13 below:

On the date of acquisition, acquired credit-impaired loans are initially recognized at fair value, which incorporates the present value of amounts estimated to be collectible. As a result of the application of this accounting methodology, certain credit-related ratios, including those referenced above, may not necessarily be directly comparable with periods prior to the acquisition of the credit-impaired non-covered loans and non-covered non-performing assets, or comparable with other institutions.

Table 13 sets forth information with respect to our non-performing non-covered assets as of ~~September~~June 30, ~~2014~~2015 and December 31, ~~2013.~~2014. As of these dates, all non-performing non-covered restructured loans are included in non-accrual non-covered loans.


	As of September 30, 2014			As of December 31, 2013			As of June 30, 2015			As of December 31, 2014
	(Dollars in thousands)						(Dollars in thousands)
Non-accrual non-covered loans	$	22,381		$	15,133		$	29,033		$	24,691
Non-covered loans past due 90 days or more (principal or interest payments)		18,644			23,141			10,847			14,871

Total non-performing non-covered loans		41,025			38,274			39,880			39,562

Other non-performing non-covered assets
Non-covered foreclosed assets held for sale, net		19,367			29,869			16,539			16,951
Other non-performing non-covered assets		—			281			12			—

Total other non-performing non-covered assets		19,367			30,150			16,551			16,951

Total non-performing non-covered assets	$	60,392		$	68,424		$	56,431		$	56,513

Allowance for loan losses for non-covered loans to non-performing non-covered loans		123.57	%		101.95	%

Allowance for loan losses for non-covered loans to non- performing non-covered loans								140.11	%		132.63	%
Non-performing non-covered loans to total non-covered loans		0.90			0.91			0.73			0.82
Non-performing non-covered assets to total non-covered assets		0.88			1.07			0.71			0.79

Our non-performing non-covered loans are comprised of non-accrual non-covered loans and accruing non-covered loans that are contractually past due 90 days. Our bank subsidiary recognizes income principally on the accrual basis of accounting. When loans are classified as non-accrual, the accrued interest is charged off and no further interest is accrued, unless the credit characteristics of the loan improve. If a loan is determined by management to be uncollectible, the portion of the loan determined to be uncollectible is then charged to the allowance for loan losses. ~~The Florida franchise contains approximately 39.6% and 53.1% of our non-performing non-covered loans as of September 30, 2014 and December 31, 2013, respectively.~~

Total non-performing non-covered loans were ~~$41.0~~$39.9 million as of ~~September~~June 30, ~~2014,~~2015, compared to ~~$38.3~~$39.6 million as of December 31, ~~2013~~2014, for an increase of ~~$2.7 million.~~$318,000. Of the ~~$2.7 million~~$318,000 increase in non-performing loans, ~~$6.4~~$1.2 million is from an increase in non-performing loans in our Arkansas market combined with a ~~$403,000~~$384,000 increase in non-performing loans in our Alabama market offset by a ~~$4.1~~$1.2 million decrease in non-performing loans in Florida. Non-performing loans at ~~September~~June 30, ~~2014~~2015 are approximately ~~$24.3~~$25.6 million, ~~$16.3~~$13.6 million and ~~$410,000~~$686,000 in the Arkansas, Florida and Alabama markets, respectively. There were no non-performing loans in New York market at June 30, 2015.

Although the current state of the real estate market has improved, uncertainties still present in the economy may continue to increase our level of non-performing non-covered loans. While we believe our allowance for loan losses is adequate and our purchased loans are adequately discounted at ~~September~~June 30, ~~2014,~~2015, as additional facts become known about relevant internal and external factors that affect loan collectability and our assumptions, it may result in us making additions to the provision for loan losses during ~~2014.~~2015. Our current or historical provision levels should not be relied upon as a predictor or indicator of future levels going forward.

Troubled debt restructurings (“~~TDR”~~TDRs”) generally occur when a borrower is experiencing, or is expected to experience, financial difficulties in the near term. As a result, the Bank will work with the borrower to prevent further difficulties, and ultimately to improve the likelihood of recovery on the loan. In those circumstances it may be beneficial to restructure the terms of a loan and work with the borrower for the benefit of both parties, versus forcing the property into foreclosure and having to dispose of it in an unfavorable and depressed real estate market. When we have modified the terms of a loan, we usually either reduce the monthly payment and/or interest rate for generally about three to twelve months. For our troubled debt restructurings that accrue interest at the time the loan is restructured, it would be a rare exception to have charged-off any portion of the loan. Only non-performing restructured loans are included in our non-performing non-covered loans. As of ~~September~~June 30, ~~2014,~~2015, we had ~~$27.2~~$27.4 million of non-covered restructured loans that are in compliance with the modified terms and are not reported as past due or non-accrual in Table 13. Our Florida market contains ~~$10.6~~$14.4 million of these non-covered restructured loans.

To facilitate this process, a loan modification that might not otherwise be considered may be granted, resulting in classification as a troubled debt restructuring. These loans can involve loans remaining on non-accrual, moving to non-accrual, or continuing on an accrual status, depending on the individual facts and circumstances of the borrower. Generally, a non-accrual loan that is restructured remains on non-accrual for a period of six months to demonstrate that the borrower can meet the restructured terms. However, performance prior to the restructuring, or significant events that coincide with the restructuring, are considered in assessing whether the borrower can pay the new terms and may result in the loan being returned to an accrual status after a shorter performance period. If the borrower’s ability to meet the revised payment schedule is not reasonably assured, the loan will remain in a non-accrual status.

The majority of the Bank’s loan modifications relate to commercial lending and involve reducing the interest rate, changing from a principal and interest payment to interest-only, a lengthening of the amortization period, or a combination of some or all of the three. In addition, it is common for the Bank to seek additional collateral or guarantor support when modifying a loan. At ~~September~~June 30, ~~2014,~~2015, the amount of troubled debt restructurings was ~~$27.8~~$29.2 million, ~~a decrease~~an increase of ~~36.1%~~8.6% from ~~$43.5~~$26.9 million at December 31, ~~2013.~~2014. As of ~~September~~June 30, ~~2014~~2015 and December 31, ~~2013, 97.9%~~2014, 93.8% and ~~98.0%~~100.0%, respectively, of all restructured loans were performing to the terms of the restructure.

Total foreclosed assets held for sale not covered by loss share were ~~$19.4~~$16.5 million as of ~~September~~June 30, ~~2014,~~2015, compared to ~~$29.9~~$17.0 million as of December 31, ~~2013~~2014 for a decrease of ~~$10.5 million.~~$412,000. The foreclosed assets held for sale not covered by loss share as of ~~September~~June 30, ~~2014~~2015 are comprised of ~~$14.9~~$11.9 million of assets located in Arkansas, ~~$4.4~~$4.7 million of assets located in Florida and the remaining $15,000 located in Alabama.

During the first ~~nine~~six months of ~~2014,~~2015, we had ~~three~~four non-covered foreclosed properties with a carrying value greater than $1.0 million. Two of these four properties ~~were acquired~~are non-farm/non-residential properties in the ~~Liberty acquisition~~Florida Panhandle and hold an aggregate carrying value of ~~$4.2~~$2.1 million at ~~September~~June 30, ~~2014.~~2015. Another non-farm/non-residential property was acquired in the Liberty acquisition and holds an aggregate carrying value of $3.2 million at June 30, 2015. The remaining property is a development loan in Northwest Arkansas which has been foreclosed since the first quarter of 2011. The carrying value was ~~$3.6~~$2.0 million at ~~September~~June 30, ~~2014.~~2015. The Company does not currently anticipate any additional losses on these properties. As of ~~September~~June 30, ~~2014,~~2015, no other foreclosed assets held for sale not covered by loss share have a carrying value greater than $1.0 million.

Table 14 shows the summary of foreclosed assets held for sale as of ~~September~~June 30, ~~2014~~2015 and December 31, ~~2013.~~2014.


	As of September 30, 2014						As of December 31, 2013						As of June 30, 2015						As of December 31, 2014
	Not Covered by Loss Share		Covered by FDIC Loss Share		Total		Not Covered by Loss Share		Covered by FDIC Loss Share		Total		Not Covered by Loss Share		Covered by FDIC Loss Share		Total		Not Covered by Loss Share		Covered by FDIC Loss Share		Total
	(In thousands)												(In thousands)
Commercial real estate loans
Non-farm/non-residential	$	8,261	$	4,701	$	12,962	$	8,422	$	9,677	$	18,099	$	7,093	$	3,525	$	10,618	$	6,894	$	3,935	$	10,829
Construction/land development		6,372		7,529		13,901		17,675		5,517		23,192		5,751		471		6,222		6,189		2,847		9,036
Agricultural		—		26		26		—		651		651		—		—		—		—		3		3
Residential real estate loans
Residential 1-4 family		4,238		1,257		5,495		3,772		5,154		8,926		2,852		476		3,328		3,381		1,086		4,467
Multifamily residential		496		—		496		—		—		—		843		—		843		487		—		487

Total foreclosed assets held for sale	$	19,367	$	13,513	$	32,880	$	29,869	$	20,999	$	50,868	$	16,539	$	4,472	$	21,011	$	16,951	$	7,871	$	24,822

A loan is considered impaired when it is probable that we will not receive all amounts due according to the contracted terms of the loans. Impaired loans include non-performing loans (loans past due 90 days or more and non-accrual loans), criticized and/or classified loans with a specific allocation, loans categorized as ~~TDR’s~~TDRs and certain other loans identified by management that are still performing (loans included in multiple categories are only included once). As of ~~September~~June 30, ~~2014,~~2015, average non-covered impaired loans were ~~$93.4~~$85.5 million compared to ~~$104.1~~$91.8 million as of December 31, ~~2013.~~2014. As of ~~September~~June 30, ~~2014,~~2015, non-covered impaired loans were ~~$83.3~~$84.1 million compared to ~~$106.5~~$85.4 million as of December 31, ~~2013~~2014 for a decrease of ~~$23.2~~$1.4 million. This decrease is primarily associated with the improvements in loan balances with a specific allocation ~~and~~offset by an increase in the level of loans categorized as ~~TDR’s.~~TDRs. As of ~~September~~June 30, ~~2014,~~2015, our Arkansas, Florida and Alabama markets accounted for approximately ~~$37.8~~$48.1 million, $35.3 million and ~~$3.7 million~~$686,000 of the non-covered impaired loans, respectively. There were no non-covered impaired loans in New York market at June 30, 2015.

We evaluated loans purchased in conjunction with ~~the 2010 FDIC-assisted~~our historical acquisitions ~~the 2012 acquisitions of Heritage and Premier and certain loans during the 2013 acquisition of Liberty~~ for impairment in accordance with the provisions of FASB ASC Topic 310-30,Loans and Debt Securities Acquired with Deteriorated Credit Quality. Purchased loans are considered impaired if there is evidence of credit deterioration since origination and if it is probable that not all contractually required payments will be collected. Purchased impaired non-covered loans are not classified as non-performing non-covered assets for the recognition of interest income as the pools are considered to be performing. However, for the purpose of calculating the non-performing credit metrics, the Company has included all of the non-covered loans which are contractually 90 days past due and still accruing, including those in performing pools. Therefore, interest income, through accretion of the difference between the carrying amount of the loans and the expected cash flows, is being recognized on all purchased impaired loans.

