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 x☒ 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 RegulationS-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 x☒ No ¨☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, anon-accelerated filer, or a smaller reporting company or an emerging growth company. See ~~definitions~~definition of “large accelerated filer,” “accelerated ~~filer” and~~filer,” “smaller reporting company” and “emerging growth company” in Rule12b-2 of the Exchange Act. (Check one):

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule12b-2 of the Exchange Act). Yes ¨☐ No x☒

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: ~~140,386,841~~143,091,132 shares as of July ~~29, 2016.~~31, 2017.

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,” 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~~sections of our Form10-K filed with the Securities and Exchange Commission (the “SEC”) on February ~~26, 2016.~~28, 2017 and this Form10-Q.


(In thousands, except share data)	June 30, 2016			December 31, 2015			June 30, 2017			December 31, 2016
	(Unaudited)						(Unaudited)
Assets
Cash and due from banks	$	136,632		$	111,258		$	147,041		$	123,758
Interest-bearing deposits with other banks		48,762			144,565			313,447			92,891

Cash and cash equivalents		185,394			255,823			460,488			216,649
Federal funds sold		525			1,550			—			1,550
Investment securities – available-for-sale		1,221,778			1,206,580			1,400,431			1,072,920
Investment securities – held-to-maturity		287,725			309,042			254,161			284,176
Loans receivable not covered by loss share		6,964,716			6,579,401
Loans receivable covered by FDIC loss share		57,440			62,170
Loans receivable								7,834,475			7,387,699
Allowance for loan losses		(74,341	)		(69,224	)		(80,138	)		(80,002	)

Loans receivable, net		6,947,815			6,572,347			7,754,337			7,307,697
Bank premises and equipment, net		207,932			212,163			207,071			205,301
Foreclosed assets held for sale not covered by loss share		17,573			18,526
Foreclosed assets held for sale covered by FDIC loss share		205			614
FDIC indemnification asset		8,130			9,284
Foreclosed assets held for sale								18,789			15,951
Cash value of life insurance		85,889			85,146			97,684			86,491
Accrued interest receivable		28,548			29,132			32,445			30,838
Deferred tax asset, net		61,613			71,565			68,368			61,298
Goodwill		377,983			377,983			420,941			377,983
Core deposit and other intangibles		19,835			21,443			21,019			18,311
Other assets		131,181			117,924			136,494			129,300

Total assets	$	9,582,126		$	9,289,122		$	10,872,228		$	9,808,465

Liabilities and Stockholders’ Equity
Deposits:
Demand and non-interest-bearing	$	1,645,472		$	1,456,624		$	1,957,677		$	1,695,184
Savings and interest-bearing transaction accounts		3,678,546			3,551,684			4,335,456			3,963,241
Time deposits		1,388,930			1,430,201			1,474,255			1,284,002

Total deposits		6,712,948			6,438,509			7,767,388			6,942,427
Securities sold under agreements to repurchase		111,072			128,389			133,741			121,290
FHLB and other borrowed funds		1,380,889			1,405,945			1,099,478			1,305,198
Accrued interest payable and other liabilities		51,476			55,696			37,751			51,234
Subordinated debentures		60,826			60,826			357,838			60,826

Total liabilities		8,317,211			8,089,365			9,396,196			8,480,975

Stockholders’ equity:
Common stock, par value $0.01; shares authorized 200,000,000 in 2016 and 100,000,000 in 2015; shares issued and outstanding 140,381,841 in 2016 and 140,241,004 (split adjusted) in 2015		1,404			701
Common stock, par value $0.01; shares authorized 200,000,000 in 2017 and 2016; shares issued and outstanding 143,070,851 in 2017 and 140,472,205 in 2016								1,431			1,405
Capital surplus		863,560			867,981			940,821			869,737
Retained earnings		389,014			326,898			527,338			455,948
Accumulated other comprehensive income		10,937			4,177			6,442			400

Total stockholders’ equity		1,264,915			1,199,757			1,476,032			1,327,490

Total liabilities and stockholders’ equity	$	9,582,126		$	9,289,122		$	10,872,228		$	9,808,465


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended June 30,						Six Months Ended June 30,
(In thousands)	2016			2015			2016			2015			2017			2016			2017			2016
	(Unaudited)												(Unaudited)
Net income	$	43,509		$	33,906		$	84,936		$	65,025		$	50,097		$	43,509		$	96,953		$	84,936
Net unrealized gain (loss) on available-for-sale securities		7,375			(6,905	)		11,150			(1,847	)		9,318			7,375			10,746			11,150
Less: reclassification adjustment for realized (gains) losses included in income		(15	)		—			(25	)		(4	)		(380	)		(15	)		(803	)		(25	)

Other comprehensive (loss) income, before tax effect		7,360			(6,905	)		11,125			(1,851	)		8,938			7,360			9,943			11,125
Tax effect		(2,888	)		2,709			(4,365	)		726			(3,506	)		(2,888	)		(3,901	)		(4,365	)

Other comprehensive income (loss)		4,472			(4,196	)		6,760			(1,125	)		5,432			4,472			6,042			6,760

Comprehensive income	$	47,981		$	29,710		$	91,696		$	63,900		$	55,529		$	47,981		$	102,995		$	91,696


	Six Months Ended June 30,						Six Months Ended June 30,
(In thousands)	2016			2015			2017			2016
	(Unaudited)						(Unaudited)
Operating Activities
Net income	$	84,936		$	65,025		$	96,953		$	84,936
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation		5,452			5,191			5,636			5,452
Amortization/(accretion)		7,880			11,967			7,698			7,880
Share-based compensation		2,812			1,219			3,427			2,812
Tax benefits from stock options exercised		(1,148	)		(83	)		—			(1,148	)
(Gain) loss on assets		(46	)		(255	)		(3,379	)		(46	)
Gain on acquisitions		—			(1,635	)		(3,807	)		—
Provision for loan losses		11,369			9,168			4,301			11,369
Deferred income tax effect		5,587			3,864			(2,680	)		5,587
Increase in cash value of life insurance		(748	)		(603	)		(773	)		(748	)
Originations of mortgage loans held for sale		(172,162	)		(129,259	)		(182,918	)		(172,162	)
Proceeds from sales of mortgage loans held for sale		168,754			122,069			193,406			168,754
Changes in assets and liabilities:
Accrued interest receivable		584			(372	)		(276	)		584
Indemnification and other assets		(12,870	)		(3,842	)		(5,733	)		(12,870	)
Accrued interest payable and other liabilities		(3,072	)		27,488			(28,362	)		(3,072	)

Net cash provided by (used in) operating activities		97,328			109,942			83,493			97,328

Investing Activities
Net (increase) decrease in federal funds sold		1,025			250			1,550			1,025
Net (increase) decrease in loans, excluding loans acquired		(391,492	)		(283,216	)
Net (increase) decrease in loans, excluding purchased loans								(29,021	)		(391,492	)
Purchases of investment securities – available-for-sale		(151,210	)		(126,016	)		(391,375	)		(151,210	)
Proceeds from maturities of investment securities – available-for-sale		140,127			108,079			69,847			140,127
Proceeds from sale of investment securities – available-for-sale		2,221			931			27,134			2,221
Purchases of investment securities – held-to-maturity		—			(6,556	)		(163	)		—
Proceeds from maturities of investment securities – held-to-maturity		20,631			25,212			29,057			20,631
Proceeds from sale of investment securities –held-to-maturity								491			—
Proceeds from foreclosed assets held for sale		7,426			16,135			9,671			7,426
Proceeds from sale of SBA Loans		1,233						10,393			1,233
Proceeds from sale of insurance book of business		—			2,938
Purchases of premises and equipment, net		(434	)		(7,675	)		(2,425	)		(434	)
Return of investment on cash value of life insurance		—			27			592			—
Net cash proceeds (paid) received – market acquisitions		—			140,820			41,363			—

Net cash provided by (used in) investing activities		(370,473	)		(129,071	)		(232,886	)		(370,473	)

Financing Activities
Net increase (decrease) in deposits, excluding deposits acquired		274,439			(13,509	)		381,206			274,439
Net increase (decrease) in securities sold under agreements to repurchase		(17,317	)		(25,719	)		12,451			(17,317	)
Net increase (decrease) in FHLB and other borrowed funds		(25,056	)		168,950			(262,234	)		(25,056	)
Proceeds from exercise of stock options		1,164			117			646			1,164
Proceeds from issuance of subordinated notes								297,201			—
Repurchase of common stock		(8,842	)		(2,015	)		(10,280	)		(8,842	)
Common stock issuance costs – market acquisitions								(195	)		—
Tax benefits from stock options exercised		1,148			83			—			1,148
Dividends paid on common stock		(22,820	)		(16,895	)		(25,563	)		(22,820	)

Net cash provided by (used in) financing activities		202,716			111,012			393,232			202,716

Net change in cash and cash equivalents		(70,429	)		91,883			243,839			(70,429	)
Cash and cash equivalents – beginning of year		255,823			112,528			216,649			255,823

Cash and cash equivalents – end of period	$	185,394		$	204,411		$	460,488		$	185,394

Home BancShares, Inc. (the “Company” or “HBI”) is a bank holding company headquartered in Conway, Arkansas. The Company is primarily engaged in providing a full range of banking services to individual and corporate customers through its wholly-owned community bank subsidiary – Centennial Bank (sometimes referred to as “Centennial” or the “Bank”). The Bank has branch locations in Arkansas, Florida, ~~and~~ South 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, 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 and the valuations of assets acquired and liabilities assumed in business ~~combinations, covered loans and the related indemnification asset.~~combinations. 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 June 30, ~~2016~~2017 and ~~2015~~2016 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 ~~2015~~2016 Form10-K, filed with the Securities and Exchange Commission.

Basic earnings per share is computed based on the weighted-average number of shares outstanding during each ~~year, which have been restated to reflect the effect of the 2-for-1 stock split during June 2016.~~year. Diluted earnings per share is computed using the weighted-average shares and all potential dilutive shares outstanding during the period. The following table sets forth the computation of basic and diluted earnings per share (“EPS”) for the following periods:


	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended June 30,				Six Months Ended June 30,
	2016		2015		2016		2015		2017		2016		2017			2016
	(In thousands)								(In thousands)
Net income	$	43,509	$	33,906	$	84,936	$	65,025	$	50,097	$	43,509	$	96,953		$	84,936

Average shares outstanding		140,382		135,265		140,386		135,222		143,282		140,382		142,538	��		140,386
Effect of common stock options		226		567		281		603		834		226		732			281

Average diluted shares outstanding		140,608		135,832		140,667		135,825		144,116		140,608		143,270			140,667

Basic earnings per share	$	0.31	$	0.25	$	0.61	$	0.48	$	0.35	$	0.31	$	0.68		$	0.61
Diluted earnings per share	$	0.31	$	0.25	$	0.60	$	0.48	$	0.35	$	0.31	$	0.68		$	0.60

On ~~October 1, 2015,~~February 23, 2017, the Company completed its acquisition of ~~Florida Business BancGroup,~~Giant Holdings, Inc. (“~~FBBI”~~GHI”), parent company of ~~Bay Cities~~Landmark Bank, N.A. (“~~Bay Cities”~~Landmark”)., pursuant to a previously announced definitive agreement and plan of merger whereby GHI merged with and into HBI and, immediately thereafter, Landmark merged with and into Centennial. The Company paid a purchase price to the ~~FBBI~~GHI shareholders of ~~$104.1~~approximately $96.0 million for the ~~FBBI~~GHI acquisition. Under the terms of the agreement, shareholders of ~~FBBI~~GHI received ~~4,159,708~~2,738,038 shares ~~(split adjusted)~~ of its common stock valued at approximately ~~$83.8~~$77.5 million as of ~~October 1, 2015,~~February 23, 2017, plus approximately ~~$20.3~~$18.5 million in cash in exchange for all outstanding shares of ~~FBBI~~GHI common stock. A portion of the cash consideration, $2.0 million, has been placed into escrow, and FBBI shareholders will have a contingent right to receive their pro-rata portions of such amount. The amount, if any, of such escrowed funds to be released to FBBI shareholders will depend upon the amount of losses that HBI incurs in the two years following the completion of the merger related to two class action lawsuits that are pending against Bay Cities.