All non-covered loans acquired with deteriorated credit quality are considered impaired loans at the date of acquisition. Since the loans are accounted for on a pooled basis under ASC 310-30, individual loans are not classified as impaired.

Since the loans are accounted for on a pooled basis under ASC 310-30, individual loans subsequently restructured within the pools are not classified as TDRs in accordance with ASC 310-30-40. For non-covered loans acquired with deteriorated credit quality that were deemed TDRs prior to the Company’s acquisition of them, these loans are also not considered TDRs as they are accounted for under ASC 310-30.

As of ~~September~~June 30, ~~2014~~2015 and December 31, ~~2013,~~2014, there were no non-covered loans acquired with deteriorated credit quality on non-accrual status as a result of the loans being accounted for on the pool basis and the pools are considered to be performing for the accruing of interest income. Also, acquired loans contractually past due 90 days or more are accruing interest because the pools are considered to be performing for the purpose of accruing interest income.

Table 15 shows the summary non-accrual loans as of ~~September~~June 30, ~~2014~~2015 and December 31, ~~2013:~~2014:


	As of September 30, 2014						As of December 31, 2013						As of June 30, 2015						As of December 31, 2014
	Not Covered by Loss Share		Covered by FDIC Loss Share		Total		Not Covered by Loss Share		Covered by FDIC Loss Share		Total		Not Covered by Loss Share		Covered by FDIC Loss Share		Total		Not Covered by Loss Share		Covered by FDIC Loss Share		Total
	(In thousands)												(In thousands)
Real estate:
Commercial real estate loans
Non-farm/non-residential	$	7,339	$	—	$	7,339	$	5,093	$	—	$	5,093	$	10,222	$	—	$	10,222	$	8,901	$	—	$	8,901
Construction/land development		1,571		—		1,571		1,080		—		1,080		1,763		—		1,763		926		—		926
Agricultural		—		—		—		89		—		89		—		—		—		—		—		—
Residential real estate loans
Residential 1-4 family		11,856		—		11,856		7,283		—		7,283		13,656		—		13,656		11,949		—		11,949
Multifamily residential		—		—		—		1		—		1		1,330		—		1,330		1,344		—		1,344

Total real estate		20,766		—		20,766		13,546		—		13,546		26,971		—		26,971		23,120		—		23,120
Consumer		250		—		250		124		—		124		529		—		529		279		—		279
Commercial and industrial		1,181		—		1,181		1,463		—		1,463		1,151		—		1,151		1,108		—		1,108
Other		184		—		184		—		—		—		382		—		382		184		—		184

Total non-accrual loans	$	22,381	$	—	$	22,381	$	15,133	$	—	$	15,133	$	29,033	$	—	$	29,033	$	24,691	$	—	$	24,691

If the non-covered non-accrual ~~non-covered~~ loans had been accruing interest in accordance with the original terms of their respective agreements, interest income of approximately ~~$361,000~~$403,000 and ~~$296,000~~$365,000 for the three-month periods ended ~~September~~June 30, ~~2014~~2015 and ~~2013,~~2014, respectively, would have been recorded. If the non-covered non-accrual ~~non-covered~~ loans had been accruing interest in accordance with the original terms of their respective agreements, interest income of approximately ~~$946,000~~$803,000 and ~~$962,000~~$632,000 for the ~~nine-month~~six-month periods ended ~~September~~June 30, ~~2014~~2015 and ~~2013,~~2014, respectively, would have been recorded. The interest income recognized on the non-covered non-accrual loans for the three and ~~nine-month~~six-month periods ended ~~September~~June 30, ~~2014~~2015 and ~~2013~~2014 was considered immaterial.

Table 16 shows the summary of accruing past due loans 90 days or more as of ~~September~~June 30, ~~2014~~2015 and December 31, ~~2013:~~2014:


	As of September 30, 2014						As of December 31, 2013						As of June 30, 2015						As of December 31, 2014
	Not Covered by Loss Share		Covered by FDIC Loss Share		Total		Not Covered by Loss Share		Covered by FDIC Loss Share		Total		Not Covered by Loss Share		Covered by FDIC Loss Share		Total		Not Covered by Loss Share		Covered by FDIC Loss Share		Total
	(In thousands)												(In thousands)
Real estate:
Commercial real estate loans
Non-farm/non-residential	$	6,720	$	13,893	$	20,613	$	7,914	$	15,287	$	23,201	$	2,928	$	2,089	$	5,017	$	5,880	$	9,029	$	14,909	��
Construction/land development		3,174		4,907		8,081		4,879		8,410		13,289		1,392		2,191		3,583		734		4,376		5,110
Agricultural		34		—		34		—		162		162		31		72		103		34		72		106
Residential real estate loans
Residential 1-4 family		4,181		9,060		13,241		6,492		10,177		16,669		4,794		4,887		9,681		4,128		7,597		11,725
Multifamily residential		1,904		—		1,904		1		357		358		1		—		1		691		—		691

Total real estate		16,013		27,860		43,873		19,286		34,393		53,679		9,146		9,239		18,385		11,467		21,074		32,541
Consumer		50		—		50		100		—		100		92		—		92		579		—		579
Commercial and industrial		2,581		1,128		3,709		3,755		825		4,580		1,609		358		1,967		2,825		1,387		4,212
Other		—		32		32		—		624		624		—		—		—		—		32		32

Total loans accruing past due 90 days or more	$	18,644	$	29,020	$	47,664	$	23,141	$	35,842	$	58,983	$	10,847	$	9,597	$	20,444	$	14,871	$	22,493	$	37,364

The Company’s total past due and non-accrual covered loans to total covered loans was ~~11.6%~~6.0% and ~~12.7%~~9.4% as of ~~September~~June 30, ~~2014~~2015 and December 31, ~~2013,~~2014, respectively.

Overview. The allowance for loan losses for non-covered loans is maintained at a level which our management believes is adequate to absorb all probable losses on loans in the loan portfolio. The amount of the allowance is affected by: (i) loan charge-offs, which decrease the allowance; (ii) recoveries on loans previously charged off, which increase the allowance; and (iii) the provision of possible loan losses charged to income, which increases the allowance. In determining the provision for possible loan losses, it is necessary for our management to monitor fluctuations in the allowance resulting from actual charge-offs and recoveries and to periodically review the size and composition of the loan portfolio in light of current and anticipated economic conditions. If actual losses exceed the amount of allowance for loan losses for non-covered loans, our earnings could be adversely affected.

As we evaluate the allowance for loan losses for non-covered loans, we categorize it as follows: (i) specific allocations; (ii) allocations for criticized and classified assets not individually evaluated for impairment; (iii) general allocations; and (iv) miscellaneous allocations.

Specific Allocations.As a general rule, if a specific allocation is warranted, it is the result of an analysis of a previously classified credit or relationship. Typically, when it becomes evident through the payment history or a financial statement review that a loan or relationship is no longer supported by the cash flows of the asset and/or borrower and has become collateral dependent, we will use appraisals or other collateral analysis to determine if collateral impairment has occurred. The amount or likelihood of loss on this credit may not yet be evident, so a charge-off would not be prudent. However, if the analysis indicates that an impairment has occurred, then a specific allocation will be determined for this loan. If our existing appraisal is outdated or the collateral has been subject to significant market changes, we will obtain a new appraisal for this impairment analysis. The majority of the Company’s impaired loans are collateral dependent at the present time, so third-party appraisals were used to determine the necessary impairment for these loans. Cash flow available to service debt was used for the other impaired loans. This analysis is performed each quarter in connection with the preparation of the analysis of the adequacy of the allowance for loan losses for non-covered loans, and if necessary, adjustments are made to the specific allocation provided for a particular loan.

For collateral dependent loans, we do not consider an appraisal outdated simply due to the passage of time. However, if an appraisal is older than 13 months and if market or other conditions have deteriorated and we believe that the current market value of the property is not within approximately 20% of the appraised value, we will consider the appraisal outdated and order a new appraisal for the impairment analysis. The recognition of any provision or related charge-off on a collateral dependent loan is either through annual credit analysis or, many times, when the relationship becomes delinquent. If the borrower is not current, we will update our credit and cash flow analysis to determine the borrower’s repayment ability. If we determine this ability does not exist and it appears that the collection of the entire principal and interest is not likely, then the loan could be placed on non-accrual status. In any case, loans are classified as non-accrual no later than 105 days past due. If the loan requires a quarterly impairment analysis, this analysis is completed in conjunction with the completion of the analysis of the adequacy of the allowance for loan losses for non-covered loans. Any exposure identified through the impairment analysis is shown as a specific reserve on the individual impairment. If it is determined that a new appraisal is required, it is ordered and will be taken into consideration during ~~the next~~ completion of the next impairment analysis.

Between the receipt of the original appraisal and the updated appraisal, we monitor the loan’s repayment history and subject the loan to examination by our internal loan review. If the loan is over $1.0 million or the total loan relationship is over $2.0 million, our policy requires an annual credit review. In addition, we update all financial information and calculate the global repayment ability of the borrower/guarantors.

In estimating the net realizable value of the collateral, management may deem it appropriate to discount the appraisal based on the applicable circumstances. In such case, the amount charged off may result in loan principal outstanding being below fair value as presented in the appraisal.

Between the receipt of the original appraisal and the updated appraisal, we monitor the loan’s repayment history. If the loan is over $1.0 million or the total loan relationship is over $2.0 million, our policy requires an annual credit review. In addition, we update all financial information and calculate the global repayment ability of the borrower/guarantors.

As a general rule, when it becomes evident that the full principal and accrued interest of a loan may not be collected, or by law at 105 days past due, we will reflect that loan as non-performing. It will remain non-performing until it performs in a manner that it is reasonable to expect that we will collect the full principal and accrued interest.

When the amount or likelihood of a loss on a loan has been determined, a charge-off should be taken in the period it is determined. If a partial charge-off occurs, the quarterly impairment analysis will determine if the loan is still impaired, and thus continues to require a specific allocation.

Allocations for Criticized and Classified Assets not Individually Evaluated for Impairment. We establish allocations for loans rated “special mention” through “loss” in accordance with the guidelines established by the regulatory agencies. A percentage rate is applied to each loan category to determine the level of dollar allocation.

General Allocations. We establish general allocations for each major loan category. This section also includes allocations to loans, which are collectively evaluated for loss such as residential real estate, commercial real estate, consumer loans and commercial and industrial loans. The allocations in this section are based on a historical review of loan loss experience and past due accounts. We give consideration to trends, changes in loan mix, delinquencies, prior losses, and other related information.

Miscellaneous Allocations. Allowance allocations other than specific, classified, and general are included in our miscellaneous section.

Loans Collectively Evaluated for Impairment. Non-covered loans collectively evaluated for impairment was ~~$4.25~~$5.17 billion and ~~$3.77~~$4.51 billion at ~~September~~June 30, ~~2014~~2015 and December 31, ~~2013,~~2014, respectively. The percentage of the allowance for loan losses for non-covered loans allocated to non-covered loans collectively evaluated for impairment to the total non-covered loans collectively evaluated for impairment increased from ~~0.65%~~0.96% at December 31, ~~2013~~2014 to ~~0.82%~~0.97% at ~~September~~June 30, ~~2014.~~2015. This increase is the result of the normal changes associated with the calculation of the allocation of the allowance for loan losses and includes routine changes from the previous year end reporting period such as organic loan growth, unallocated allowance, individual loan impairments, asset quality and net charge-offs.

Charge-offs and Recoveries. Total non-covered charge-offs ~~decreased~~increased to ~~$2.5~~$3.3 million and ~~$7.5~~$6.5 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2014,~~2015, respectively, compared to ~~$5.1~~$2.5 million and ~~$11.8~~$5.0 million for the same periods in ~~2013,~~2014, respectively. Total non-covered recoveries ~~decreased~~increased to ~~$750,000~~$1.2 million and ~~$1.9~~$1.7 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2014,~~2015, respectively, compared to ~~$2.2 million~~$635,000 and ~~$3.5~~$1.1 million for the same periods in ~~2013,~~2014, respectively. For the three months ended ~~September~~June 30, ~~2014,~~2015, the net charge-offs were ~~$1.7~~$2.2 million for Arkansas and ~~$132,000~~$13,000 for ~~Florida and~~Alabama plus net recoveries of ~~$2,000~~$38,000 for ~~Alabama, respectively,~~Florida, equaling a net charge-off position of ~~$1.8~~$2.1 million. For the ~~nine~~six months ended ~~September~~June 30, ~~2014,~~2015, the net charge-offs were ~~$3.7~~$4.2 million for Arkansas, ~~$1.8 million~~$511,000 for Florida and ~~$135,000~~$21,000 for Alabama, ~~respectively,~~ equaling a net charge-off position of ~~$5.6~~$4.8 million.

During the first ~~nine~~six months of ~~2014,~~2015, there were ~~$7.5~~$6.5 million in non-covered charge-offs and ~~$1.9~~$1.7 million in non-covered recoveries. While ~~the~~these charge-offs and recoveries consisted of many relationships, there were no individual relationships consisting of charge-offs greater than $1.0 million.

We have not charged off an amount less than what was determined to be the fair value of the collateral as presented in the appraisal (for collateral dependent loans) for any period presented. Loans partially charged-off are placed on non-accrual status until it is proven that the borrower’s repayment ability with respect to the remaining principal balance can be reasonably assured. This is usually established over a period of 6-12 months of timely payment performance.

Table 17 shows the allowance for loan losses, charge-offs and recoveries for non-covered loans as of and for the three and ~~nine-month~~six-month periods ended ~~September~~June 30, ~~2014~~2015 and ~~2013.~~2014.


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013			2015			2014			2015			2014
	(Dollars in thousands)												(Dollars in thousands)
Balance, beginning of period	$	48,248		$	40,498		$	39,022		$	45,170		$	52,731		$	44,024		$	52,471		$	39,022
Loans charged off
Real estate:
Commercial real estate loans:
Non-farm/non-residential		480			2,980			1,148			3,844			854			601			1,656			668
Construction/land development		386			392			553			560			394			145			477			167
Agricultural		—			—			—			—			—			—			—			—
Residential real estate loans:		—
Residential 1-4 family		562			787			1,779			2,713			1,088			870			1,952			1,217
Multifamily residential		—			—			266			2,291			—			—			—			266

Total real estate		1,428			4,159			3,746			9,408			2,336			1,616			4,085			2,318
Consumer		85			184			283			872			18			32			106			198
Commercial and industrial		416			438			1,600			619			590			316			1,419			1,184
Agricultural		—			—			—			—			—			—			—			—
Other		615			320			1,865			881			395			562			879			1,250

Total loans charged off		2,544			5,101			7,494			11,780			3,339			2,526			6,489			4,950

Recoveries of loans previously charged off
Real estate:
Commercial real estate loans:
Non-farm/non-residential		9			1,938			230			2,051			700			199			701			221
Construction/land development		23			4			68			19			8			20			66			45
Agricultural		—			1			—			1			—			—			—			—
Residential real estate loans:		—
Residential 1-4 family		329			115			375			771			92			(6	)		249			46
Multifamily residential		3			11			10			81			—			2			—			7

Total real estate		364			2,069			683			2,923			800			215			1,016			319
Consumer		16			33			230			123			22			152			40			214
Commercial and industrial		190			16			255			49			205			30			236			65
Agricultural		—			—			—			—			—			—			—			—
Other		180			127			705			407			157			238			433			525

Total recoveries		750			2,245			1,873			3,502			1,184			635			1,725			1,123

Net loans charged off (recovered)		1,794			2,856			5,621			8,278			2,155			1,891			4,764			3,827
Provision for loan losses for non-covered loans		4,241			—			17,294			750			5,301			6,115			8,170			13,053

Balance, September 30	$	50,695		$	37,642		$	50,695		$	37,642
Balance, June 30													$	55,877		$	48,248		$	55,877		$	48,248


Net charge-offs (recoveries) on loans not covered by loss share to average non-covered loans		0.16	%		0.48	%		0.18	%		0.48	%		0.16	%		0.18	%		0.19	%		0.19	%
Allowance for loan losses for non-covered loans to total non-covered loans⁽¹⁾		1.11			1.58			1.11			1.58			1.02			1.17			1.02			1.17
Allowance for loan losses for non-covered loans to net charge-offs (recoveries)		712			332			675			340			646			10,234			582			2,542

Allocated Allowance for Loan Losses for Non-Covered ~~Loans.~~Loans. We use a risk rating and specific reserve methodology in the calculation and allocation of our allowance for loan losses for non-covered loans. While the allowance is allocated to various loan categories in assessing and evaluating the level of the allowance, the allowance is available to cover charge-offs incurred in all loan categories. Because a portion of our portfolio has not matured to the degree necessary to obtain reliable loss data from which to calculate estimated future losses, the unallocated portion of the allowance is an integral component of the total allowance. Although unassigned to a particular credit relationship or product segment, this portion of the allowance is vital to safeguard against the imprecision inherent in estimating credit losses.

The changes for the period ended ~~September~~June 30, ~~2014~~2015 and the year ended December 31, ~~2013~~2014 in the allocation of the allowance for loan losses for non-covered loans for the individual types of loans are primarily associated with changes in the ASC 310 calculations, both individual and aggregate, and changes in the ASC 450 calculations. These calculations are affected by changes in individual loan impairments, changes in asset quality, net charge-offs during the period and normal changes in the outstanding loan portfolio, as well any changes to the general allocation factors due to changes within the actual characteristics of the loan portfolio.

Table 18 presents the allocation of allowance for loan losses for non-covered loans as of ~~September~~June 30, ~~2014~~2015 and December 31, ~~2013.~~2014.


	As of September 30, 2014					As of December 31, 2013					As of June 30, 2015					As of December 31, 2014
	Allowance Amount		% of loans⁽¹⁾			Allowance Amount		% of loans⁽¹⁾			Allowance Amount		% of loans⁽¹⁾			Allowance Amount		% of loans⁽¹⁾
	(Dollars in thousands)										(Dollars in thousands)
Real estate:
Commercial real estate loans:
Non-farm/non-residential	$	18,050		41.8	%	$	14,848		41.4	%	$	19,547		45.1	%	$	16,872		41.3	%
Construction/land development		6,530		14.4			6,282		13.4			9,403		14.5			8,116		14.5
Agricultural		249		1.7			252		1.9			435		1.5			355		1.5
Residential real estate loans:
Residential 1-4 family		8,982		20.4			6,072		21.8			9,181		18.1			9,909		20.0
Multifamily residential		3,407		5.5			2,817		5.1			3,753		5.8			3,537		5.2

Total real estate		37,218		83.8			30,271		83.6			42,319		85.0			38,789		82.5
Consumer		697		1.3			632		1.7			669		0.9			763		1.2
Commercial and industrial		3,351		12.0			1,933		12.2			7,534		12.0			5,950		13.9
Agricultural		4,618		1.4			1,931		0.9			4,342		1.3			5,035		1.0
Other		—		1.5			—		1.6			—		0.8			—		1.4
Unallocated		4,811		—			4,255		—			1,013		—			1,934		—

Total	$	50,695		100.0	%	$	39,022		100.0	%	$	55,877		100.0	%	$	52,471		100.0	%

Allowance for loan losses for covered loans were ~~$2.1~~$4.4 million and ~~$4.8~~$2.5 million at ~~September~~June 30, ~~2014~~2015 and December 31, ~~2013,~~2014, respectively.

Total covered charge-offs decreased to zero or the three months ended June 30, 2015, compared to $1.1 million for the same period in 2014. Total covered recoveries increased to ~~$863,000~~$186,000 for the three months ended ~~September~~June 30, ~~2014,~~2015, compared to ~~zero~~$128,000 for the same period in ~~2013. Total recoveries decreased to $87,000~~2014. There was an $80,000 provision for loan losses taken on covered loans during the three months ended ~~September~~June 30, ~~2014, compared to $154,000 for the same period in 2013.~~2015. There was zero provision for loan losses taken on covered loans during the three months ended ~~September~~June 30, 2014.

Total charge-offs decreased to $772,000 for the six months ended June 30, 2015, compared to $1.1 million for the same period in 2014. Total recoveries increased to $451,000 for the six months ended June 30, 2015, compared to $302,000 for the same period in 2014. There was ~~$100,000~~$998,000 provision for loan losses taken on covered loans during the ~~three~~six months ended ~~September~~June 30, ~~2013.~~

Total charge-offs decreased to $1.9 million for the nine months ended September 30, 2014, compared to $5.0 million for the same period in 2013. Total recoveries increased to $389,000 for the nine months ended September 30, 2014, compared to $171,000 for the same period in 2013.2015. There was zero provision for loan losses taken on covered loans during the ~~nine~~six months ended ~~September~~June 30, 2014. ~~There was $100,000 provision for loan losses taken on covered loans during the nine months ended September 30, 2013.~~

Our securities portfolio is the second largest component of earning assets and provides a significant source of revenue. Securities within the portfolio are classified as held-to-maturity, available-for-sale, or trading based on the intent and objective of the investment and the ability to hold to maturity. Fair values of securities are based on quoted market prices where available. If quoted market prices are not available, estimated fair values are based on quoted market prices of comparable securities. The estimated effective duration of our securities portfolio was ~~2.8~~3.0 years as of ~~September~~June 30, ~~2014.~~2015.

As of ~~September~~June 30, ~~2014~~2015 and December 31, ~~2013~~2014 we had ~~$296.0~~$337.0 million and ~~$114.6~~$356.8 million of held-to-maturity securities, respectively. Of the ~~$296.0~~$337.0 million of held-to-maturity securities, ~~$117.8~~$148.5 million were invested in mortgage-backed securities, ~~and $178.2~~$180.6 million were invested in state and political subdivisions, and $7.8 million were invested in obligations of U.S. Government-sponsored enterprises as of ~~September~~June 30, ~~2014. All~~2015. Of the $356.8 million of ~~the~~ held-to-maturity securities, $161.1 million were invested in mortgage-backed securities, $191.0 million were invested in state and political subdivisions, and $4.7 million were invested in U.S. Government-sponsored enterprises as of December 31, ~~2013.~~2014.

Securities available-for-sale are reported at fair value with unrealized holding gains and losses reported as a separate component of stockholders’ equity as other comprehensive income. Securities that are held as available-for-sale are used as a part of our asset/liability management strategy. Securities that may be sold in response to interest rate changes, changes in prepayment risk, the need to increase regulatory capital, and other similar factors are classified as available-for-sale. Available-for-sale securities were ~~$1.07~~$1.08 billion and ~~$1.18~~$1.07 billion as of ~~September~~June 30, ~~2014~~2015 and December 31, ~~2013,~~2014, respectively.