~~FBBI~~GHI formerly operated six branch locations ~~and a loan production office~~ in the Tampa Bay area and in Sarasota, Florida. Including the effects of any purchase accounting adjustments, as of October 1, 2015, FBBI had approximately $564.5 million in total assets, $408.3 million in loans after $14.1 million of loan discounts, and $472.0 million in deposits.

See Note 2 “Business Combinations” in the Notes to Consolidated Financial Statements on Form 10-K for the year ended December 31, 2015 for an additional discussion regarding the acquisition of FBBI.

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 FDIC, as receiver for the failed Doral Bank. This pool of loans is now housed in a division of Centennial known as the Centennial Commercial Finance Group (“Centennial CFG”). Centennial CFG is responsible for servicing the acquired loan pool and originating new loan production.

In connection with this acquisition of loans, we opened a loan production office on April 23, 2015 in New York City. Through the loan production office, Centennial CFG is building out a national lending platform focusing on commercial real estate plus commercial and industrial loans. As of June 30, 2016 and December 31, 2015, Centennial CFG had $891.3 million and $715.7 million in total loans net of discount, respectively. Centennial CFG currently has plans to build this loan portfolio to approximately $1.1 billion by the end of 2016. During 2016, the Company has plans to open a deposit-only branch location in New York City.

~~Acquisition of Doral Bank’s~~Ft. Lauderdale, Florida ~~Panhandle operations~~

On February 27, 2015, the Company’s banking subsidiary, Centennial, acquired all the deposits and substantially all the assets of 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.area. Including the effects of the purchase accounting adjustments, ~~the~~as of acquisition ~~provided the Company with~~date, GHI had approximately $398.1 million in total assets, $327.8 million in loans ~~of approximately $37.9~~after $8.1 million ~~net~~ of loan discounts, and $304.0 million in deposits.

The Company has determined that the acquisition of the net assets of GHI constitutes a business combination as defined by the ASC Topic 805. Accordingly, the assets acquired and liabilities assumed are presented at their fair values as required. Fair values were determined based on the requirements of ASC Topic 820. In many cases, the determination of these fair values required management to make estimates about discount rates, future expected cash flows, market conditions and other future events that are highly subjective in nature and subject to change. The following schedule is a 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 and interest-bearing deposits with other banks – The carrying amount of these assets is a reasonable estimate of fair value based on the short-term nature of these assets.

Investment securities – Investment securities were acquired from GHI with an approximately ~~$467.6~~$5,000 adjustment to market value based upon quoted market prices.

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 $315.6 million ~~plus a $428.2 million cash settlement to balance~~of the ~~transaction. There is no loss-share~~loans purchased in conjunction with the ~~FDIC~~acquisition in accordance with the provisions of FASB ASC Topic310-20,Nonrefundable Fees and Other Costs,which were recorded with a $3.6 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 $20.3 million of loans evaluated were considered purchased credit impaired loans within the provisions of FASB ASC Topic310-30,Loans and Debt Securities Acquired with Deteriorated Credit Quality, and were recorded with a $4.5 million discount. These purchase credit impaired loans will recognize interest income through accretion of the difference between the carrying amount of the loans and the expected cash flows. The acquired GHI loan balance includes $1.6 million of discount on purchased loans.

Bank premises and equipment – Bank premises and equipment were acquired from GHI with a $608,000 adjustment to market value. This represents the difference between current appraisals completed in connection with the acquisition and book value acquired.

Cash value of life insurance– Cash value of life insurance was acquired from GHI at market value.

Accrued interest receivable – Accrued interest receivable was acquired from GHI 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.~~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%.

~~Prior~~Core deposit intangible – This intangible asset represents the value of the relationships that GHI 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 $3.4 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. The $324,000 fair value adjustment applied for time deposits was because the weighted average interest rate of GHI’s certificates of deposits were estimated to be below the current market rates.

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

Accrued interest payable and other liabilities – The fair value used represents the adjustments of certain estimated liabilities from GHI.

The Company’s operating results for the period ended June 30, 2017, include the operating results of the acquired assets and assumed liabilities subsequent to the acquisition ~~Doral Florida operated five branch locations in Panama City, Panama City Beach~~date. Due to the fair value adjustments recorded and ~~Pensacola, Florida plus a loan production office in Tallahassee, Florida. At~~ the ~~time~~fact GHI total assets acquired are less than 5% of total assets as of June 30, 2017 excluding GHI as recorded by HBI as of acquisition date, historical results are not believed to be material to the Company’s results, and thus nopro-forma information is presented.

On February 28, 2017, HBI completed its previously announced acquisition of all of the issued and outstanding shares of common stock of The Bank of Commerce, a Florida state-chartered bank that operated in the Sarasota, Florida area (“BOC”), pursuant to an acquisition agreement, dated December 1, 2016, by and between HBI and Bank of Commerce Holdings, Inc. (“BCHI”), parent company of BOC. HBI merged BOC with and into Centennial effective as of the close of business on February 28, 2017.

The acquisition of BOC was conducted in accordance with the provisions of Section 363 of the United States Bankruptcy Code (the “Bankruptcy Code”) pursuant to a voluntary petition for relief under Chapter 11 of the Bankruptcy Code filed by BCHI with the United States Bankruptcy Court for the Middle District of Florida (the “Bankruptcy Court”). The sale of BOC by BCHI was subject to certain bidding procedures approved by the Bankruptcy Court. On November 14, 2016, the Company submitted an initial bid to purchase the outstanding shares of BOC in accordance with the bidding procedures approved by the Bankruptcy Court. An auction was subsequently conducted on November 16, 2016, and the Company was deemed to be the successful bidder. The Bankruptcy Court entered a final order on December 9, 2016 approving the sale of BOC to the Company pursuant to and in accordance with the acquisition agreement.

Under the terms of the acquisition agreement, HBI paid an aggregate of approximately $4.2 million in cash for the acquisition, which included the purchase of all outstanding shares of BOC common stock, the discounted purchase of certain subordinated debentures issued by BOC from the existing holders of the subordinated debentures, and an expense reimbursement to BCHI for approved administrative claims in connection with the bankruptcy proceeding.

BOC formerly operated 29three branch locations in the Sarasota, Florida ~~Panhandle.~~area. Including the effects of the purchase accounting adjustments, as of acquisition date, BOC had approximately $178.1 million in total assets, $118.5 million in loans after $5.8 million of loan discounts, and $139.8 million in deposits.

The Company has determined that the acquisition of the net assets of BOC constitutes a business combination as defined by the ASC Topic 805. Accordingly, the assets acquired and liabilities assumed are presented at their fair values as required. Fair values were determined based on the requirements of ASC Topic 820. In many cases, the determination of these fair values required management to make estimates about discount rates, future expected cash flows, market conditions and other future events that are highly subjective in nature and subject to change. The following schedule is a 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 and interest-bearing deposits with other banks – The carrying amount of these assets is a reasonable estimate of fair value based on the short-term nature of these assets.

Investment securities – Investment securities were acquired from BOC with a $113,000 adjustment to market value based upon quoted market prices.

The Company evaluated $106.8 million of the loans purchased in conjunction with the acquisition in accordance with the provisions of FASB ASC Topic310-20,Nonrefundable Fees and Other Costs,which were recorded with a $3.0 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 $17.5 million of loans evaluated were considered purchased credit impaired loans within the provisions of FASB ASC Topic310-30,Loans and Debt Securities Acquired with Deteriorated Credit Quality, and were recorded with a $2.8 million discount. These purchase credit impaired loans will recognize interest income through accretion of the difference between the carrying amount of the loans and the expected cash flows.

Bank premises and equipment – Bank premises and equipment were acquired from BOC at market value.

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

Accrued interest receivable – Accrued interest receivable was acquired from BOC 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%.

Core deposit intangible – This intangible asset represents the value of the relationships that BOC 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 ~~closed all five branch locations during~~recorded $968,000 of core deposit intangible.

Deposits – The fair values used for the ~~July 2015 systems conversion~~demand and ~~returned~~savings deposits that comprise the ~~facilities back~~transaction accounts acquired, by definition equal the amount payable on demand at the acquisition date. The $270,000 fair value adjustment applied for time deposits was because the weighted-average interest rate of BOC’s certificates of deposits were estimated to be below the current market rates.

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

~~See Note 2 “Business Combinations”~~Accrued interest payable and other liabilities – The fair value used represents the adjustment of certain estimated liabilities from BOC.

The Company’s operating results for the period ended June 30, 2017, 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 BOC total assets acquired are less than 5% of total assets as of June 30, 2017 excluding BOC as recorded by HBI as of acquisition date, historical results are not believed to be material to the Company’s results, and thus nopro-forma information is presented.

On March 27, 2017, the Company and Centennial, entered into a definitive agreement and plan of merger with Stonegate Bank (“Stonegate”). The acquisition agreement provides that Stonegate will merge with and into Centennial (the “Merger”). Under the terms of the merger agreement, shareholders of Stonegate will receive, in the ~~Notes~~aggregate, proceeds from the transaction of approximately $749.8 million, consisting of $50.0 million in cash and $699.7 million of HBI common stock. In addition, the holders of outstanding stock options of Stonegate will receive approximately $28.6 million in cash in connection with the cancellation of their options immediately before the Merger, for a total transaction value of approximately $778.4 million. The number of shares of HBI common stock to ~~Consolidated Financial Statements~~be issued to Stonegate shareholders will be determined based on ~~Form 10-K~~the volume-weighted average closing price per share of HBI common stock for the ~~year ended December 31, 2015 for an additional discussion regarding~~20 consecutive trading days ending on the third trading day prior to the closing date (the “Average Closing Price”). In addition, if the Average Closing Price of HBI common stock as of the closing date is equal to $35.19 or greater or $22.52 or less, then the Average Closing Price will be fixed at $35.19 or $22.52, respectively. The acquisition is expected to close early in the fourth quarter of ~~Doral Florida.~~2017, and is subject to the approval of the shareholders of the Company and Stonegate, regulatory approvals, and other customary conditions set forth in the agreement.

As of June 30, 2017, Stonegate had approximately $3.13 billion in total assets, $2.44 billion in loans and $2.62 billion in customer deposits. Stonegate is conducting banking business from 24 locations in key Florida markets with significant presence in Broward and Sarasota counties.