As of ~~September~~June 30, ~~2014, $495.2~~2015, $492.3 million, or ~~46.4%~~45.6%, of our available-for-sale securities were invested in mortgage-backed securities, compared to ~~$461.6~~$503.1 million, or ~~39.3%~~47.1%, of our available-for-sale securities as of December 31, ~~2013.~~2014. To reduce our income tax burden, ~~$176.7~~$183.0 million, or ~~16.6%~~16.9%, of our available-for-sale securities portfolio as of ~~September~~June 30, ~~2014,~~2015, was primarily invested in tax-exempt obligations of state and political subdivisions, compared to ~~$195.5~~$176.6 million, or 16.6%, of our available-for-sale securities as of December 31, ~~2013.~~2014. Also, we had approximately ~~$343.4~~$357.5 million, or ~~32.2%~~33.1%, invested in obligations of U.S. Government-sponsored enterprises as of ~~September~~June 30, ~~2014,~~2015, compared to ~~$463.5~~$336.1 million, or ~~39.4%~~31.5%, of our available-for-sale securities as of December 31, ~~2013.~~2014.

Certain investment securities are valued at less than their historical cost. These declines are primarily the result of the rate for these investments yielding less than current market rates. Based on evaluation of available evidence, we believe the declines in fair value for these securities are temporary. It is our intent to hold these securities to recovery. Should the impairment of any of these securities become other than temporary, the cost basis of the investment will be reduced and the resulting loss recognized in net income in the period the other than temporary impairment is identified.

See Note 3 “Investment Securities” toin the Condensed Notes to Consolidated Financial Statements for the carrying value and fair value of investment securities.

Our deposits averaged ~~$5.30~~$5.91 billion and ~~$5.29~~$5.76 billion for the three and ~~nine-month~~six-month periods ended ~~September~~June 30, ~~2014.~~2015. Total deposits ~~decreased $115.8 million, or~~as of June 30, 2015 were $5.88 billion, for an annualized ~~decrease~~increase of ~~2.9%, to $5.28 billion as of September 30, 2014,~~16.9% from ~~$5.39 billion as of~~ December 31, ~~2013.~~2014. Deposits are our primary source of funds. We offer a variety of products designed to attract and retain deposit customers. Those products consist of checking accounts, regular savings deposits, NOW accounts, money market accounts and certificates of deposit. Deposits are gathered from individuals, partnerships and corporations in our market areas. In addition, we obtain deposits from state and local entities and, to a lesser extent, U.S. Government and other depository institutions.

Our policy also permits the acceptance of brokered deposits. As of ~~September~~June 30, ~~2014~~2015 and December 31, ~~2013,~~2014, brokered deposits were ~~$45.2~~$82.0 million and ~~$100.4~~$33.6 million, respectively. Included in these brokered deposits are ~~$30.2~~$27.0 million and ~~$41.2~~$28.6 million of Certificate of Deposit Account Registry Service (CDARS) as of ~~September~~June 30, ~~2014~~2015 and December 31, ~~2013,~~2014, respectively. CDARS are deposits of our customers we have swapped with other institutions. This gives our customers the potential for FDIC insurance of up to $50.0 million.

The interest rates paid are competitively priced for each particular deposit product and structured to meet our funding requirements. We will continue to manage interest expense through deposit pricing. We may allow higher rate deposits to run off during periods of limited loan demand. We believe that additional funds can be attracted and deposit growth can be realized through deposit pricing if we experience increased loan demand or other liquidity needs.

Table 19 reflects the classification of the average deposits and the average rate paid on each deposit category, which is in excess of 10 percent of average total deposits, for the three and ~~nine-month~~six-month periods ended ~~September~~June 30, ~~2014~~2015 and ~~2013.~~2014.


	Three Months Ended September 30,										Three Months Ended June 30,
	2014					2013					2015					2014
	Average Amount		Average Rate Paid			Average Amount		Average Rate Paid			Average Amount		Average Rate Paid			Average Amount		Average Rate Paid
	(Dollars in thousands)										(Dollars in thousands)
Non-interest-bearing transaction accounts	$	1,148,923		—	%	$	738,526		—	%	$	1,344,580		—	%	$	1,054,233		—	%
Interest-bearing transaction accounts		2,437,794		0.21			1,469,958		0.16			2,732,292		0.22			2,457,506		0.19
Savings deposits		397,473		0.11			221,119		0.05			417,198		0.06			351,350		0.06
Time deposits:
$100,000 or more		697,821		0.68			427,422		0.71			808,688		0.53			734,974		0.65
Other time deposits		617,951		0.43			404,727		0.40			610,115		0.44			645,275		0.42

Total	$	5,299,962		0.24	%	$	3,261,752		0.22	%	$	5,912,873		0.22	%	$	5,243,338		0.24	%


	Nine Months Ended September 30,
	2014					2013
	Average Amount		Average Rate Paid			Average Amount		Average Rate Paid
	(Dollars in thousands)
Non-interest-bearing transaction accounts	$	1,068,626		—	%	$	704,123		—	%
Interest-bearing transaction accounts		2,444,111		0.20			1,532,649		0.18
Savings deposits		365,852		0.08			214,391		0.08
Time deposits:
$100,000 or more		753,874		0.66			473,704		0.80
Other time deposits		653,381		0.43			432,311		0.43

Total	$	5,285,844		0.25	%	$	3,357,178		0.26	%


	Six Months Ended June 30,
	2015					2014
	Average Amount		Average Rate Paid			Average Amount		Average Rate Paid
	(Dollars in thousands)
Non-interest-bearing transaction accounts	$	1,286,275		—	%	$	1,029,004		—	%
Interest-bearing transaction accounts		2,685,063		0.22			2,447,322		0.10
Savings deposits		410,420		0.06			349,780		0.03
Time deposits:
$100,000 or more		736,323		0.60			782,364		0.34
Other time deposits		641,300		0.42			671,391		0.23

Total	$	5,759,381		0.23	%	$	5,279,861		0.13	%

We enter into short-term purchases of securities under agreements to resell (resale agreements) and sales of securities under agreements to repurchase (repurchase agreements) of substantially identical securities. The amounts advanced under resale agreements and the amounts borrowed under repurchase agreements are carried on the balance sheet at the amount advanced. Interest incurred on repurchase agreements is reported as interest expense. Securities sold under agreements to repurchase decreased ~~$89,000,~~$25.7 million, or ~~0.06%~~14.6%, from ~~$161.0~~$176.5 million as of December 31, ~~2013~~2014 to ~~$160.9~~$150.7 million as of ~~September~~June 30, ~~2014.~~2015.

Our FHLB borrowed funds were ~~$713.6~~$866.9 million and ~~$350.7~~$698.0 million at ~~September~~June 30, ~~2014~~2015 and December 31, ~~2013,~~2014, respectively. At ~~September~~June 30, ~~2014, $520.0~~2015, $25.0 million and ~~$193.6~~$841.9 million of the outstanding balance were issued as short-term and long-term advances, respectively. At December 31, ~~2013, $130.3~~2014, $515.0 million and ~~$220.4~~$183.0 million of the outstanding ~~balances~~balance were issued as short-term and long-term advances, respectively. Our remaining FHLB borrowing capacity was ~~$582.8 million~~$735.8 billion and ~~$373.5~~$905.6 million as of ~~September~~June 30, ~~2014~~2015 and December 31, ~~2013,~~2014, respectively. Expected maturities will differ from contractual maturities, because FHLB may have the right to call or HBI may have the right to prepay certain obligations.

Subordinated debentures, which consist of guaranteed payments on trust preferred securities, were $60.8 million as ~~of September~~June 30, ~~2014~~2015 and December 31, ~~2013.~~2014.

The trust preferred securities are tax-advantaged issues that qualify for Tier 1 capital treatment subject to certain limitations. Distributions on these securities are included in interest expense. Each of the trusts is a statutory business trust organized for the sole purpose of issuing trust securities and investing the proceeds in our subordinated debentures, the sole asset of each trust. The trust preferred securities of each trust represent preferred beneficial interests in the assets of the respective trusts and are subject to mandatory redemption upon payment of the subordinated debentures held by the trust. We wholly own the common securities of each trust. Each trust’s ability to pay amounts due on the trust preferred securities is solely dependent upon our making payment on the related subordinated debentures. Our obligations under the subordinated securities and other relevant trust agreements, in aggregate, constitute a full and unconditional guarantee by us of each respective trust’s obligations under the trust securities issued by each respective trust.

Stockholders’ equity was ~~$958.7 million~~$1.06 billion at ~~September~~June 30, ~~2014~~2015 compared to ~~$841.0 million~~$1.02 billion at December 31, ~~2013,~~2014, an annualized increase of ~~18.72%~~9.2%. As of ~~September~~June 30, ~~2014~~2015 and December 31, ~~2013~~2014 our equity to asset ratio was ~~13.3%~~13.1% and ~~12.3%~~13.7% respectively. Book value per share was ~~$14.42~~$15.67 at ~~September~~June 30, ~~2014~~2015 compared to ~~$12.92~~$15.03 at December 31, ~~2013, a 15.52%~~2014, an 8.6% annualized increase.

Common Stock Cash Dividends. We declared cash dividends on our common stock of ~~$0.10~~$0.125 per share and $0.075 per share for each of the three-month periods ended ~~September~~June 30, ~~2014~~2015 and ~~2013,~~2014, respectively. The common stock dividend payout ratio for the three months ended ~~September~~June 30, 2015 and 2014 was 24.92% and ~~2013 was 24.28% and 22.98%~~17.18%, respectively. The common stock dividend payout ratio for the ~~nine~~six months ended ~~September~~June 30, 2015 and 2014 was 25.98% and ~~2013 was 19.75% and 22.57%~~17.52%, respectively. For the ~~fourth~~third quarter of ~~2014,~~2015, the Board of Directors declared a regular ~~$0.10~~$0.15 per share quarterly cash dividend payable ~~December 3, 2014,~~September 2, 2015, to shareholders of record ~~November~~August 12, ~~2014.~~2015.

Stock Repurchase Program.During the first six months of 2015, the Company utilized a portion of its previously approved stock repurchase program. This program authorized the repurchase of 2,376,000 shares of the Company’s common stock. During the first quarter of 2015, the Company repurchased a total of 67,332 shares with a weighted-average stock price of $29.89 per share. No shares were repurchased during the second quarter of 2015. The 2015 earnings were used to fund these repurchases. Shares repurchased to date under the program total 1,578,228 shares. The remaining balance available for repurchase is 797,772 shares at June 30, 2015.

Risk-Based Capital. We, as well as our bank subsidiary, are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and other discretionary actions by regulators that, if enforced, could have a direct material effect on our financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, we must meet specific capital guidelines that involve quantitative measures of our assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. Our capital amounts and classifications are also subject to qualitative judgments by the regulators as to components, risk weightings and other factors.

In July 2013, the Federal Reserve Board and the other federal bank regulatory agencies issued a final rule to revise their risk-based and leverage capital requirements and their method for calculating risk-weighted assets (“Basel III”). Basel III became effective for the Company and its bank subsidiary on January 1, 2015.

Basel III applies to all depository institutions, bank holding companies with total consolidated assets of $500 million or more, and savings and loan holding companies. Among other things, Basel III establishes a new minimum and well-capitalized “common equity Tier 1 capital” requirement of 4.5% and 6.5% of risk-weighted assets, respectively. It also raises the minimum and well-capitalized “Tier 1 risk-based capital” requirement to 6% and 8% of risk-weighted assets, respectively. Basel III changes assigned higher risk weightings (150%) to exposures that are more than 90 days past due or are on non-accrual status and certain commercial real estate facilities that finance the acquisition, development or construction of real property.

Quantitative measures established by regulation to ensure capital adequacy require us to maintain minimum amounts and ratios (set forth in the table below) of total and Tier 1 capital to risk-weighted assets, and of Tier 1 capital to average assets. Management believes that, as of ~~September~~June 30, ~~2014~~2015 and December 31, ~~2013,~~2014, we met all regulatory capital adequacy requirements to which we were subject.

Table 20 presents our risk-based capital ratios as of ~~September~~June 30, ~~2014~~2015 and December 31, ~~2013.~~2014.


	As of September 30, 2014			As of December 31, 2013			As of June 30, 2015			As of December 31, 2014
	(Dollars in thousands)						(Dollars in thousands)
Tier 1 capital
Stockholders’ equity	$	958,681		$	840,955		$	1,061,701		$	1,015,292
Qualifying trust preferred securities		59,000			59,000
Goodwill and core deposit intangibles, net		(333,708	)		(323,272	)		(322,170	)		(345,762	)
Unrealized (gain) loss on available-for-sale securities		(5,336	)		4,140			(5,884	)		(7,009	)
Deferred tax assets		(206	)		(31,330	)		(7,926	)		—

Total common equity Tier 1 capital								725,721			662,521
Qualifying trust preferred securities								59,000			59,000

Total Tier 1 capital		678,431			549,493			784,721			721,521


Tier 2 capital
Qualifying allowance for loan losses		52,844			43,815			60,258			55,011

Total Tier 2 capital		52,844			43,815			60,258			55,011

Total risk-based capital	$	731,275		$	593,308		$	844,979		$	776,532

Average total assets for leverage ratio	$	6,637,011		$	5,859,902		$	7,570,625		$	7,000,248

Risk weighted assets	$	5,461,984		$	5,051,558		$	6,765,022		$	5,747,191


Ratios at end of period
Common equity Tier 1 capital								10.73	%		N/A
Leverage ratio		10.22	%		9.38	%		10.37			10.31	%
Tier 1 risk-based capital		12.42			10.88			11.60			12.55
Total risk-based capital		13.39			11.75			12.49			13.51
Minimum guidelines
Common equity Tier 1 capital								4.50	%		N/A
Leverage ratio		4.00	%		4.00	%		4.00			4.00	%
Tier 1 risk-based capital		4.00			4.00			6.00			4.00
Total risk-based capital		8.00			8.00			8.00			8.00
Well-capitalized guidelines
Common equity Tier 1 capital								6.50	%		N/A
Leverage ratio								5.00			5.00	%
Tier 1 risk-based capital								8.00			6.00
Total risk-based capital								10.00			10.00

As of the most recent notification from regulatory agencies, our bank subsidiary was “well-capitalized” under the regulatory framework for prompt corrective action. To be categorized as “well-capitalized”, we, as well as our banking subsidiary, ~~and we~~ must maintain minimum leverage, Tier 1 risk-based capital, and total risk-based capital ratios as set forth in the table. There are no conditions or events since that notification that we believe have changed the bank subsidiary’s category.

Our accounting and reporting policies conform to generally accepted accounting principles in the United States (“GAAP”) and the prevailing practices in the banking industry. However, due to the application of purchase accounting from the Company’s significant number of historical acquisitions (especially Liberty), we believe certain non-GAAP measures and ratios that exclude the impact of these items are useful to the investors and users of our financial statements to evaluate our performance, including net income, earnings per share, net interest margin and the allowance for loan losses for non-covered loans to total non-covered loans.

Because of the Company’s significant number of historical acquisitions, our net income, earnings per share, net interest margin and the allowance for loan losses for non-covered loans to total non-covered loans were significantly impacted by accretion and amortization of the fair value adjustments recorded in purchase accounting combined with the recording of provision for loan losses as loans migrate from purchased loan accounting treatment to originated loan accounting treatment. The accretion, amortization and provision for loan losses affect our net income, earnings per share and certain operating ratios as we accrete loan discounts to interest income; amortize premiums and discounts on time deposits to interest expense; amortize impairments of the indemnification assets to non-interest income; amortize intangible assets and accrue FDIC true-up liability to non-interest expense; expense merger and acquisition costs and make provision for loan losses to cover new loans originated which are replacing the purchased loans acquired.

The Company experienced ~~a $4.2 million and $17.3 million~~an $814,000 decrease in the provision for loan losses for non-covered loans during the ~~three and nine months ended September 30, 2014 which are increases~~second quarter of 2015 versus ~~the same periods in 2013. Included~~2014. This expected decrease is primarily a reflection of a slowdown in the ~~2014 three and nine-month periods was $2.9~~migration of the acquired Liberty loans from purchased-loan accounting treatment to originated-loan accounting treatment offset by provisioning for second quarter 2015 organic loan growth. The Company experienced a $4.9 million ofdecrease in the provision for loan losses ~~associated with purchased credit impaired~~for non-covered loans ~~acquired.~~during the first six months of 2015 versus 2014. This expected ~~increase~~decrease is ~~not an indication of a decline in asset quality, but~~ primarily a reflection of a slowdown in the migration of the acquired Liberty ~~(and other acquired)~~ loans from ~~purchased loan~~purchased-loan accounting treatment to ~~originated loan~~originated-loan accounting ~~treatment.~~treatment combined with a lower level of non-performing loans. Based upon current accounting guidance, the allowance for loan losses is not carried over in an acquisition. As a result, ~~virtually~~ none of the ~~Liberty footprint~~acquired loans had any allocation of the allowance for loan losses at ~~year end.~~merger date. This is the result of all loans acquired ~~on October 24, 2013 from Liberty~~ being recorded at fair value in accordance with the fair value methodology prescribed in ASC Topic 820. However, as the acquired loans payoff or renew and the acquired footprint originates new loan production, it is necessary to establish an allowance which represents an amount that, in management’s judgment, will be adequate to absorb credit losses. Traditionally, there is a large migration of these loans during the first year after acquisition, which can create an elevated provision for loan losses as was the case during 2014 with respect to the Liberty acquisition. As the acquired loans mature and are renewed as new credits, management evaluates the credit risk associated with these new credit decisions and determines the required allowance for loan loss for these new originated loans using the allowance for loan loss methodology for all originated loans as disclosed in Note 1 to the Notes to Consolidated Financial Statements in our Form 10-K.

We had ~~$1.82~~$1.48 billion of purchased non-covered loans, which includes ~~$148.2~~$131.7 million of discount for credit losses on non-covered loans acquired, at ~~September~~June 30, ~~2014.~~2015. We had ~~$2.04~~$1.77 billion of purchased non-covered loans, which includes ~~$174.6~~$139.7 million of discount for credit losses on non-covered loans acquired, at December 31, ~~2013.~~2014. For purchased credit-impaired financial assets, GAAP requires a discount embedded in the purchase price that is attributable to the expected credit losses at the date of acquisition, which is a different approach from non-purchased-credit-impaired assets. While the discount for credit losses on purchased non-covered loans is not available for credit losses on non-purchased non-covered loans, management believes it is useful information to show the same accounting as if applied to all loans, including those acquired in a business combination.

We believe these non-GAAP measures and ratios, when taken together with the corresponding GAAP measures and ratios, provide meaningful supplemental information regarding our performance. We believe investors benefit from referring to these non-GAAP measures and ratios in assessing our operating results and related trends, and when planning and forecasting future periods. However, these non-GAAP measures and ratios should be considered in addition to, and not as a substitute for or preferable to, ratios prepared in accordance with GAAP. In Tables 21 through 25 below, we have provided a reconciliation of, where applicable, the most comparable GAAP financial measures and ratios to the non-GAAP financial measures and ratios, or a reconciliation of the non-GAAP calculation of the financial measure for the periods indicated:


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013			2015			2014			2015			2014
	(In thousands, except per share data)												(In thousands, except per share data)
GAAP net income	$	27,371		$	18,363		$	83,137		$	53,570		$	33,906		$	28,429		$	65,025		$	55,766

Accretion to net interest income		(13,465	)		(5,988	)		(45,120	)		(16,133	)		(10,959	)		(16,439	)		(21,301	)		(31,703	)
Provision for loan losses⁽¹⁾		1,315			—			14,368			750
Provision for loan losses														2,501			6,115			5,370			13,053
FDIC indemnification amortization		6,947			3,177			18,313			7,452			2,202			6,622			6,158			11,366
FDIC true-up accrual		383			351			1,020			711			383			371			765			638
Amortization of intangible assets		1,153			802			3,467			2,406			1,100			1,147			2,229			2,314
Gain on acquisitions														—			—			(1,635	)
Merger and acquisition expenses		3,772			1,034			4,727			1,063			—			106			1,417			955
Tax impact of the above items		(64	)		379			1,960			2,280			2,901			1,263			4,252			2,052

Non-GAAP impact to net income		41			(245	)		(1,265	)		(1,471	)		(1,872	)		(815	)		(2,745	)		(1,325	)


Non-GAAP net income	$	27,412		$	18,118		$	81,872		$	52,099		$	32,034		$	27,614		$	62,280		$	54,441


GAAP diluted earnings per share	$	0.41		$	0.33		$	1.26		$	0.95		$	0.50		$	0.43		$	0.96		$	0.85
Impact of purchase accounting, net of tax		—			—			(0.02	)		(0.03	)		(0.03	)		(0.01	)		(0.04	)		(0.02	)

Non-GAAP diluted earnings per share	$	0.41		$	0.33		$	1.24		$	0.92		$	0.47		$	0.42		$	0.92		$	0.83


Average diluted shares outstanding		66,616			56,620			65,889			56,577			67,915			65,545			67,912			65,523


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013			2015			2014			2015			2014
	(Dollars in thousands)												(Dollars in thousands)
Interest income on loans receivable – FTE	$	76,024		$	45,121		$	226,674		$	133,577		$	82,470		$	75,518		$	158,060		$	150,650
Purchase accounting accretion		13,326			5,879			44,710			15,717			10,705			16,303			20,903			31,432

Non-GAAP interest income on loans receivable – FTE	$	62,698		$	39,242		$	181,964		$	117,860		$	71,765		$	59,215		$	137,157		$	119,218


Average loans	$	4,661,600		$	2,668,421		$	4,498,643		$	2,672,088		$	5,507,405		$	4,403,767		$	5,289,205		$	4,415,814
Average purchase accounting loan discounts⁽¹⁾		233,014			221,048			257,205			235,498			168,558			256,731			180,434			269,964

Average loans (non-GAAP)	$	4,894,614		$	2,889,469		$	4,755,848		$	2,907,586		$	5,675,963		$	4,660,498		$	5,469,639		$	4,685,778


Average yield on loans (reported)		6.47	%		6.71	%		6.74	%		6.68	%		6.01	%		6.88	%		6.03	%		6.88	%

Average contractual yield on loans (non-GAAP)		5.08			5.39			5.12			5.42			5.07			5.10			5.06			5.13