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


	June 30, 2016									June 30, 2017
	Available-for-Sale									Available-for-Sale
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)			Estimated Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)			Estimated Fair Value
	(In thousands)									(In thousands)
U.S. government-sponsored enterprises	$	310,028	$	2,631	$	(819	)	$	311,840	$	354,594	$	2,544	$	(461	)	$	356,677
Residential mortgage-backed securities		282,626		3,466		(193	)		285,899		335,446		1,284		(923	)		335,807
Commercial mortgage-backed securities		351,161		4,928		(405	)		355,684		426,988		2,323		(1,259	)		428,052
State and political subdivisions		208,980		9,102		(2	)		218,080		236,216		5,318		(610	)		240,924
Other securities		50,985		584		(1,294	)		50,275		36,586		2,760		(375	)		38,971

Total	$	1,203,780	$	20,711	$	(2,713	)	$	1,221,778	$	1,389,830	$	14,229	$	(3,628	)	$	1,400,431


										Held-to-Maturity
										Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)			Estimated Fair Value
										(In thousands)
U.S. government-sponsored enterprises										$	6,212	$	41	$	—		$	6,253
Residential mortgage-backed securities											64,462		276		(130	)		64,608
Commercial mortgage-backed securities											20,648		301		(6	)		20,943
State and political subdivisions											162,839		4,039		—			166,878

Total										$	254,161	$	4,657	$	(136	)	$	258,682


	Held-to-Maturity
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)			Estimated Fair Value
	(In thousands)
U.S. government-sponsored enterprises	$	6,950	$	97	$	—		$	7,047
Residential mortgage-backed securities		83,256		1,232		(14	)		84,474
Commercial mortgage-backed securities		40,774		1,017		—			41,791
State and political subdivisions		156,745		6,364		(2	)		163,107

Total	$	287,725	$	8,710	$	(16	)	$	296,419


	December 31, 2015									December 31, 2016
	Available-for-Sale									Available-for-Sale
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)			Estimated Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)			Estimated Fair Value
	(In thousands)									(In thousands)
U.S. government-sponsored enterprises	$	367,911	$	1,875	$	(1,246	)	$	368,540	$	237,439	$	963	$	(1,641	)	$	236,761
Residential mortgage-backed securities		254,531		1,580		(1,356	)		254,755		259,037		1,226		(1,627	)		258,636
Commercial mortgage-backed securities		311,279		994		(1,713	)		310,560		322,316		845		(2,342	)		320,819
State and political subdivisions		211,546		7,723		(151	)		219,118		215,209		3,471		(2,181	)		216,499
Other securities		54,440		191		(1,024	)		53,607		38,261		2,603		(659	)		40,205

Total	$	1,199,707	$	12,363	$	(5,490	)	$	1,206,580	$	1,072,262	$	9,108	$	(8,450	)	$	1,072,920


	Held-to-Maturity									Held-to-Maturity
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)			Estimated Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)			Estimated Fair Value
	(In thousands)									(In thousands)
U.S. government-sponsored enterprises	$	7,395	$	37	$	(17	)	$	7,415	$	6,637	$	23	$	(32	)	$	6,628
Residential mortgage-backed securities		92,585		250		(282	)		92,553		71,956		267		(301	)		71,922
Commercial mortgage-backed securities		41,579		155		(42	)		41,692		35,863		107		(133	)		35,837
State and political subdivisions		167,483		4,870		(69	)		172,284		169,720		3,100		(169	)		172,651

Total	$	309,042	$	5,312	$	(410	)	$	313,944	$	284,176	$	3,497	$	(635	)	$	287,038

Assets, principally investment securities, having a carrying value of approximately ~~$1.27~~$1.40 billion and ~~$1.25~~$1.07 billion at June 30, ~~2016~~2017 and December 31, ~~2015,~~2016, 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 ~~$111.1~~$133.7 million and ~~$128.4~~$121.3 million at June 30, ~~2016~~2017 and December 31, ~~2015,~~2016, respectively.

The amortized cost and estimated fair value of securities classified asavailable-for-sale andheld-to-maturity at June 30, ~~2016,~~2017, 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
	Amortized		Estimated		Amortized		Estimated
	Cost		Fair Value		Cost		Fair Value
	(In thousands)
Due in one year or less	$	164,728	$	167,278	$	57,697	$	59,065
Due after one year through five years		892,526		898,424		122,334		124,901
Due after five years through ten years		240,776		242,080		17,895		18,214
Due after ten years		91,800		92,649		56,235		56,502

Total	$	1,389,830	$	1,400,431	$	254,161	$	258,682

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 andsix-month periods ended June 30, 2017, approximately $12.0 million and $27.1 million, respectively, inavailable-for-sale securities were sold. The gross realized gains and losses on the sales for the three-month period ended June 30, 2017 totaled approximately $514,000 and $127,000, respectively. The gross realized gains and losses on the sales for thesix-month period ended June 30, 2017 totaled approximately $937,000 and $127,000, respectively. The income tax expense/benefit to net security gains and losses was 39.225% of the gross amounts.

During the three andsix-month periods ended June 30, 2016, approximately $844,000 and $2.2 million, inavailable-for-sale securities were sold, respectively. The gross realized gains on the sales for the three andsix-month periods ended June 30, 2016 totaled approximately $15,000 and $25,000, respectively. The income tax expense/benefit to net security gains and losses was 39.225% of the gross amounts.

During the ~~three-month period~~three andsix-month periods ended June 30, ~~2015, no available-for-sale securities were sold. During the six-month period ended June 30, 2015,~~2017, oneheld-to-maturity security experienced its second downgrade in its credit rating. The Company made a strategic decision to sell thisheld-to-maturity security for approximately ~~$931,000~~$483,000, which resulted in ~~available-for-sale securities were sold. The~~a gross realized ~~gain~~loss on the sale for the three andsix-month ~~period~~ periods ended June 30, ~~2015 totaled~~2017 of approximately ~~$4,000. The income tax expense/benefit to net security gains and losses was 39.225% of the gross amounts.~~$7,000.

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 - 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 three andsix-month periods ended June 30, ~~2016,~~2017, no securities were deemed to have other-than-temporary impairment.

For the six months ended June 30, ~~2016,~~2017, the Company had investment securities with approximately ~~$1.5~~$1.4 million 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 81.3%~~75.3% 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 asavailable-for-sale andheld-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 June 30, ~~2016~~2017 and December 31, ~~2015:~~2016:


																June 30, 2017
	June 30, 2016															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 Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Value		Losses			Value		Losses			Value		Losses
	(In thousands)															(In thousands)
U.S. government-sponsored enterprises	$	70,315	$	(467	)	$	44,379	$	(352	)	$	114,694	$	(819	)	$	51,957	$	(283	)	$	39,341	$	(178	)	$	91,298	$	(461	)
Residential mortgage-backed securities		34,380		(151	)		9,223		(56	)		43,603		(207	)		158,147		(716	)		22,917		(337	)		181,064		(1,053	)
Commercial mortgage-backed securities		27,751		(280	)		31,975		(125	)		59,726		(405	)		125,079		(764	)		38,801		(501	)		163,880		(1,265	)
State and political subdivisions		1,047		(2	)		504		(2	)		1,551		(4	)		31,058		(591	)		1,698		(19	)		32,756		(610	)
Other securities		11,394		(312	)		15,021		(982	)		26,415		(1,294	)		1,581		(35	)		8,395		(340	)		9,976		(375	)

Total	$	144,887	$	(1,212	)	$	101,102	$	(1,517	)	$	245,989	$	(2,729	)	$	367,822	$	(2,389	)	$	111,152	$	(1,375	)	$	478,974	$	(3,764	)


																December 31, 2016
	December 31, 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 Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Value		Losses			Value		Losses			Value		Losses
	(In thousands)															(In thousands)
U.S. government-sponsored enterprises	$	135,128	$	(1,240	)	$	4,751	$	(24	)	$	139,879	$	(1,264	)	$	98,180	$	(1,031	)	$	75,044	$	(642	)	$	173,224	$	(1,673	)
Residential mortgage-backed securities		200,256		(1,445	)		10,511		(193	)		210,767		(1,638	)		188,117		(1,742	)		8,902		(186	)		197,019		(1,928	)
Commercial mortgage-backed securities		192,644		(1,449	)		23,592		(305	)		216,236		(1,754	)		202,289		(2,220	)		21,020		(255	)		223,309		(2,475	)
State and political subdivisions		27,334		(202	)		4,400		(18	)		31,734		(220	)		94,309		(2,348	)		500		(2	)		94,809		(2,350	)
Other securities		21,866		(339	)		15,803		(685	)		37,669		(1,024	)		1,540		(125	)		12,687		(534	)		14,227		(659	)

Total	$	577,228	$	(4,675	)	$	59,057	$	(1,225	)	$	636,285	$	(5,900	)	$	584,435	$	(7,466	)	$	118,153	$	(1,619	)	$	702,588	$	(9,085	)

Income earned on securities for the three and six months ended June 30, ~~2016~~2017 and ~~2015,~~2016, is as follows:


	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended June 30,				Six Months Ended June 30,
	2016		2015		2016		2015		2017		2016		2017		2016
	(In thousands)								(In thousands)
Taxable:
Available-for-sale	$	4,344	$	4,248	$	8,911	$	8,755	$	5,680	$	4,344	$	10,474	$	8,911
Held-to-maturity		801		882		1,684		1,918		754		801		1,438		1,684
Non-taxable:
Available-for-sale		1,565		1,375		3,139		2,721		1,583		1,565		3,130		3,139
Held-to-maturity		1,258		1,399		2,499		2,805		1,383		1,258		2,780		2,499

Total	$	7,968	$	7,904	$	16,233	$	16,199	$	9,400	$	7,968	$	17,822	$	16,233

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


	June 30,		December 31,		June 30,		December 31,
	2016		2015		2017		2016
	(In thousands)				(In thousands)
Real estate:
Commercial real estate loans
Non-farm/non-residential	$	2,883,970	$	2,968,147	$	3,368,663	$	3,153,121
Construction/land development		1,066,844		943,095		1,315,309		1,135,843
Agricultural		78,535		75,027		78,260		77,736
Residential real estate loans
Residential 1-4 family		1,207,756		1,130,714		1,513,888		1,356,136
Multifamily residential		394,980		429,872		398,781		340,926

Total real estate		5,632,085		5,546,855		6,674,901		6,063,762
Consumer		48,933		52,258		38,424		41,745
Commercial and industrial		1,130,372		850,357		994,827		1,123,213
Agricultural		69,666		67,109		69,697		74,673
Other		83,660		62,822		56,626		84,306

Loans receivable not covered by loss share	$	6,964,716	$	6,579,401
Total loans receivable					$	7,834,475	$	7,387,699

During the three andsix-month periods ended June 30, 2017, the Company sold $5.8 million and $9.8 million, respectively, of the guaranteed portion of certain SBA loans, which resulted in a gain of approximately $387,000 and $575,000, respectively. During the three andsix-month periods ended June 30, 2016, the Company sold $1.2 million of the guaranteed portion of certain SBA loans, which resulted in a gain of approximately $79,000. ~~During the three and six-month periods ended June 30, 2015, no SBA loans were sold.~~

Mortgage loans held for sale of approximately ~~$42.3~~$45.8 million and ~~$38.9~~$56.2 million at June 30, ~~2016~~2017 and December 31, ~~2015,~~2016, respectively, are included in residential1-4 family loans. Mortgage loans held for sale are carried at the lower of cost or fair value, determined using an aggregate basis. Gains and losses resulting from sales of mortgage loans are recognized when the respective loans are sold to investors. Gains and losses are determined by the difference between the selling price and the carrying amount of the loans sold, net of discounts collected or paid. The Company obtains forward commitments to sell mortgage loans to reduce market risk on mortgage loans in the process of origination and mortgage loans held for sale. The forward commitments acquired by the Company for mortgage loans in process of origination are considered mandatory forward commitments. Because these commitments are structured on a mandatory basis, the Company is required to substitute another loan or to buy back the commitment if the original loan does not fund. These commitments are derivative instruments and their fair values at June 30, ~~2016~~2017 and December 31, ~~2015~~2016 were not material.

The Company ~~evaluated~~had $1.36 billion of purchased loans, which includes $95.6 million of discount for credit losses on purchased ~~in conjunction with the acquisitions under purchase~~loans, at June 30, 2017. The Company had $37.6 million and ~~assumption agreements with the FDIC~~$58.0 million remaining of non-accretable discount for ~~impairment in accordance with the provisions of FASB ASC Topic 310-30. Purchased covered~~credit losses on purchased loans ~~are considered impaired if there is evidence of~~and accretable discount for 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~~losses on purchased ~~FDIC covered impaired~~ loans, respectively, as of June 30, ~~2016 and~~2017. The Company had $1.13 billion of purchased loans, which includes $100.1 million of discount for credit losses on purchased loans, at December 31, ~~2015~~2016. The Company had $35.3 million and $64.9 million remaining of non-accretable discount for ~~the Company:~~

~~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~~on purchased loans and accretable discount for credit losses on purchased loans, respectively, as of the acquisition. Techniques used in determining risk of loss are similar to the Centennial 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 June 30, 2016 and December 31, ~~2015, $3.7 million and $3.3 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 six months ended June 30, 2016:~~losses:


	For Loans Not Covered by Loss Share			For Loans Covered by FDIC Loss Share			Total			Six Months Ended June 30, 2017
	(In thousands)									(In thousands)
Allowance for loan losses:
Beginning balance	$	66,636		$	2,588		$	69,224		$	80,002
Loans charged off		(8,243	)		(71	)		(8,314	)		(6,111	)
Recoveries of loans previously charged off		2,052			10			2,062			1,946

Net loans recovered (charged off)		(6,191	)		(61	)		(6,252	)		(4,165	)

Provision for loan losses for non-covered loans		11,369			—			11,369
Provision for loan losses											4,301

Net provision for loan losses for covered loans		—			—			—
Balance, June 30, 2017										$	80,138

Balance, June 30, 2016	$	71,814		$	2,527		$	74,341

The following tables present the balance in the allowance for loan losses for the ~~non-covered loan portfolio for the~~ three andsix-month periods ended June 30, ~~2016,~~2017, 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 June 30, 2016. 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 discounts for credit losses on non-covered loans acquired were $109.5 million, $139.5 million and $131.7 million at June 30, 2016, December 31, 2015 and June 30, 2015, respectively.