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013			2015			2014			2015			2014
	(Dollars in thousands)												(Dollars in thousands)
Interest expense on deposits	$	3,243		$	1,810		$	9,722		$	6,424		$	3,311		$	3,095		$	6,569		$	6,479
Amortization of time deposit (premiums)/discounts, net		139			109			410			416			254			136			398			271

Non-GAAP interest expense on deposits	$	3,382		$	1,919		$	10,132		$	6,840		$	3,565		$	3,231		$	6,967		$	6,750

Average interest-bearing deposits	$	4,151,039		$	2,523,226		$	4,217,218		$	2,653,055

Average deposits													$	4,568,293		$	4,189,105		$	4,473,106		$	4,250,857
Average unamortized CD (premium)/discount, net		(262	)		(831	)		(126	)		(958	)		(1,352	)		(125	)		(1,039	)		(57	)

Average interest-bearing deposits (non-GAAP)	$	4,150,777		$	2,522,395		$	4,217,092		$	2,652,097
Average deposits (non-GAAP)													$	4,566,941		$	4,188,980		$	4,472,067		$	4,250,800


Average cost of deposits (reported)		0.31	%		0.28	%		0.31	%		0.32	%		0.29	%		0.30	%		0.30	%		0.31	%

Average contractual cost of deposits (non-GAAP)		0.32			0.30			0.32			0.34			0.31			0.31			0.31			0.32


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013			2015			2014			2015			2014
	(Dollars in thousands)												(Dollars in thousands)
Net interest income – FTE	$	80,334		$	47,423		$	238,592		$	138,739		$	87,328		$	79,667		$	168,254		$	158,258
Total purchase accounting accretion		13,465			5,988			45,120			16,133			10,959			16,439			21,301			31,703

Non-GAAP net interest income – FTE	$	66,869		$	41,435		$	193,472		$	122,606		$	76,369		$	63,228		$	146,953		$	126,555


Average interest-earning assets	$	6,063,518		$	3,476,796		$	5,895,975		$	3,535,965		$	7,005,404		$	5,807,532		$	6,826,278		$	5,810,815
Average purchase accounting loan discounts		233,014			221,048			257,205			235,498
Average purchase accounting loan discounts⁽¹⁾														168,558			256,731			180,434			269,964

Average interest-earning assets (non-GAAP)	$	6,296,532		$	3,697,844		$	6,153,180		$	3,771,463		$	7,173,962		$	6,064,263		$	7,006,712		$	6,080,779


Net interest margin (reported)		5.26	%		5.41	%		5.41	%		5.25	%		5.00	%		5.50	%		4.97	%		5.49	%

Net interest margin (non-GAAP)		4.21			4.45			4.20			4.35			4.27			4.18			4.23			4.20

Table 25: Allowance for Loan Losses for Non-Covered Loans to Total Non-Covered Loans


	As of September 30, 2014									As of June 30, 2015
	Non-Covered Loans			Purchased Non-Covered Loans			Total			Non-Covered Loans			Purchased Non-Covered Loans			Total
	(Dollars in thousands)									(Dollars in thousands)
Loan balance reported (A)	$	2,766,285		$	1,816,730		$	4,583,015		$	4,016,808		$	1,444,453		$	5,499,028
Loan balance reported plus discount (B)		2,766,285			1,964,902			4,731,187			4,016,808			1,576,199			5,630,774

Allowance for loan losses for non-covered loans (C)		50,695			—			50,695			55,877			—			55,877
Discount for credit losses on non-covered loans acquired (D)		—			148,172			148,172			—			131,746			131,746

Total allowance for loan losses for non-covered loans plus discount for credit losses on non-covered loans acquired (E)	$	50,695		$	148,172		$	198,867		$	55,877		$	131,746		$	187,623


Allowance for loan losses for non-covered loans to total non-covered loans (C/A)		1.83	%		N/A			1.11	%		1.38	%		N/A			1.02	%
Discount for credit losses on non-covered loans acquired to non-covered loans acquired plus discount for credit losses on non-covered loans acquired (D/B)		N/A			7.54	%		N/A			N/A			8.36	%		N/A
Allowance for loan losses for non-covered loans plus discount for credit losses on non-covered loans acquired to total non-covered loans plus discount for credit losses on non-covered loans acquired (E/B)		N/A			N/A			4.20	%		N/A			N/A			3.33	%

Note: Discount for credit losses on purchased credit impaired loans acquired are accounted for on a pool by pool basis and are not available to cover credit losses on non-acquired loans or other pools.


	As of December 31, 2013									As of December 31, 2014
	Non-Covered Loans			Purchased Non-Covered Loans			Total			Non-Covered Loans			Purchased Non-Covered Loans			Total
	(Dollars in thousands)									(Dollars in thousands)
Loan balance reported (A)	$	2,150,463		$	2,043,974		$	4,194,437		$	3,044,153		$	1,773,161		$	4,817,314
Loan balance reported plus discount (B)		2,150,463			2,218,611			4,369,074			3,044,153			1,912,881			4,957,034

Allowance for loan losses for non-covered loans (C)	$	39,022		$	—		$	39,022			52,471			—			52,471
Discount for credit losses on non-covered loans acquired (D)		—			174,637			174,637			—			139,720			139,720

Total allowance for loan losses for non-covered loans plus discount for credit losses on non-covered loans acquired (E)	$	39,022		$	174,637		$	213,659		$	52,471		$	139,720		$	192,191


Allowance for loan losses for non-covered loans to total non-covered loans (C/A)		1.81	%		N/A			0.93	%		1.72	%		N/A			1.09	%
Discount for credit losses on non-covered loans acquired to non-covered loans acquired plus discount for credit losses on non-covered loans acquired (D/B)		N/A			7.87	%		N/A			N/A			7.30	%		N/A
Allowance for loan losses for non-covered loans plus discount for credit losses on non-covered loans acquired to total non-covered loans plus discount for credit losses on non-covered loans acquired (E/B)		N/A			N/A			4.89	%		N/A			N/A			3.88	%

We had ~~$334.3~~$342.5 million, ~~$324.0~~$346.3 million, and ~~$95.3~~$321.7 million total goodwill, core deposit intangibles and other intangible assets as of ~~September~~June 30, ~~2014,~~2015, December 31, ~~2013~~2014 and ~~September~~June 30, ~~2013,~~2014, respectively. Because of our level of intangible assets and related amortization expenses, management believes diluted earnings per share excluding intangible amortization, tangible book value per share, return on average assets excluding intangible amortization, return on average tangible equity excluding intangible amortization and tangible equity to tangible assets are useful in evaluating our company. These calculations, which are similar to the GAAP calculation of diluted earnings per share, tangible book value, return on average assets, return on average equity, and equity to assets, are presented in Tables 26 through 30, respectively.


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014		2013		2015		2014		2015		2014
	(Dollars in thousands, except per share data)								(Dollars in thousands, except per share data)
GAAP net income	$	27,371	$	18,363	$	83,137	$	53,570	$	33,906	$	28,429	$	65,025	$	55,766
Intangible amortization after-tax		701		487		2,107		1,462		669		697		1,355		1,406

Earnings excluding intangible amortization	$	28,072	$	18,850	$	85,244	$	55,032	$	34,575	$	29,126	$	66,380	$	57,172


GAAP diluted earnings per share	$	0.41	$	0.33	$	1.26	$	0.95	$	0.50	$	0.43	$	0.96	$	0.85
Intangible amortization after-tax		0.01		—		0.03		0.02		0.01		0.01		0.02		0.02

Diluted earnings per share excluding intangible amortization	$	0.42	$	0.33	$	1.29	$	0.97	$	0.51	$	0.44	$	0.98	$	0.87


	As of June 30, 2015		As of December 31, 2014
	(In thousands, except per share data)
Book value per share: A/B	$	15.67	$	15.03
Tangible book value per share: (A-C-D)/B		10.61		9.90

(A) Total equity	$	1,061,701	$	1,015,292
(B) Shares outstanding		67,774		67,571
(C) Goodwill	$	322,728	$	325,423
(D) Core deposit and other intangibles		19,816		20,925


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013			2015			2014			2015			2014
	(Dollars in thousands)												(Dollars in thousands)
Return on average assets: A/C		1.56	%		1.80	%		1.63	%		1.73	%		1.72	%		1.70	%		1.70	%		1.67	%
Return on average assets excluding intangible amortization: B/(C-D)		1.68			1.89			1.76			1.82			1.83			1.83			1.81			1.80

(A) Net income	$	27,371		$	18,363		$	83,137		$	53,570		$	33,906		$	28,429		$	65,025		$	55,766
Intangible amortization after-tax		701			487			2,107			1,462			669			697			1,355			1,406

(B) Earnings excluding intangible amortization	$	28,072		$	18,850		$	85,244		$	55,032		$	34,575		$	29,126		$	66,380		$	57,172


(C) Average assets	$	6,970,925		$	4,046,625		$	6,819,775		$	4,128,403		$	7,900,721		$	6,721,920		$	7,722,256		$	6,744,139
(D) Average goodwill, core deposits and other intangible assets		334,413			95,723			326,747			96,521			343,083			322,274			343,653			322,851


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013			2015			2014			2015			2014
	(Dollars in thousands)												(Dollars in thousands)
Return on average equity: A/C		11.58	%		13.63	%		12.48	%		13.53	%		12.98	%		12.96	%		12.66	%		12.98	%
Return on average tangible equity excluding intangible amortization: B/(C-D)		18.46			17.04			20.21			16.99			19.68			20.94			19.34			21.20

(A) Net income	$	27,371		$	18,363		$	83,137		$	53,570		$	33,906		$	28,429		$	65,025		$	55,766
(B) Earnings excluding intangible amortization		28,072			18,850			85,244			55,032			34,575			29,126			66,380			57,172
(C) Average equity		937,794			534,563			890,583			529,554			1,047,765			880,044			1,035,691			866,586
(D) Average goodwill, core deposits and other intangible assets		334,413			95,723			326,747			96,521			343,083			322,274			343,653			322,851


	As of September 30, 2014			As of December 31, 2013			As of June 30, 2015			As of December 31, 2014
	(Dollars in thousands)						(Dollars in thousands)
Equity to assets: B/A		13.32	%		12.35	%		13.15	%		13.71	%
Tangible equity to tangible assets:(B-C-D)/(A-C-D)		9.10			7.97			9.30			9.48

(A) Total assets	$	7,196,371		$	6,811,861		$	8,074,382		$	7,403,272
(B) Total equity		958,681			840,955			1,061,701			1,015,292
(C) Goodwill		313,320			301,736			322,728			325,423
(D) Core deposit and other intangibles		21,004			22,298			19,816			20,925

See Note 22 toin the Condensed Notes to Consolidated Financial Statements for a discussion of certain recently issued and recently adopted accounting pronouncements.

Liquidity Management. Liquidity refers to the ability or the financial flexibility to manage future cash flows to meet the needs of depositors and borrowers and fund operations. Maintaining appropriate levels of liquidity allows us to have sufficient funds available for reserve requirements, customer demand for loans, withdrawal of deposit balances and maturities of deposits and other liabilities. Our primary source of liquidity at our holding company is dividends paid by our bank subsidiary. Applicable statutes and regulations impose restrictions on the amount of dividends that may be declared by our bank subsidiary. Further, any dividend payments are subject to the continuing ability of the bank subsidiary to maintain compliance with minimum federal regulatory capital requirements and to retain its characterization under federal regulations as a “well-capitalized” institution.