The following tables present the balances in the allowance for loan losses for the non-covered loan portfolio for the six-month period ended June 30, 2015 and the year ended December 31, 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 December 31, 2015.2017. 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, 2015																					Three Months Ended June 30, 2017
	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	$	8,116		$	17,227		$	13,446		$	5,950		$	5,798		$	1,934		$	52,471		$	12,073		$	28,923		$	18,240		$	13,384		$	3,370		$	4,321		$	80,311
Loans charged off		(477	)		(198	)		(1,951	)		(1,470	)		(2,393	)		—			(6,489	)		(119	)		(191	)		(397	)		(134	)		(564	)		—			(1,405	)
Recoveries of loans previously charged off		66			701			249			236			473			—			1,725			28			379			121			70			247			—			845

Net loans recovered (charged off)		(411	)		503			(1,702	)		(1,234	)		(1,920	)		—			(4,764	)		(91	)		188			(276	)		(64	)		(317	)		—			(560	)
Provision for loan losses		1,698			2,252			1,190			2,818			1,133			(921	)		8,170			860			(1,268	)		(249	)		(492	)		10			1,526			387

Balance, June 30		9,403			19,982			12,934			7,534			5,011			1,013			55,877		$	12,842		$	27,843		$	17,715		$	12,828		$	3,063		$	5,847		$	80,138


																						Six Months Ended June 30, 2017
																						Construction/ Land Development			Other Commercial Real Estate			Residential Real Estate			Commercial & Industrial			Consumer & Other			Unallocated			Total
																						(In thousands)
Allowance for loan losses:
Beginning balance																						$	11,522		$	28,188		$	16,517		$	12,756		$	4,188		$	6,831		$	80,002
Loans charged off		(105	)		(3,725	)		(2,602	)		(1,168	)		(682	)		—			(8,282	)		(326	)		(1,655	)		(2,288	)		(779	)		(1,063	)		—			(6,111	)
Recoveries of loans previously charged off		132			38			633			566			354			—			1,723			227			710			254			252			503			—			1,946

Net loans recovered (charged off)		27			(3,687	)		(1,969	)		(602	)		(328	)		—			(6,559	)		(99	)		(945	)		(2,034	)		(527	)		(560	)		—			(4,165	)
Provision for loan losses		481			9,222			2,161			2,341			318			1,473			15,996			1,419			600			3,232			599			(565	)		(984	)		4,301
Reclass of provision for loan losses attributable to FDIC loss share agreements		745			1,277			(738	)		32			6			—			1,322

Balance, December 31	$	10,656		$	26,794		$	12,388		$	9,305		$	5,007		$	2,486		$	66,636
Balance, June 30																						$	12,842		$	27,843		$	17,715		$	12,828		$	3,063		$	5,847		$	80,138


	As of December 31, 2015																					As of June 30, 2017
	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	$	1,149		$	2,115		$	186		$	921		$	—		$	—		$	4,371		$	121		$	1,196		$	228		$	2,138		$	8		$	—		$	3,691
Loans collectively evaluated for impairment		9,506			24,511			12,157			8,383			5,006			2,486			62,049			12,718			26,297			16,880			10,589			3,050			5,847			75,381

Loans evaluated for impairment balance, December 31		10,655			26,626			12,343			9,304			5,006			2,486			66,420
Loans evaluated for impairment balance, June 30																							12,839			27,493			17,108			12,727			3,058			5,847			79,072

Purchased credit impaired loans acquired		1			168			45			1			1			—			216
Purchased credit impaired loans																							3			350			607			101			5			—			1,066

Balance, December 31	$	10,656		$	26,794		$	12,388		$	9,305		$	5,007		$	2,486		$	66,636
Balance, June 30																						$	12,842		$	27,843		$	17,715		$	12,828		$	3,063		$	5,847		$	80,138

Loans receivable:
Period end amount allocated to:
Loans individually evaluated for impairment	$	21,215		$	55,858		$	18,240		$	6,290		$	1,053		$	—		$	102,656		$	38,672		$	52,656		$	24,779		$	10,031		$	1,009		$	—		$	127,147
Loans collectively evaluated for impairment		901,147			2,887,880			1,490,866			825,640			179,391			—			6,284,924			1,260,049			3,306,528			1,841,046			972,024			161,069			—			7,540,716

Loans evaluated for impairment balance, December 31		922,362			2,943,738			1,509,106			831,930			180,444			—			6,387,580
Loans evaluated for impairment balance, June 30																							1,298,721			3,359,184			1,865,825			982,055			162,078			—			7,667,863

Purchased credit impaired loans acquired		20,733			99,436			51,480			18,427			1,745			—			191,821
Purchased credit impaired loans																							16,588			87,739			46,844			12,772			2,669			—			166,612

Balance, December 31	$	943,095		$	3,043,174		$	1,560,586		$	850,357		$	182,189		$	—		$	6,579,401
Balance, June 30																						$	1,315,309		$	3,446,923		$	1,912,669		$	994,827		$	164,747		$	—		$	7,834,475

The following tables present the balances in the allowance for loan losses for thesix-month period ended June 30, 2016 and the year ended December 31, 2016, and the allowance for loan losses and recorded investment in loans receivable based on portfolio segment by impairment method as of December 31, 2016. Allocation of a portion of the allowance to one type of loans does not preclude its availability to absorb losses in other categories.

The following is an aging analysis for ~~the non-covered loan portfolio~~loans receivable as of June 30, ~~2016~~2017 and December 31, ~~2015:~~2016:


	June 30, 2016														June 30, 2017
	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	$	1,514	$	2,424	$	18,157	$	22,095	$	2,861,875	$	2,883,970	$	8,467	$	4,757	$	914	$	17,877	$	23,548	$	3,345,115	$	3,368,663	$	8,202
Construction/land development		773		248		7,988		9,009		1,057,835		1,066,844		3,686		5,962		72		5,541		11,575		1,303,734		1,315,309		3,176
Agricultural		—		—		403		403		78,132		78,535		30		346		—		114		460		77,800		78,260		—
Residential real estate loans
Residential 1-4 family		4,302		2,630		17,847		24,779		1,182,977		1,207,756		3,080		4,574		4,048		17,129		25,751		1,488,137		1,513,888		1,550
Multifamily residential		423		—		1,304		1,727		393,253		394,980		1		—		—		1,367		1,367		397,414		398,781		1,367

Total real estate		7,012		5,302		45,699		58,013		5,574,072		5,632,085		15,264		15,639		5,034		42,028		62,701		6,612,200		6,674,901		14,295
Consumer		220		41		224		485		48,448		48,933		51		133		58		138		329		38,095		38,424		6
Commercial and industrial		470		2,279		8,929		11,678		1,118,694		1,130,372		3,978		2,619		685		3,999		7,303		987,524		994,827		141
Agricultural and other		414		2		1,110		1,526		151,800		153,326		9		287		—		703		990		125,333		126,323		—

Total	$	8,116	$	7,624	$	55,962	$	71,702	$	6,893,014	$	6,964,716	$	19,302	$	18,678	$	5,777	$	46,868	$	71,323	$	7,763,152	$	7,834,475	$	14,442


	December 31, 2015														December 31, 2016
	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	$	1,494	$	292	$	25,058	$	26,844	$	2,941,303	$	2,968,147	$	9,247	$	2,036	$	686	$	27,518	$	30,240	$	3,122,881	$	3,153,121	$	9,530
Construction/land development		897		343		7,128		8,368		934,727		943,095		4,176		685		16		7,042		7,743		1,128,100		1,135,843		3,086
Agricultural		177		—		561		738		74,289		75,027		30		—		—		435		435		77,301		77,736		—
Residential real estate loans
Residential 1-4 family		3,614		3,091		16,489		23,194		1,107,520		1,130,714		3,915		6,972		1,287		23,307		31,566		1,324,570		1,356,136		2,996
Multifamily residential		1,330		—		871		2,201		427,671		429,872		1		—		—		262		262		340,664		340,926		—

Total real estate		7,512		3,726		50,107		61,345		5,485,510		5,546,855		17,369		9,693		1,989		58,564		70,246		5,993,516		6,063,762		15,612
Consumer		133		66		285		484		51,774		52,258		46		117		66		161		344		41,401		41,745		21
Commercial and industrial		679		781		8,793		10,253		840,104		850,357		6,430		984		582		3,464		5,030		1,118,183		1,123,213		309
Agricultural and other		347		164		1,034		1,545		128,386		129,931		—		782		10		935		1,727		157,252		158,979		—

Total	$	8,671	$	4,737	$	60,219	$	73,627	$	6,505,774	$	6,579,401	$	23,845	$	11,576	$	2,647	$	63,124	$	77,347	$	7,310,352	$	7,387,699	$	15,942

Non-accruing loans ~~not covered by loss share~~ at June 30, ~~2016~~2017 and December 31, ~~2015~~2016 were ~~$36.7~~$32.4 million and ~~$36.4~~$47.2 million, respectively.

The following is a summary of the ~~non-covered~~ impaired loans as of June 30, ~~2016~~2017 and December 31, ~~2015:~~2016:


	June 30, 2016														June 30, 2017
							Three Months Ended				Six Months Ended										Three Months Ended				Six Months Ended
	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		Total Recorded Investment		Allocation of Allowance for Loan Losses		Average Recorded Investment		Interest Recognized		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	$	—	$	—	$	—	$	15	$	—	$	19	$	—	$	29	$	29	$	—	$	15	$	—	$	19	$	1
Construction/land development		29		29		—		15		—		10		1		23		23		—		12		—		8		1
Agricultural		—		—		—		—		—		—		—		37		—		—		—		1		—		1
Residential real estate loans
Residential 1-4 family		116		116		—		98		2		92		4		201		201		—		101		3		144		6
Multifamily residential		47		47		—		47		1		31		1		—		—		—		—		—		—		—

Total real estate		192		192		—		175		3		152		6		290		253		—		128		4		171		9
Consumer		—		—		—		—		—		—		—		3		—		—		—		—		—		—
Commercial and industrial		45		45		—		48		1		36		1		17		81		—		41		—		68		1
Agricultural and other		—		—		—		—		—		—		—		—		—		—		—		—		—		—

Total loans without a specific valuation allowance		237		237		—		223		4		188		7		310		334		—		169		4		239		10
Loans with a specific valuation allowance
Real estate:
Commercial real estate loans
Non-farm/non-residential		41,256		38,805		1,703		39,890		292		41,546		607		41,320		39,178		1,192		42,091		322		44,846		649
Construction/land development		16,774		16,539		794		15,973		103		15,674		177		10,315		9,481		121		10,110		69		9,272		135
Agricultural		426		403		—		473		—		503		—		77		117		4		138		1		238		3
Residential real estate loans
Residential 1-4 family		19,088		18,184		54		16,122		56		16,526		103		21,260		20,745		214		23,230		77		24,045		181
Multifamily residential		1,304		1,304		—		1,244		—		1,216		4		1,841		1,655		14		1,100		28		917		32

Total real estate		78,848		75,235		2,551		73,702		451		75,465		891		74,813		71,176		1,545		76,669		497		79,318		1,000
Consumer		233		224		—		223		1		244		2		139		141		—		156		—		158		—
Commercial and industrial		9,884		8,969		3		12,286		76		11,912		181		6,489		6,345		2,138		7,217		6		7,156		11
Agricultural and other		1,120		1,110		—		1,079		—		1,064		—		819		868		8		816		2		856		2

Total loans with a specific valuation allowance		90,085		85,538		2,554		87,290		528		88,685		1,074		82,260		78,530		3,691		84,858		505		87,488		1,013
Total impaired loans
Real estate:
Commercial real estate loans
Non-farm/non-residential		41,256		38,805		1,703		39,905		292		41,565		607		41,349		39,207		1,192		42,106		322		44,865		650
Construction/land development		16,803		16,568		794		15,988		103		15,684		178		10,338		9,504		121		10,122		69		9,280		136
Agricultural		426		403		—		473		—		503		—		114		117		4		138		2		238		4
Residential real estate loans
Residential 1-4 family		19,204		18,300		54		16,220		58		16,618		107		21,461		20,946		214		23,331		80		24,189		187
Multifamily residential		1,351		1,351		—		1,291		1		1,247		5		1,841		1,655		14		1,100	��	28		917		32

Total real estate		79,040		75,427		2,551		73,877		454		75,617		897		75,103		71,429		1,545		76,797		501		79,489		1,009
Consumer		233		224		—		223		1		244		2		142		141		—		156		—		158		—
Commercial and industrial		9,929		9,014		3		12,334		77		11,948		182		6,506		6,426		2,138		7,258		6		7,224		12
Agricultural and other		1,120		1,110		—		1,079		—		1,064		—		819		868		8		816		2		856		2

Total impaired loans	$	90,322	$	85,775	$	2,554	$	87,513	$	532	$	88,873	$	1,081	$	82,570	$	78,864	$	3,691	$	85,027	$	509	$	87,727	$	1,023

Note: Purchased ~~non-covered~~credit impaired loans ~~acquired with deteriorated credit quality~~ are accounted for on a pooled basis under ASC310-30. All of these pools are currently considered to be performing, resulting in none of the purchased ~~non-covered~~credit impaired loans ~~acquired with deteriorated credit quality~~ being classified as ~~non-covered~~ impaired loans as of June 30, ~~2016.~~2017.


	December 31, 2015										December 31, 2016
							Year Ended				Unpaid				Allocation		Year Ended
	Unpaid Contractual Principal Balance		Total Recorded Investment		Allocation of Allowance for Loan Losses		Average Recorded Investment		Interest Recognized		Contractual Principal Balance		Total Recorded Investment		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	$	29	$	29	$	—	$	6	$	2	$	29	$	29	$	—	$	23	$	2
Construction/land development		—		—		—		—		—		—		—		—		6		—
Agricultural		—		—		—		—		—		40		—		—		—		2
Residential real estate loans
Residential 1-4 family		80		80		—		21		6		231		231		—		119		15
Multifamily residential		—		—		—		—		—		—		—		—		19		—

Total real estate		109		109		—		27		8		300		260		—		167		19
Consumer		—		—		—		—		—		—		—		—		—		—
Commercial and industrial		12		12		—		2		1		124		124		—		64		8
Agricultural and other		—		—		—		—		—		—		—		—		—		—

Total loans without a specific valuation allowance		121		121		—		29		9		424		384		—		231		27
Loans with a specific valuation allowance
Real estate:
Commercial real estate loans
Non-farm/non-residential		47,861		44,858		2,115		43,900		1,139		52,477		50,355		1,414		42,979		1,335
Construction/land development		17,025		15,077		1,149		16,026		303		8,313		7,595		15		12,878		334
Agricultural		583		561		—		153		—		395		438		2		469		—
Residential real estate loans
Residential 1-4 family		18,454		17,333		168		16,947		390		26,681		25,675		95		20,239		293
Multifamily residential		1,160		1,160		18		3,281		34		552		552		8		922		9

Total real estate		85,083		78,989		3,450		80,307		1,866		88,418		84,615		1,534		77,487		1,971
Consumer		306		286		—		570		7		165		161		—		223		3
Commercial and industrial		13,385		11,163		921		6,542		191		7,160		7,032		95		10,630		255
Agricultural and other		1,034		1,034		—		614		4		935		935		—		1,037		—

Total loans with a specific valuation allowance		99,808		91,472		4,371		88,033		2,068		96,678		92,743		1,629		89,377		2,229
Total impaired loans
Real estate:
Commercial real estate loans
Non-farm/non-residential		47,890		44,887		2,115		43,906		1,141		52,506		50,384		1,414		43,002		1,337
Construction/land development		17,025		15,077		1,149		16,026		303		8,313		7,595		15		12,884		334
Agricultural		583		561		—		153		—		435		438		2		469		2
Residential real estate loans
Residential 1-4 family		18,534		17,413		168		16,968		396		26,912		25,906		95		20,358		308
Multifamily residential		1,160		1,160		18		3,281		34		552		552		8		941		9

Total real estate		85,192		79,098		3,450		80,334		1,874		88,718		84,875		1,534		77,654		1,990
Consumer		306		286		—		570		7		165		161		—		223		3
Commercial and industrial		13,397		11,175		921		6,544		192		7,284		7,156		95		10,694		263
Agricultural and other		1,034		1,034		—		614		4		935		935		—		1,037		—

Total impaired loans	$	99,929	$	91,593	$	4,371	$	88,062	$	2,077	$	97,102	$	93,127	$	1,629	$	89,608	$	2,256

Interest recognized on ~~non-covered~~ impaired loans during the three months ended June 30, ~~2016~~2017 and ~~2015~~2016 was approximately ~~$532,000~~$509,000 and ~~$522,000,~~$532,000, respectively. Interest recognized on ~~non-covered~~ impaired loans during the six months ended June 30, ~~2016~~2017 and ~~2015~~2016 was approximately ~~$1.1~~$1.0 million and ~~$1.0~~$1.1 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 theon-going monitoring of the credit quality of the Company’s loan portfolio, management tracks certain credit quality indicators including trends related to (i) the risk rating of loans, (ii) the level of classified loans, (iii) net charge-offs,(iv) non-performing loans and (v) the general economic conditions in Arkansas, Florida, Alabama and ~~Alabama.~~New York.

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

•

Risk rating 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 becharged-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 Topic310-30) by class as of June 30, ~~2016~~2017 and December 31, ~~2015:~~2016:


	June 30, 2016								June 30, 2017
	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	$	34,292	$	616	$	—	$	34,908	$	27,479	$	773	$	—	$	28,252
Construction/land development		22,619		—		—		22,619		12,381		105		—		12,486
Agricultural		543		—		—		543		426		—		—		426
Residential real estate loans
Residential 1-4 family		20,192		450		—		20,642		22,334		578		—		22,912
Multifamily residential		1,854		—		—		1,854		786		—		—		786

Total real estate		79,500		1,066		—		80,566		63,406		1,456		—		64,862
Consumer		301		16		—		317		174		1		—		175
Commercial and industrial		8,728		70		—		8,798		15,421		84		—		15,505
Agricultural and other		1,783		—		—		1,783		708		—		—		708

Total	$	90,312	$	1,152	$	—	$	91,464
Total risk rated loans									$	79,709	$	1,541	$	—	$	81,250


	December 31, 2015								December 31, 2016
	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	$	42,077	$	706	$	—	$	42,783	$	43,657	$	462	$	—	$	44,119
Construction/land development		17,821		1		—		17,822		8,619		33		—		8,652
Agricultural		534		—		—		534		759		—		—		759
Residential real estate loans
Residential 1-4 family		18,497		276		—		18,773		28,846		445		—		29,291
Multifamily residential		2,075		30		—		2,105		1,391		—		—		1,391

Total real estate		81,004		1,013		—		82,017		83,272		940		—		84,212
Consumer		320		18		—		338		211		2		—		213
Commercial and industrial		5,869		29		—		5,898		16,991		170		—		17,161
Agricultural and other		1,582		90		—		1,672		935		—		—		935

Total	$	88,775	$	1,150	$	—	$	89,925
Total risk rated loans									$	101,409	$	1,112	$	—	$	102,521

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 $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 receivable by class and risk rating as of June 30, ~~2016~~2017 and December 31, ~~2015:~~2016:


	June 30, 2016															June 30, 2017
	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	$	1,022	$	5,438	$	1,701,321	$	940,756	$	115,672	$	34,908	$	2,799,117		$	1,032	$	578	$	1,675,101	$	1,538,389	$	37,572	$	28,252	$	3,280,924
Construction/land development		216		1,097		268,429		749,232		4,681		22,619		1,046,274			33		838		193,881		1,063,218		28,265		12,486		1,298,721
Agricultural		—		257		54,313		23,195		173		543		78,481			—		83		49,714		27,155		882		426		78,260
Residential real estate loans
Residential 1-4 family		1,728		1,740		896,959		226,934		12,346		20,642		1,160,349			1,483		1,216		1,010,859		426,751		10,917		22,912		1,474,138
Multifamily residential		—		140		286,088		49,349		50,908		1,854		388,339			—		—		288,688		101,997		216		786		391,687

Total real estate		2,966		8,672		3,207,110		1,989,466		183,780		80,566		5,472,560			2,548		2,715		3,218,243		3,157,510		77,852		64,862		6,523,730
Consumer		15,674		261		21,679		9,799		99		317		47,829			12,681		162		15,872		8,384		51		175		37,325
Commercial and industrial		13,837		8,348		484,276		580,289		19,696		8,798		1,115,244			12,039		3,851		497,950		442,664		10,046		15,505		982,055
Agricultural and other		4,293		886		76,528		68,118		264		1,783		151,872			2,735		927		64,980		55,403		—		708		124,753

Total risk rated loans	$	36,770	$	18,167	$	3,789,593	$	2,647,672	$	203,839	$	91,464		6,787,505		$	30,003	$	7,655	$	3,797,045	$	3,663,961	$	87,949	$	81,250		7,667,863

Purchased credit impaired loans acquired														177,211
Purchased credit impaired loans															Purchased credit impaired loans														166,612

Total non-covered loans													$	6,964,716
Total loans receivable																												$	7,834,475


	December 31, 2015															December 31, 2016
	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	$	1,064	$	5,950	$	1,603,950	$	1,183,898	$	31,405	$	42,783	$	2,869,050		$	1,047	$	4,762	$	1,568,385	$	1,425,316	$	33,559	$	44,119	$	3,077,188
Construction/land development		61		696		254,907		645,249		3,627		17,822		922,362			400		981		180,094		921,081		7,087		8,652		1,118,295
Agricultural		—		298		47,413		26,262		181		534		74,688			—		157		53,753		22,238		829		759		77,736
Residential real estate loans
Residential 1-4 family		1,193		1,838		850,744		198,304		15,015		18,773		1,085,867			2,336		1,683		941,760		324,045		10,360		29,291		1,309,475
Multifamily residential		—		155		301,113		63,640		56,226		2,105		423,239			—		—		278,514		45,742		8,870		1,391		334,517

Total real estate		2,318		8,937		3,058,127		2,117,353		106,454		82,017		5,375,206			3,783		7,583		3,022,506		2,738,422		60,705		84,212		5,917,211
Consumer		16,367		318		23,768		10,266		109		338		51,166			15,080		231		15,330		9,645		81		213		40,580
Commercial and industrial		10,885		6,729		495,064		307,818		5,536		5,898		831,930			13,117		3,644		500,220		558,413		19,209		17,161		1,111,764
Agricultural and other		4,572		926		73,447		48,386		275		1,672		129,278			3,379		976		82,641		70,649		—		935		158,580

Total risk rated loans	$	34,142	$	16,910	$	3,650,406	$	2,483,823	$	112,374	$	89,925		6,387,580		$	35,359	$	12,434	$	3,620,697	$	3,377,129	$	79,995	$	102,521		7,228,135

Purchased credit impaired loans acquired														191,821
Purchased credit impaired loans															Purchased credit impaired loans														159,564

Total non-covered loans													$	6,579,401
Total loans receivable																												$	7,387,699

The following is a presentation of ~~non-covered~~ troubled debt restructurings (“TDRs”) by class as of June 30, ~~2016~~2017 and December 31, ~~2015:~~2016:


	June 30, 2016													June 30, 2017
	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		11	$	14,347	$	7,792	$	268		$	5,625	$	13,684		14	$	17,017	$	10,457	$	256	$	5,456	$	16,169
Construction/land development		5		2,597		2,302		—			290		2,592		3		641		554		79		—		633
Agricultural															2		146		—		39		78		117
Residential real estate loans
Residential 1-4 family		10		1,655		814		128			100		1,042		20		5,297		3,206		104		1,308		4,618
Multifamily residential		1		46		47		—			—		47		1		295		—		—		288		288