Our bank subsidiary has potential obligations resulting from the issuance of standby letters of credit and commitments to fund future borrowings to our loan customers. Many of these obligations and commitments to fund future borrowings to our loan customers are expected to expire without being drawn upon; therefore, the total commitment amounts do not necessarily represent future cash requirements affecting our liquidity position.

Liquidity needs can be met from either assets or liabilities. On the asset side, our primary sources of liquidity include cash and due from banks, federal funds sold, available-for-sale investment securities and scheduled repayments and maturities of loans. We maintain adequate levels of cash and cash equivalents to meet our day-to-day needs. As of ~~September~~June 30, ~~2014,~~2015, our cash and cash equivalents were ~~$137.5~~$204.4 million, or ~~1.9%~~2.5% of total assets, compared to ~~$165.5~~$112.5 million, or ~~2.4%~~1.5% of total assets, as of December 31, ~~2013.~~2014. Our available-for-sale investment securities and federal funds sold were ~~$1.11~~$1.08 billion as of ~~September~~June 30, ~~2014~~2015 and ~~$1.18~~$1.07 billion as of December 31, ~~2013.~~2014.

Our investment portfolio is comprised of approximately ~~81.8%~~78.6% or ~~$1.12~~$1.11 billion of securities which mature in less than five years. As of ~~September~~June 30, ~~2014~~2015 and December 31, ~~2013, $1.14~~2014, $1.35 billion and ~~$1.13~~$1.40 billion, respectively, of securities were pledged as collateral for various public fund deposits and securities sold under agreements to repurchase.

On the liability side, our principal sources of liquidity are deposits, borrowed funds, and access to capital markets. Customer deposits are our largest sources of funds. As of ~~September~~June 30, ~~2014,~~2015, our total deposits were ~~$5.28~~$5.88 billion, or ~~73.3%~~72.8% of total assets, compared to ~~$5.39~~$5.42 billion, or ~~79.2%~~73.3% of total assets, as of December 31, ~~2013.~~2014. We attract our deposits primarily from individuals, business, and municipalities located in our market areas.

We may occasionally use our Fed funds lines of credit in order to temporarily satisfy short-term liquidity needs. We have Fed funds lines with three other financial institutions pursuant to which we could have borrowed up to $35.0 million on an unsecured basis as of ~~September~~June 30, ~~2014~~2015 and December 31, ~~2013.~~2014. These lines may be terminated by the respective lending institutions at any time.

We also maintain lines of credit with the Federal Home Loan Bank. Our FHLB borrowed funds were ~~$713.6~~$866.9 million and ~~$350.7~~$698.0 million at ~~September~~June 30, ~~2014~~2015 and December 31, ~~2013,~~2014, respectively. At ~~September~~June 30, ~~2014, $520.0~~2015, $25.0 million and ~~$193.6~~$841.9 million of the outstanding balance were issued as short-term and long-term advances, respectively. At December 31, ~~2013, $130.3~~2014, $515.0 million and ~~$220.4~~$183.0 million of the outstanding balance were ~~issued as~~ short-term and long-term advances, respectively. Our FHLB borrowing capacity was ~~$582.8 million~~$735.8 billion and ~~$373.5~~$905.6 million as of ~~September~~June 30, ~~2014~~2015 and December 31, ~~2013,~~2014, respectively.

Market Risk Management. Our primary component of market risk is interest rate volatility. Fluctuations in interest rates will ultimately impact both the level of income and expense recorded on a large portion of our assets and liabilities, and the market value of all interest-earning assets and interest-bearing liabilities, other than those which possess a short term to maturity. We do not hold market risk sensitive instruments for trading purposes.

Asset/Liability Management. Our management actively measures and manages interest rate risk. The asset/liability committees of the boards of directors of our holding company and bank subsidiary are also responsible for approving our asset/liability management policies, overseeing the formulation and implementation of strategies to improve balance sheet positioning and earnings, and reviewing our interest rate sensitivity position.

One of the tools that our management uses to measure short-term interest rate risk is a net interest income simulation model. This analysis calculates the difference between net interest income forecasted, using base market rates and using a rising and a falling interest rate scenario. The income simulation model includes various assumptions regarding the re-pricing relationships for each of our products. Many of our assets are floating rate loans, which are assumed to re-price immediately, and proportional to the change in market rates, depending on their contracted index. Some loans and investments include the opportunity of prepayment (embedded options), and accordingly the simulation model uses indexes to estimate these prepayments and reinvest their proceeds at current yields. Our non-term deposit products re-price more slowly, usually changing less than the change in market rates and at our discretion.

This analysis indicates the impact of changes in net interest income for the given set of rate changes and assumptions. It assumes the balance sheet remains static and that its structure does not change over the course of the year. It does not account for all factors that impact this analysis, including changes by management to mitigate the impact of interest rate changes or secondary impacts such as changes to our credit risk profile as interest rates change.

Furthermore, loan prepayment rate estimates and spread relationships change regularly. Interest rate changes create changes in actual loan prepayment rates that will differ from the market estimates incorporated in this analysis. Changes that vary significantly from the assumptions may have significant effects on our net interest income.

Interest Rate Sensitivity. Our primary business is banking and the resulting earnings, primarily net interest income, are susceptible to changes in market interest rates. It is management’s goal to maximize net interest income within acceptable levels of interest rate and liquidity risks.

A key element in the financial performance of financial institutions is the level and type of interest rate risk assumed. The single most significant measure of interest rate risk is the relationship of the repricing periods of earning assets and interest-bearing liabilities. The more closely the repricing periods are correlated, the less interest rate risk we assume. We use repricing gap and simulation modeling as the primary methods in analyzing and managing interest rate risk.

Gap analysis attempts to capture the amounts and timing of balances exposed to changes in interest rates at a given point in time. ~~Our~~As of June 30, 2015, our gap position ~~as of September 30, 2014~~ was ~~asset~~liability sensitive with a one-year cumulative repricing gap as a percentage of ~~87.5%~~total earning assets of negative 5.7%. During ~~these periods,~~this period, the amount of change our asset base realizes in relation to the total change in market interest ~~rate exceeds~~rates is lower than that of the liability base. As a result, our net interest income will have a negative effect in an environment of modestly rising rates.

We have a portion of our securities portfolio invested in mortgage-backed securities. Mortgage-backed securities are included based on their final maturity date. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

Table 31 presents a summary of the repricing schedule of our interest-earning assets and interest-bearing liabilities (gap) as of ~~September~~June 30, ~~2014.~~2015.


	Interest Rate Sensitivity Period																							Interest Rate Sensitivity Period
	0-30 Days			31-90 Days			91-180 Days			181-365 Days			1-2 Years			2-5 Years			Over 5 Years			Total		0-30 Days			31-90 Days			91-180 Days			181-365 Days			1-2 Years			2-5 Years			Over 5 Years			Total
	(Dollars in thousands)																							(Dollars in thousands)
Earning assets
Interest-bearing deposits due from banks	$	28,416		$	—		$	—		$	—		$	—		$	—		$	—		$	28,416	$	87,729		$	—		$	—		$	—		$	—		$	—		$	—		$	87,729
Federal funds sold		44,275			—			—			—			—			—			—			44,275		—			—			—			—			—			—			—			—
Investment securities		60,268			79,808			48,642			97,459			183,108			512,635			381,733			1,363,653		98,668			81,063			66,081			108,415			166,320			486,077			410,369			1,416,993
Loans receivable, net		886,021			370,073			487,674			753,475			834,195			1,157,693			292,010			4,781,141		1,075,748			409,531			503,135			855,117			927,608			1,443,621			383,901			5,598,661

Total earning assets		1,018,980			449,881			536,316			850,934			1,017,303			1,670,328			673,743			6,217,485		1,262,145			490,594			569,216			963,532			1,093,928			1,929,698			794,270			7,103,383


Interest-bearing liabilities
Interest-bearing transaction and savings deposits		120,926			241,852			362,778			725,555			470,664			458,129			450,925			2,830,829		131,927			263,854			395,781			791,561			517,570			504,081			494,748			3,099,522
Time deposits		158,233			182,322			254,353			425,301			182,163			71,870			1,759			1,276,001		205,983			201,113			267,435			482,742			154,607			59,002			1,581			1,372,463
Federal funds purchased		—			—			—			—			—			—			—			—		—			—			—			—			—			—			—			—
Securities sold under repurchase agreements		160,895			—			—			—			—			—			—			160,895		150,746			—			—			—			—			—			—			150,746
FHLB borrowed funds		343,720			22,251			90,874			115,769			25,675			111,410			3,854			713,553		710,068			16,211			10,169			360			15,530			110,845			3,724			866,907
Subordinated debentures		60,826			—			—			—			—			—			—			60,826		60,826			—			—			—			—			—			—			60,826

Total interest-bearing liabilities		844,600			446,425			708,005			1,266,625			678,502			641,409			456,538			5,042,104		1,259,550			481,178			673,385			1,274,663			687,707			673,928			500,053			5,550,464

Interest rate sensitivity gap	$	174,380		$	3,456		$	(171,689	)	$	(415,691	)	$	338,801		$	1,028,919		$	217,205		$	1,175,381	$	2,595		$	9,416		$	(104,169	)	$	(311,131	)	$	406,221		$	1,255,770		$	294,217		$	1,552,919

Cumulative interest rate sensitivity gap	$	174,380		$	177,836		$	6,147		$	(409,544	)	$	(70,743	)	$	958,176		$	1,175,381				$	2,595		$	12,011		$	(92,158	)	$	(403,289	)	$	2,932		$	1,258,702		$	1,552,919
Cumulative rate sensitive assets to rate sensitive liabilities		120.6	%		113.8	%		100.3	%		87.5	%		98.2	%		120.9	%		123.3	%				100.2	%		100.7	%		96.2	%		89.1	%		100.1	%		124.9	%		128.0	%
Cumulative gap as a % of total earning assets		2.8	%		2.9	%		0.1	%		(6.6	)%		(1.1	)%		15.4	%		18.9	%				0.0	%		0.2	%		-1.3	%		-5.7	%		0.0	%		17.7	%		21.9	%

Based on their evaluation as of the end of the period covered by this Quarterly Report on Form 10-Q, the Chief Executive Officer and Chief Financial Officer have concluded that the disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934) are effective to ensure that information required to be disclosed by us in reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms. Additionally, our disclosure controls and procedures were also effective in ensuring that information required to be disclosed in our Exchange Act report is accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures.

There have not been any changes in the Company’s internal controls over financial reporting during the quarter ended ~~September~~June 30, ~~2014,~~2015, which have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

There are no material pending legal proceedings, other than ordinary routine litigation incidental to its business, to which ~~Home BancShares, Inc.~~the Company or its subsidiaries are a party or of which any of their property is the subject.

~~There~~Except for the risk factors set for below, there were no material changes from the risk factors set forth in Part I, Item 1A, “Risk Factors,” of our Form 10-K for the year ended December 31, ~~2013.~~2014. See the discussion of our risk factors in the Form 10-K, as filed with the SEC. The risks described are not the only risks facing the Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

Our success depends significantly on our Chairman, John W. Allison, and our executive officers, especially C. Randall Sims, Brian S. Davis and Kevin D. Hester plus Centennial Bank’s Chief Executive Officer and President, Tracy M. French, and our regional Centennial Bank presidents, Robert F. Birch, Russell D. Carter, III and Jim F. Haynes, Jr. Centennial Bank, in particular, relies heavily on its management team’s relationships in its local communities to generate business. Because we do not have employment agreements or non-compete agreements with our executive officers and regional bank presidents, these employees are free to resign at any time and accept an employment offer from another company, including a competitor. The loss of services from a member of our current management team may materially and adversely affect our business, financial condition, results of operations and future prospects.

If our bank subsidiary’s assets exceed $10 billion in the future, its change in status under the federal bank regulatory framework will result in increased compliance costs for the bank subsidiary, which could affect our operating results.

Among other things, the Dodd-Frank Act created the Consumer Financial Protection Bureau (the “CFPB”), which has broad regulatory and enforcement powers over consumer financial products and services. Banks with total assets of more than $10 billion are subject to certain capital testing regulations which are not applicable to smaller banks, and further, the CFPB has exclusive or primary authority to examine banks with more than $10 billion for, and enforce compliance with, the federal consumer financial protection laws. As of June 30, 2015, our bank subsidiary had $8.06 billion in assets. On a pro-forma basis assuming completion of our acquisition of FBBI and its bank subsidiary, our bank subsidiary would have had $8.63 billion in assets as of June 30, 2015. In the event that our bank subsidiary’s total assets exceed $10 billion at the end of four consecutive quarters in the future, the bank subsidiary would become subject to additional requirements and regulations and CFPB supervision, examination and enforcement. We expect that our bank subsidiary would have increased compliance costs as a result of such a change in status, which could affect our operating results.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


719 Harkrider, Suite 100, Conway, Arkansas		72032
(Address of principal executive offices)		(Zip Code)


~~HOME BANCSHARES, INC.~~ ~~FORM 10-Q~~ ~~September 30, 2014~~ ~~INDEX~~
		Page No.
Part I:	Financial Information

Item 1:	Financial Statements

	Consolidated Balance Sheets – ~~September~~June 30, ~~2014~~2015 (Unaudited) and December 31, ~~2013~~2014		4

	Consolidated Statements of Income (Unaudited) – Three and ~~nine~~six months ended ~~September~~June 30, ~~2014~~2015 and ~~2013~~2014		5

	Consolidated Statements of Comprehensive Income (Unaudited) – Three and ~~nine~~six months ended ~~September~~June 30, ~~2014~~2015 and ~~2013~~2014		6

	Consolidated Statements Stockholders’ Equity (Unaudited) – ~~Nine~~Six months ended ~~September~~June 30, ~~2014~~2015 and ~~2013~~2014		6

	Consolidated Statements of Cash Flows (Unaudited) – ~~Nine~~Six months ended ~~September~~June 30, ~~2014~~2015 and ~~2013~~2014		7

	Condensed Notes to Consolidated Financial Statements (Unaudited)		~~8-43~~8-42

	Report of Independent Registered Public Accounting Firm		4443

Item 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations		~~45-85~~44-86

Item 3:	Quantitative and Qualitative Disclosures About Market Risk		~~86-88~~87-89

Item 4:	Controls and Procedures		89

Part II:	Other Information

Item 1:	Legal Proceedings		89

~~Item 1A:~~	~~Risk Factors~~		89

~~Item 2:~~	~~Unregistered Sales of Equity Securities and Use of Proceeds~~		89

~~Item 3:~~	~~Defaults Upon Senior Securities~~		89

~~Item 4:~~	~~Mine Safety Disclosures~~		89

~~Item 5:~~	~~Other Information~~		90

Item 6:1A:	~~Exhibits~~Risk Factors		90

Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds		91

Item 3:	Defaults Upon Senior Securities		91

Item 4:	Mine Safety Disclosures		91

Item 5:	Other Information		91

Item 6:	Exhibits		91

Signatures			9192


	Doral Bank’s Florida Panhandle operations
	Acquired from FDIC		Fair Value Adjustments			As Recorded by HBI
	(Dollars in thousands)
Assets
Cash and due from banks	$	1,688	$	428,214		$	429,902
Loans receivable not covered by loss share		42,244		(4,300	)		37,944

Total loans receivable		42,244		(4,300	)		37,944
Core deposit intangible		—		1,363			1,363

Total assets acquired	$	43,932	$	425,277		$	469,209


Liabilities
Deposits
Demand and non-interest-bearing	$	3,130	$	—		$	3,130
Savings and interest-bearing transaction accounts		119,865		—			119,865
Time deposits		343,271		1,308			344,579

Total deposits		466,266		1,308			467,574

Total liabilities assumed	$	466,266	$	1,308		$	467,574


Pre-tax gain on acquisition						$	1,635


	September 30, 2014
	Less Than 12 Months					12 Months or More					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(In thousands)
U.S. government-sponsored enterprises	$	25,839	$	(70	)	$	27,305	$	(565	)	$	53,144	$	(635	)
Mortgage-backed securities		245,228		(1,276	)		75,480		(1,306	)		320,708		(2,582	)
State and political subdivisions		12,613		(121	)		19,155		(343	)		31,768		(464	)
Other securities		—		—			14,228		(378	)		14,228		(378	)

Total	$	283,680	$	(1,467	)	$	136,168	$	(2,592	)	$	419,848	$	(4,059	)


	Florida Traditions Bank
	Acquired from Traditions			Fair Value Adjustments			As Recorded by HBI
	(Dollars in thousands)
Assets
Cash and due from banks	$	5,169		$	(5	)	$	5,164
Interest-bearing deposits with other banks		8,151			—			8,151
Federal funds sold		270			—			270
Investment securities		12,942			(81	)		12,861
Loans not covered by loss share		250,129			(8,500	)		241,629
Allowance for loan losses		(4,532	)		4,532			—

Total loans receivable		245,597			(3,968	)		241,629
Bank premises and equipment, net		15,791			2,104			17,895
Foreclosed assets held for sale not covered by loss share		100			—			100
Cash value of life insurance		6,535			—			6,535
Accrued interest receivable		711			—			711
Deferred tax asset		1,206			(678	)		528
Goodwill		—			11,584			11,584
Core deposit intangible		—			2,173			2,173
Other assets		1,157			1,715			2,872

Total assets acquired	$	297,629		$	12,844		$	310,473

Liabilities
Deposits
Demand and non-interest-bearing	$	50,503		$	—		$	50,503
Savings and interest-bearing transaction accounts		147,814			—			147,814
Time deposits		69,031			—			69,031

Total deposits		267,348			—			267,348
FHLB borrowed funds		2,643			—			2,643
Accrued interest payable and other liabilities		1,155			(155	)		1,000

Total liabilities assumed		271,146			(155	)		270,991

Equity
Common stock		26			(13	)		13
Capital surplus		25,799			13,670			39,469
Retained earnings		632			(632	)		—
Accumulated other comprehensive income		26			(26	)		—

Total equity assumed		26,483			12,999			39,482

Total liabilities and equity assumed	$	297,629		$	12,844		$	310,473


	Three Months Ended September 30, 2014
	Construction/ Land Development			Other Commercial Real Estate			Residential Real Estate			Commercial & Industrial			Consumer & Other			Unallocated		Total
	(In thousands)
Allowance for loan losses:
Beginning balance	$	6,657		$	19,570		$	10,016		$	3,714		$	3,864		$	4,427	$	48,248
Loans charged off		(386	)		(480	)		(562	)		(416	)		(700	)		—		(2,544	)
Recoveries of loans previously charged off		23			9			332			190			196			—		750

Net loans recovered (charged off)		(363	)		(471	)		(230	)		(226	)		(504	)		—		(1,794	)
Provision for loan losses		236			(800	)		2,603			(137	)		1,955			384		4,241

Balance, September 30	$	6,530		$	18,299		$	12,389		$	3,351		$	5,315		$	4,811	$	50,695


	Nine Months Ended September 30, 2014
	Construction/ Land Development			Other Commercial Real Estate			Residential Real Estate			Commercial & Industrial			Consumer & Other			Unallocated		Total
	(In thousands)
Allowance for loan losses:
Beginning balance	$	6,282		$	15,100		$	8,889		$	1,933		$	2,563		$	4,255	$	39,022
Loans charged off		(553	)		(1,148	)		(2,045	)		(1,600	)		(2,148	)		—		(7,494	)
Recoveries of loans previously charged off		68			230			385			255			935			—		1,873

Net loans recovered (charged off)		(485	)		(918	)		(1,660	)		(1,345	)		(1,213	)		—		(5,621	)
Provision for loan losses		733			4,117			5,160			2,763			3,965			556		17,294

Balance, September 30	$	6,530		$	18,299		$	12,389		$	3,351		$	5,315		$	4,811	$	50,695


Options Outstanding							Options Exercisable
Exercise Prices	Options Outstanding Shares (000)		Weighted- Average Remaining Contractual Life (in years)		Weighted- Average Exercise Price		Options Exercisable Shares (000)		Weighted- Average Exercise Price
$ 3.08 to $3.50		7		0.70	$	3.39		7	$	3.39
$ 3.92 to $4.34		43		0.86		4.26		43		4.26
$ 4.78 to $4.92		61		1.01		4.83		61		4.83
$ 5.33 to $5.33		199		1.10		5.33		199		5.33
$ 5.54 to $5.54		199		1.45		5.54		199		5.54
$ 8.54 to $8.60		77		3.29		8.57		77		8.57
$ 9.25 to $9.31		10		2.65		9.29		10		9.29
$10.16 to $11.37		55		2.55		10.33		55		10.33
$13.12 to $13.12		88		7.31		13.12		34		13.12
$17.25 to $34.80		253		8.83		24.64		30		18.23

		992						715


Level 1		Quoted prices in active markets for identical assets or liabilities

Level 2		Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities

Level 3		Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities


	Yield Accretion Income		Amortization of Indemnification Asset		FDIC True-up Expense
	(In thousands)
Three Months Ended:
September 30, 2013	$	4,072	$	3,485	$	249
September 30, 2014		7,866		7,112		281

Additional income (expense)	$	3,794	$	3,627	$	32

Nine Months Ended:
September 30, 2013	$	9,423	$	8,565	$	406
September 30, 2014		21,211		18,880		716

Additional income (expense)	$	11,788	$	10,315	$	310


10.1		Amendment to Home Bancshares, Inc. Amended and Restated 2006 Stock Option and Performance Incentive Plan*

12.1		Computation of Ratios of Earnings to Fixed Charges*

15		Awareness of Independent Registered Public Accounting Firm*

31.1		CEO Certification Pursuant Rule 13a-14(a)/15d-14(a)*

31.2		CFO Certification Pursuant Rule 13a-14(a)/15d-14(a)*

32.1		CEO Certification Pursuant 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes – Oxley Act of 2002*

32.2		CFO Certification Pursuant 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes – Oxley Act of 2002*

101.INS		XBRL Instance Document*

101.SCH		XBRL Taxonomy Extension Schema Document*

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document*

101.LAB		XBRL Taxonomy Extension Label Linkbase Document*

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document*

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document*


Date: ~~November 6, 2014~~	~~/s/ Randy E. Mayor~~
August 6, 2015	~~Randy E. Mayor,~~ /s/ Brian S. Davis
		Brian S. Davis, Chief Financial Officer

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company