Total real estate		27		18,645		10,955		396			6,015		17,365		40		23,396		14,217		478		7,130		21,825
Consumer															1		3		—		3		—		3
Commercial and industrial		4		112		—		85			13		98		6		359		237		75		5		317
Other															1		166		166		—		—		166

Total		31	$	18,757	$	10,955	$	481		$	6,028	$	17,463		48	$	23,924	$	14,620	$	556	$	7,135	$	22,311


	December 31, 2015													December 31, 2016
	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		13	$	14,422	$	9,189	$	273		$	4,626	$	14,088		17	$	21,344	$	14,600	$	263	$	5,542	$	20,405
Construction/land development		2		1,026		1,018		—			—		1,018		1		560		556		—		—		556
Agricultural															2		146		—		43		80		123
Residential real estate loans
Residential 1-4 family		8		2,813		811		1,925			—		2,736		21		5,179		2,639		124		1,017		3,780
Multifamily residential		1		295		—		—			290		290		1		295		—		—		290		290

Total real estate		24		18,556		11,018		2,198			4,916		18,132		42		27,524		17,795		430		6,929		25,154
Commercial and industrial		2		69		—		69			—		69		6		395		237		115		10		362

Total		26	$	18,625	$	11,018	$	2,267	��	$	4,916	$	18,201		48	$	27,919	$	18,032	$	545	$	6,939	$	25,516

The following is a presentation of ~~non-covered~~ TDRs onnon-accrual status as of June 30, ~~2016~~2017 and December 31, ~~2015~~2016 because they are not in compliance with the modified terms:

In addition to the TDRs that occurred during the period provided in the preceding tables, the Company had TDRs with pre-modification loan balances of zero and $3.4 million as of June 30, 2016 and December 31, 2015, respectively, for which other real estate owned (“OREO”) was received in full or partial satisfaction of the loans. The majority of such TDRs were in commercial real estate and residential real estate as of June 30, 2016 and December 31, 2015, respectively. At June 30, 2016, the Company had $2.7 million of residential real estate properties in OREO.

The following is a presentation of ~~non-covered~~total foreclosed assets as of June 30, ~~2016~~2017 and December 31, ~~2015:~~2016:

The following ~~tables present~~is a summary of the ~~balance~~purchased credit impaired loans acquired in the ~~allowance for loan losses for~~GHI and BOC acquisitions during the ~~covered loan portfolio for the three andsix-month~~ ~~periods ended June 30, 2016, and the allowance for loan losses and recorded investment in loans covered by FDIC loss share based on portfolio segment by impairment method~~first quarter of 2017 as of ~~June 30, 2016.~~the date of acquisition:

As of June 30, 2016
Construction/
Land
Development Other
Commercial
Real Estate Residential
Real Estate Commercial
& Industrial Consumer
& Other Unallocated Total
(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, June 30
—      —      —      —      —      —      —

Purchased credit impaired loans acquired
34    102    2,349    33    9    —      2,527

Balance, June 30
$ 34    $ 102    $ 2,349    $ 33    $ 9    $ —      $ 2,527

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
1,700    192    55,032    404    112    —      57,440

Balance, June 30
$ 1,700    $ 192    $ 55,032    $ 404    $ 112    $ —      $ 57,440

The following tables present the balance in the allowance for loan losses for the covered loan portfolio for the six-month period ended June 30, 2015 and the year ended December 31, 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 December 31, 2015.

As of December 31, 2015
Construction/
Land
Development Other
Commercial
Real Estate Residential
Real Estate Commercial
& Industrial Consumer
& Other Unallocated Total
(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
126    4    2,430    19    9    —      2,588

Balance, December 31
$ 126    $ 4    $ 2,430    $ 19    $ 9    $ —      $ 2,588

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
1,692    188    59,949    230    111    —      62,170

Balance, December 31
$ 1,692    $ 188    $ 59,949    $ 230    $ 111    $ —      $ 62,170


	GHI		BOC
	(In thousands)
Contractually required principal and interest at acquisition	$	22,379	$	18,586
Non-accretable difference (expected losses and foregone interest)		4,462		2,811

Cash flows expected to be collected at acquisition		17,917		15,775
Accretable yield		2,071		1,043

Basis in purchased credit impaired loans at acquisition	$	15,846	$	14,732

Changes in the carrying amount of the accretable yield for purchased credit impaired loans ~~acquired~~ were as follows for thesix-month period ended June 30, ~~2016~~2017 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	$	43,900		$	253,991		$	38,212		$	159,564
Reforecasted future interest payments for loan pools		6,564			—			1,913			—
Accretion recorded to interest income		(13,984	)		13,984			(10,172	)		10,172
Acquisitions of GHI and BOC								3,114			30,578
Adjustment to yield		6,858			—			1,699			—
Transfers to foreclosed assets held for sale		—			(2,304	)		—			(698	)
Payments received, net		—			(31,020	)		—			(33,004	)

Balance at end of period	$	43,338		$	234,651		$	34,766		$	166,612

The loan pools were evaluated by the Company and are currently forecasted to have a slowerrun-off than originally expected. As a result, the Company has reforecast the total accretable yield expectations for those loan pools by ~~$6.6~~$1.9 million. This updated forecast does not change the expected weighted average yields on the loan pools.

During the ~~2016~~2017 impairment tests on the estimated cash flows of ~~non-loss-share~~ loans, wethe Company established that several ~~non-covered~~ loan pools were determined to have a materially projected credit improvement. As a result of this improvement, wethe Company will recognize approximately ~~$6.9~~$1.7 million as an additional adjustment to yield over 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 June 30, ~~2016~~2017 and December 31, ~~2015,~~2016, were as follows:


	June 30, 2016			December 31, 2015			June 30, 2017			December 31, 2016
	(In thousands)						(In thousands)
Goodwill
Balance, beginning of period	$	377,983		$	325,423		$	377,983		$	377,983
Acquisitions		—			55,255			42,958			—
Sale of insurance book of business		—			(2,695	)

Balance, end of period	$	377,983		$	377,983		$	420,941		$	377,983


	June 30, 2016			December 31, 2015			June 30, 2017			December 31, 2016
	(In thousands)						(In thousands)
Core Deposit and Other Intangibles
Balance, beginning of period	$	21,443		$	20,925		$	18,311		$	21,443
Acquisition		—			1,363			4,378			—
Sale of insurance book of business		—			(243	)
Amortization expense		(1,608	)		(2,229	)		(1,670	)		(1,608	)

Balance, June 30	$	19,835			19,816		$	21,019			19,835

Acquisitions					3,477
Amortization expense					(1,850	)					(1,524	)

Balance, end of year				$	21,443					$	18,311

The carrying basis and accumulated amortization of core deposits and other intangibles at June 30, ~~2016~~2017 and December 31, ~~2015~~2016 were:


	June 30, 2016			December 31, 2015			June 30, 2017			December 31, 2016
	(In thousands)						(In thousands)
Gross carrying basis	$	51,378		$	51,378		$	55,756		$	51,378
Accumulated amortization		(31,543	)		(29,935	)		(34,737	)		(33,067	)

Net carrying amount	$	19,835		$	21,443		$	21,019		$	18,311

Core deposit and other intangible amortization expense was approximately ~~$763,000~~$866,000 and ~~$1.1 million~~$763,000 for the three months ended June 30, ~~2016~~2017 and ~~2015,~~2016, respectively. Core deposit and other intangible amortization expense was approximately ~~$1.6~~$1.7 million and ~~$2.2~~$1.6 million for the six months ended June 30, ~~2016~~2017 and ~~2015,~~2016, respectively. Including all of the mergers completed as of June 30, ~~2016,~~2017, the Company’s estimated amortization expense of core deposits and other intangibles for each of the years ~~2016~~2017 through ~~2020~~2021 is approximately: ~~2016 – $3.1 million;~~ 2017 – ~~$3.0~~$3.3 million; 2018 – ~~$2.9~~$3.5 million; 2019 – ~~$2.8~~$3.4 million; 2020 – ~~$2.3~~$2.8 million; 2021 – $2.7 million.

The carrying amount of the Company’s goodwill was $420.9 million and $378.0 million at ~~both~~ June 30, ~~2016~~2017 and December 31, ~~2015.~~2016, 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 June 30, ~~2016~~2017 and December 31, ~~2015~~2016 other assets were ~~$131.2~~$136.5 million and ~~$117.9~~$129.3 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 approximately $536,000 and $3.2 million at June 30, 2016 and December 31, 2015, 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 (“FHLB”), Federal Reserve Bank (“Federal Reserve”), Bankers’ Bank and other miscellaneous holdings. The equity securities without a readily determinable fair value were ~~$110.8~~$117.5 million and ~~$97.5~~$112.4 million at June 30, ~~2016~~2017 and December 31, ~~2015,~~2016, respectively, and are accounted for at cost.

The aggregate amount of time deposits with a minimum denomination of $250,000 was ~~$583.0~~$634.8 million and ~~$503.3~~$569.1 million at June 30, ~~2016~~2017 and December 31, ~~2015,~~2016, respectively. The aggregate amount of time deposits with a minimum denomination of $100,000 was ~~$874.2~~$961.7 million and ~~$885.3~~$842.9 million at June 30, ~~2016~~2017 and December 31, ~~2015,~~2016, respectively. Interest expense applicable to certificates in excess of $100,000 totaled ~~$1.2~~$1.9 million and ~~$1.3~~$1.4 million for the three months ended June 30, ~~2016~~2017 and ~~2015,~~2016, respectively. Interest expense applicable to certificates in excess of $100,000 totaled ~~$2.3~~$3.6 million and ~~$2.6~~$2.3 million for the six months ended June 30, ~~2016~~2017 and ~~2015,~~2016, respectively. As of June 30, ~~2016~~2017 and December 31, ~~2015,~~2016, brokered deposits were ~~$331.2~~$634.4 million and ~~$199.3~~$502.5 million, respectively.

Deposits totaling approximately $1.20 billion and ~~$1.25~~$1.23 billion at June 30, ~~2016~~2017 and December 31, ~~2015,~~2016, respectively, were public funds obtained primarily from state and political subdivisions in the United States.

At June 30, ~~2016~~2017 and December 31, ~~2015,~~2016, securities sold under agreements to repurchase totaled ~~$111.1~~$133.7 million and ~~$128.4~~$121.3 million, respectively. For the three-month periods ended June 30, ~~2016~~2017 and ~~2015,~~2016, securities sold under agreements to repurchase daily weighted-average totaled ~~$115.8~~$128.7 million and ~~$168.3~~$115.8 million, respectively. For thesix-month periods ended June 30, ~~2016~~2017 and ~~2015,~~2016, securities sold under agreements to repurchase daily weighted-average totaled $126.4 million and $122.4 million, ~~and $173.9 million,~~ respectively.

~~The gross amount of recognized liabilities for securities sold under agreements to repurchase was $111.1 million and $128.4 million at June 30, 2016 and December 31, 2015, respectively.~~ The remaining contractual maturity of securities sold under agreements to repurchase in the consolidated balance sheets as of June 30, ~~2016~~2017 and December 31, ~~2015~~2016 is presented in the following tables:


	June 30, 2016										June 30, 2017
	Overnight and Continuous		Up to 30 Days		30-90 Days		Greater than 90 Days		Total		Overnight and Continuous		Up to 30 Days		30-90 Days		Greater than 90 Days		Total
	(In thousands)										(In thousands)
Securities sold under agreements to repurchase:
U.S. government-sponsored enterprises	$	4,459	$	—	$	—	$	—	$	4,459	$	11,514	$	—	$	—	$	—	$	11,514
Mortgage-backed securities		48,544		—		—		—		48,544		18,420		—		—		—		18,420
State and political subdivisions		57,271		—		—		—		57,271		82,048		—		—		—		82,048
Other securities		798		—		—		—		798		21,759		—		—		—		21,759

Total borrowings	$	111,072	$	—	$	—	$	—	$	111,072	$	133,741	$	—	$	—	$	—	$	133,741


	December 31, 2015										December 31, 2016
	Overnight and Continuous		Up to 30 Days		30-90 Days		Greater than 90 Days		Total		Overnight and Continuous		Up to 30 Days		30-90 Days		Greater than 90 Days		Total
	(In thousands)										(In thousands)
Securities sold under agreements to repurchase:
U.S. government-sponsored enterprises	$	7,216	$	—	$	—	$	—	$	7,216	$	1,918	$	—	$	—	$	—	$	1,918
Mortgage-backed securities		54,512		—		—		—		54,512		22,691		—		—		—		22,691
State and political subdivisions		65,294		—		—		—		65,294		74,559		—		—		—		74,559
Other securities		1,367		—		—		—		1,367		22,122		—		—		—		22,122

Total borrowings	$	128,389	$	—	$	—	$	—	$	128,389	$	121,290	$	—	$	—	$	—	$	121,290

The Company’s FHLB borrowed funds were ~~$1.38~~$1.10 billion and ~~$1.41~~$1.31 billion at June 30, ~~2016~~2017 and December 31, ~~2015,~~2016, respectively. At June 30, ~~2016~~2017, $200.0 million and ~~December 31, 2015, $1.35 billion and $1.41 billion, respectively~~$899.5 million of the outstanding balance were issued as short-term and long-term ~~advances.~~advances, respectively. At December 31, 2016, $40.0 million and $1.27 billion of the outstanding balance 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 ~~0.33%~~0.64% to 5.96% and are secured by loans and investments securities. Maturities of borrowings as of June 30, ~~2016~~2017 include: ~~2016 – $40.8 million;~~ 2017 – ~~$585.5~~$325.4 million; 2018 – ~~$459.3~~$459.1 million; 2019 – $143.1 million; 2020 – $146.4 million; 2021 – zero; after ~~2020~~2021 – ~~$474,000.~~$25.4 million. Expected maturities will differ from contractual maturities because FHLB may have the right to call or HBI the right to prepay certain obligations.

Additionally, the Company had ~~$266.2~~$566.3 million and ~~$261.1~~$516.2 million at June 30, ~~2016~~2017 and December 31, ~~2015,~~2016, respectively, in letters of credit under a FHLB blanket borrowing line of credit, which are used to collateralize public deposits at June 30, ~~2016~~2017 and December 31, ~~2015,~~2016, respectively.

The Company had ~~$5.3 million related to~~zero other borrowings at June 30, ~~2016. Additionally, the~~2017. The Company took out a $20.0 million line of credit for general corporate purposes during ~~2015. The~~2015, but the balance on this line of credit at June 30, ~~2016~~2017 and December 31, ~~2015~~2016 was zero.

Subordinated debentures consists of subordinated debt securities and guaranteed payments on trust preferred securities. As of June 30, 2017 and December 31, 2016, subordinated debentures were $357.8 million and $60.8 million, respectively.

Subordinated debentures at June 30, ~~2016~~2017 and December 31, ~~2015 consisted of guaranteed payments on trust preferred securities with~~2016 contained the following components:


	As of June 30, 2016		As of December 31, 2015		As of June 30, 2017		As of December 31, 2016
	(In thousands)				(In thousands)
Trust preferred securities
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
Subordinated debt securities
Subordinated notes, net of issuance costs, issued in 2017, due 2027, fixed rate of 5.625% during the first five years and at a floating rate of 3.575% above the then three-month LIBOR rate, reset quarterly, thereafter, callable in 2022 without penalty						297,012		—

Total	$	60,826	$	60,826	$	357,838	$	60,826

Trust Preferred Securities. 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 aretax-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.

~~14.~~Subordinated Debt Securities. On April 3, 2017, the Company completed an underwritten public offering of $300.0 million in aggregate principal amount of its 5.625%Fixed-to-Floating Rate Subordinated Notes due 2027 (the “Notes”) for net proceeds, after underwriting discounts and issuance costs, of approximately $297.0 million. The Notes are unsecured, subordinated debt obligations and mature on April 15, 2027. From and including the date of issuance to, but excluding April 15, 2022, the Notes bear interest at an initial rate of 5.625% per annum. From and including April 15, 2022 to, but excluding the maturity date or earlier redemption, the Notes will bear interest at a floating rate equal to three-month LIBOR as calculated on each applicable date of determination plus a spread of 3.575%; provided, however, that in the event three-month LIBOR is less than zero, then three-month LIBOR shall be deemed to be zero.

The Company may, beginning with the interest payment date of April 15, 2022, and on any interest payment date thereafter, redeem the Notes, in whole or in part, at a redemption price equal to 100% of the principal amount of the Notes to be redeemed plus accrued and unpaid interest to but excluding the date of redemption. The Company may also redeem the Notes at any time, including prior to April 15, 2022, at its option, in whole but not in part, if: (i) a change or prospective change in law occurs that could prevent the Company from deducting interest payable on the Notes for U.S. federal income tax purposes; (ii) a subsequent event occurs that could preclude the Notes from being recognized as Tier 2 capital for regulatory capital purposes; or (iii) the Company is required to register as an investment company under the Investment Company Act of 1940, as amended; in each case, at a redemption price equal to 100% of the principal amount of the Notes plus any accrued and unpaid interest to but excluding the redemption date. The Notes provide the Company with additional Tier 2 regulatory capital to support expected future growth.

The following is a summary of the components of the provision (benefit) for income taxes for the three andsix-month periods ended June 30, ~~2016~~2017 and ~~2015:~~2016:


	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended June 30,					Six Months Ended June 30,
	2016		2015		2016		2015		2017			2016		2017			2016
	(In thousands)								(In thousands)
Current:
Federal	$	17,488	$	16,456	$	37,693	$	28,530	$	29,278		$	17,488	$	48,669		$	37,693
State		3,474		3,269		7,487		5,667		5,815			3,474		9,667			7,487

Total current		20,962		19,725		45,180		34,197		35,093			20,962		58,336			45,180

Deferred:
Federal		4,224		179		4,661		3,224		(4,014	)		4,224		(2,236	)		4,661
State		839		35		926		640		(797	)		839		(444	)		926

Total deferred		5,063		214		5,587		3,864		(4,811	)		5,063		(2,680	)		5,587

Income tax expense	$	26,025	$	19,939	$	50,767	$	38,061	$	30,282		$	26,025	$	55,656		$	50,767

The reconciliation between the statutory federal income tax rate and effective income tax rate is as follows for the three andsix-month periods ended June 30, ~~2016~~2017 and ~~2015:~~2016:


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015			2017			2016			2017			2016
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		(1.54	)		(1.89	)		(1.58	)		(1.96	)
Cash value of life insurance		(0.18	)		(0.19	)		(0.19	)		(0.20	)
Effect ofnon-taxable interest income														(1.36	)		(1.54	)		(1.43	)		(1.58	)
Effect of gain on acquisitions														—			—			(0.87	)		—
Stock compensation														(0.07	)		—			(0.55	)		—
State income taxes, net of federal benefit		4.06			4.02			4.07			4.02			4.12			4.06			4.03			4.07
Other		0.09			0.09			0.11			0.06			(0.02	)		(0.09	)		0.29			(0.08	)

Effective income tax rate		37.43	%		37.03	%		37.41	%		36.92	%		37.67	%		37.43	%		36.47	%		37.41	%

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:


	June 30, 2016		December 31, 2015		June 30, 2017		December 31, 2016
	(In thousands)				(In thousands)
Deferred tax assets:
Allowance for loan losses	$	29,160	$	27,153	$	31,649	$	31,381
Deferred compensation		2,516		3,505		2,567		3,925
Stock options		1,072		1,800
Stock compensation						3,121		669
Real estate owned		2,233		1,988		3,464		2,296
Loan discounts		14,042		21,298		20,119		9,157
Tax basis premium/discount on acquisitions		15,439		15,772		13,318		14,757
Investments		2,451		2,637		1,394		1,957
Other		12,640		13,667		8,001		8,361

Gross deferred tax assets		79,553		87,820		83,633		72,503

Deferred tax liabilities:
Accelerated depreciation on premises and equipment		1,724		3,946		1,097		2,154
Unrealized gain on securities available-for-sale		7,061		2,696		4,159		258
Core deposit intangibles		5,423		5,930		6,065		4,950
Indemnification asset		573		678
FHLB dividends		1,756		1,689		1,926		1,926
Other		1,403		1,316		2,018		1,917

Gross deferred tax liabilities		17,940		16,255		15,265		11,205

Net deferred tax assets	$	61,613	$	71,565	$	68,368	$	61,298

The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction and the states of Arkansas, Alabama, Florida and New York. The Company is no longer subject to U.S. federal and state tax examinations by tax authorities for years before ~~2011.~~2012.

The Company also has the ~~Annual Meeting~~authority to issue up to 5,500,000 shares of ~~Shareholders of the Company, the shareholders approved, as proposed in the Proxy Statement, an amendment to~~preferred stock, par value $0.01 per share under the Company’s Restated Articles of ~~Incorporation to increase the number of authorized shares of common stock from 100,000,000 to 200,000,000.~~Incorporation.

On April 21, 2016, our Board of Directors declared a two-for-one stock split to be paid in the form of a 100% stock dividend on June 8, 2016 (the “Payment Date”) to shareholders of record at the close of business on May 18, 2016. The additional shares were distributed by the Company’s transfer agent, Computershare, and the Company’s common stock began trading on a split-adjusted basis on the NASDAQ Global Select Market on or about June 9, 2016. The stock split increased the Company’s total shares of common stock outstanding as of June 8, 2016 from 70,191,253 shares to 140,382,506 shares (split adjusted). All previously reported share and per share data included in filings subsequent to the Payment Date are restated to reflect the retroactive effect of this two-for-one stock split.

On January 20, 2017, the Company’s Board of Directors authorized the repurchase of up to an additional 5,000,000 shares of its common stock under the previously approved stock repurchase program, which brought the total amount of authorized shares to repurchase to 9,752,000 shares. During the first six months of ~~2016,~~2017, the Company utilized a portion of ~~its previously approved~~this stock repurchase program. ~~This program authorized~~

The following table sets forth information with respect to purchases made by or on behalf of the ~~repurchase~~Company of ~~4,752,000~~ shares ~~(split adjusted)~~ of the Company’s common ~~stock.~~ stock during the periods indicated:

During first six months of ~~2016,~~2017, the Company repurchased a total of ~~461,800~~420,000 shares ~~(split adjusted)~~ with a weighted-average stock price of ~~$19.15~~$24.51 per ~~share (split adjusted).~~share. The ~~2016~~2017 earnings were used to fund the repurchases during the year. Shares repurchased to date under the program total ~~3,618,256 shares (split adjusted).~~4,087,064 shares. The remaining balance available for repurchase is ~~1,133,744~~5,664,936 shares ~~(split adjusted)~~ at June 30, ~~2016.~~2017.

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. On April 21, 2016 at the Annual Meeting of Shareholders of the Company, the shareholders approved, as proposed in the Proxy Statement, an amendment to the Plan to increase the number of shares of the Company’s common stock available for issuance under the Plan by 2,000,000 shares ~~(split adjusted)~~ to 11,288,000 shares (split adjusted). The Plan provides for the granting of incentive andnon-qualified stock options to and other equity awards, including the issuance of restricted shares. As of June 30, ~~2016,~~2017, the maximum total number of shares of the Company’s common stock available for issuance under the Plan was 11,288,000 (split adjusted). At June 30, ~~2016,~~2017, the Company had approximately ~~2,668,000~~2,405,000 shares of common stock remaining available for future grants and approximately ~~5,119,000~~4,729,000 shares of common stock reserved for issuance pursuant to outstanding awards under the Plan.

The intrinsic value of the stock options outstanding and stock options vested at June 30, ~~2016~~2017 was ~~$12.0~~$20.6 million and ~~$7.7~~$11.3 million, respectively. Total unrecognized compensation cost, net of income tax benefit, related tonon-vested stock option awards, which are expected to be recognized over the vesting periods, was approximately ~~$7.6~~$6.0 million as of June 30, ~~2016.~~2017. For the first six months of ~~2016,~~2017, the Company has expensed approximately ~~$658,000~~$863,000 for thenon-vested awards.

The table below summarizes the stock option transactions under the Plan ~~(split adjusted)~~ at June 30, ~~2016~~2017 and December 31, ~~2015~~2016 and changes during thesix-month period and year then ended:


	For the Six Months Ended June 30, 2016					For the Year Ended December 31, 2015					For the Six Months Ended June 30, 2017					For the Year Ended December 31, 2016
	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		2,794		$	12.71		1,810		$	5.90		2,397		$	15.19		2,794		$	12.71
Granted		140			21.25		1,486			18.15		80			25.96		140			21.25
Forfeited/Expired		(14	)		17.28		(40	)		20.16		—			—		(14	)		17.28
Exercised		(468	)		3.20		(462	)		2.90		(153	)		7.53		(523	)		3.50

Outstanding, end of period		2,452			14.99		2,794			12.71		2,324			16.07		2,397			15.19

Exercisable, end of period		669		$	8.29		960		$	5.13		897		$	12.34		639		$	8.88

Stock-based compensation expense for stock-based compensation awards granted is based on the grant-date fair value. For stock option awards, the fair value is estimated at the date of grant using the Black-Scholes option-pricing model. This model requires the input of highly subjective assumptions, changes to which can materially affect the fair value estimate. Additionally, there may be other factors that would otherwise have a significant effect on the value of employee stock options granted but are not considered by the model. Accordingly, while management believes that the Black-Scholes option-pricing model provides a reasonable estimate of fair value, the model does not necessarily provide the best single measure of fair value for the Company’s employee stock options. The weighted-average fair value of options granted during the ~~year~~six months ended June 30, ~~2016~~2017 was ~~$5.08~~$7.10 per ~~share (split adjusted).~~share. The weighted-average fair value of options granted during the year ended December 31, ~~2015~~2016 was ~~$4.28~~$5.08 per share (split adjusted). 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 Six Months Ended			For the Year Ended			For the Six Months Ended June 30, 2017			For the Year Ended December 31, 2016
	June 30, 2016			December 31, 2015			For the Six Months Ended June 30, 2017			For the Year Ended December 31, 2016
Expected dividend yield		1.65	%		1.60	%		1.39	%		1.65	%
Expected stock price volatility		26.66	%		25.91	%		28.47	%		26.66	%
Risk-free interest rate		1.65	%		1.74	%		2.06	%		1.65	%
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 ~~(split adjusted)~~ at June 30, ~~2016:~~2017:


Options Outstanding	Options Outstanding							Options Exercisable				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			Options Outstanding Shares (000)		Weighted- Average Remaining Contractual Life (in years)		Weighted- Average Exercise Price		Options Exercisable Shares (000)		Weighted- Average Exercise Price
$1.96 to $2.67			46		2.01	$	2.48		46	$	2.48
$4.27 to $4.66			111		1.50		4.31		111		4.31
$2.10 to $2.66														19		1.68	$	2.55		19	$	2.55
$4.27 to $4.62														91		0.55		4.28		91		4.28
$5.08 to $6.56			251		3.46		5.94		215		5.84			123		4.15		6.45		123		6.45
$8.63 to $9.54			284		6.68		9.09		164		9.07
$8.62 to $9.54														284		5.68		9.09		224		9.08
$14.71 to $16.86			270		8.24		16.02		78		16.25			262		7.26		16.00		124		16.12
$17.13 to $17.40			219		8.44		17.19		54		17.23
$17.12 to $17.40														215		7.43		17.19		94		17.21
$18.46 to $18.46			1,050		9.15		18.46		—		—			1,050		8.15		18.46		184		18.46
$20.16 to $20.58			80		9.27		20.37		—		—			80		8.27		20.37		14		20.34
$21.25 to $21.25			140		9.81		21.25		—		—			120		8.81		21.25		24		21.25
$25.96 to $25.96														80		9.81		25.96		—		—

			2,451						668					2,324						897

The table below summarized the activity for the Company’s restricted stock issued and outstanding ~~(split adjusted)~~ at June 30, ~~2016~~2017 and December 31, ~~2015~~2016 and changes during the period and year then ended:

~~On January 25, 2016, the Company granted a total~~Total unrecognized compensation cost, net of ~~156,734 shares (split adjusted) of the Company’s restricted common stock~~income tax benefit, related to ~~the Company’s Chairman, a group of the Company’s non-employee directors and an employee of the Company’s bank subsidiary. The~~non-vested restricted stock ~~issued will “cliff” vest on January 25, 2019.~~awards, which are expected to be recognized over the vesting periods, was approximately $13.3 million as of June 30, 2017.

~~On January 25, 2016, the Company granted a total of 10,000 shares (split adjusted) of the Company’s unrestricted common stock to the Company’s Chairman in lieu of a cash bonus.~~

On April 26, 2016, the Company granted a total of 2,000 shares (split adjusted) of the Company’s restricted common stock to the Company’s newest non-employee director, Mike Beebe. The restricted stock issued will vest equally each year over three years beginning on the first anniversary of the issuance.

The table below shows the components ofnon-interest expense for the three and six months ended June 30, ~~2016~~2017 and ~~2015:~~2016:


	Three Months Ended				Six Months Ended
	June 30,				June 30,				Three Months Ended June 30,				Six Months Ended June 30,
	2016		2015		2016		2015		2017		2016		2017		2016
	(In thousands)								(In thousands)
Salaries and employee benefits	$	25,437	$	22,056	$	49,395	$	41,446	$	28,034	$	25,437	$	55,455	$	49,395
Occupancy and equipment		6,509		6,678		13,180		12,727		7,034		6,509		13,715		13,180
Data processing expense		2,766		3,063		5,430		5,482		2,863		2,766		5,586		5,430
Other operating expenses:
Advertising		733		657		1,556		1,436		812		733		1,510		1,556
Merger and acquisition expenses		—		—		0		1,417		789		—		7,516		—
Amortization of intangibles		763		1,100		1,608		2,229		866		763		1,670		1,608
Electronic banking expense		1,237		1,299		2,693		2,531		1,654		1,237		3,173		2,693
Directors’ fees		289		281		564		576		324		289		637		564
Due from bank service charges		337		286		642		501		456		337		876		642
FDIC and state assessment		1,446		1,172		2,892		2,568		1,182		1,446		2,470		2,892
Insurance		544		617		1,077		1,283		543		544		1,121		1,077
Legal and accounting		658		706		1,181		1,153		474		658		1,101		1,181
Other professional fees		1,044		560		1,969		1,048		1,233		1,044		2,386		1,969
Operating supplies		419		509		855		943		477		419		944		855
Postage		260		295		546		604		295		260		581		546
Telephone		455		470		942		974		398		455		722		942
Other expense		4,690		3,501		8,705		7,045		3,569		4,690		6,681		8,705

Total other operating expenses		12,875		11,453		25,230		24,308		13,072		12,875		31,388		25,230

Total non-interest expense	$	47,587	$	43,250	$	93,235	$	83,963	$	51,003	$	47,587	$	106,144	$	93,235

~~17. Concentration~~16. Significant Estimates and Concentrations of Credit Risks

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

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

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

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 June 30, ~~2016~~2017 and December 31, ~~2015, non-covered~~2016, commercial real estate loans represented ~~57.9%~~60.8% and ~~60.6%~~59.1% of ~~non-covered~~total loans receivable, respectively, and ~~318.6%~~322.6% and ~~332.3%~~328.9% of total stockholders’ equity, respectively. ~~Non-covered residential~~Residential real estate loans represented 24.4% and 23.0% of total loans receivable and ~~23.7% of non-covered loans~~129.6% and ~~126.7% and 130.1%~~127.8% of total stockholders’ equity at June 30, ~~2016~~2017 and December 31, ~~2015,~~2016, respectively.

Approximately ~~89.5%~~89.6% of the Company’s total loans and 90.7% of the Company’s real estate loans as of June 30, ~~2016,~~2017, are to borrowers whose collateral is located in Alabama, Arkansas, Florida and ~~Florida,~~New York, the ~~three~~ states in which the Company has its branch locations. ~~Additionally, the Company has 81.0% of its loans as real estate loans primarily in Arkansas, Florida and South Alabama.~~

Although general economic conditions in ~~our~~the Company’s market areas have improved, both nationally and locally, over the past three years and 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.

Any future volatility in the economy could cause the values of assets and liabilities recorded in the financial statements to change rapidly, resulting in material future adjustments in asset values, the allowance for 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 June 30, ~~2016~~2017 and December 31, ~~2015,~~2016, commitments to extend credit of ~~$1.72~~$1.89 billion and ~~$1.43~~$1.82 billion, respectively, were outstanding. A percentage of these balances are participated out to other banks; therefore, the Company can call on the participating banks to fund future draws. Since some of these commitments are expected to expire without being drawn upon, the total commitment amount does not necessarily represent future cash requirements.

Outstanding standby letters of credit are contingent commitments issued by the Company, generally to guarantee the performance of a customer in third-party borrowing arrangements. The term of the guarantee is dependent upon the creditworthiness of the borrower, 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 foron-balance-sheet instruments. The maximum amount of future payments the Company could be required to make under these guarantees at June 30, ~~2016~~2017 and December 31, ~~2015,~~2016, is ~~$39.2~~$45.8 million and ~~$24.3~~$41.1 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 six months of ~~2016,~~2017, the Company requested approximately ~~$21.4~~$38.1 million in regular dividends from its banking subsidiary. This dividend is equal to approximately ~~24%~~37.0% of the Company’s banking subsidiary’s ~~earnings for the first six months of 2016.~~year-to-date 2017 earnings.

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

Quantitative measures established by regulation to ensure capital adequacy require the Company to maintain minimum amounts and ratios of total, common Tier 1 equity and Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined) and of Tier 1 capital (as defined) to average assets (as defined). Management believes that, as of June 30, ~~2016,~~2017, the Company meets all capital adequacy requirements to which it is subject.

The Federal Reserve Board’s risk-based capital guidelines include the definitions for (1) a well-capitalized institution, (2) an adequately-capitalized institution, and (3) an undercapitalized institution. Under Basel III, the criteria for a well-capitalized institution are now: a 6.5% “common equity Tier 1 risk-based capital” ratio, a 5% “Tier 1 leverage capital” ratio, an 8% “Tier 1 risk-based capital” ratio, and a 10% “total risk-based capital” ratio. As of June 30, ~~2016,~~2017, 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 ~~10.6%~~11.79%, ~~10.1%~~10.54%, ~~11.3%~~12.47%, and ~~12.2%~~16.78%, respectively, as of June 30, ~~2016.~~2017.

In connection with the GHI acquisition, accounted for using the purchase method, the Company acquired approximately $398.1 million in assets, including $41.0 million in cash and cash equivalents, assumed $345.0 million in liabilities, issued 2,738,038 shares of its common stock valued at approximately $77.5 million as of February 23, 2017, and paid approximately $18.5 million in cash in exchange for all outstanding shares of GHI common stock.

In connection with the BOC acquisition, accounted for using the purchase method, the Company acquired approximately $178.1 million in assets, including $4.6 million in cash and cash equivalents, assumed $170.1 million in liabilities, issued no equity and paid approximately $4.2 million in cash. As a result, the Company recorded a bargain purchase gain of $3.8 million.

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


	June 30,				June 30,
	2016		2015		2017		2016
	(In thousands)				(In thousands)
Interest paid	$	14,572	$	9,738	$	20,491	$	14,572
Income taxes paid		47,250		31,210		74,542		47,250
Assets acquired by foreclosure		6,440		11,991		9,137		6,440

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 June 30, ~~2016~~2017 and December 31, ~~2015,~~2016, Level 3 securities were immaterial. In addition, there were no material transfers between hierarchy levels during ~~2016~~2017 and ~~2015.~~2016.

The Company reviews the prices supplied by the independent pricing service, as well as their underlying pricing methodologies, for reasonableness and to ensure such prices are aligned with traditional pricing matrices. In general, the Company does not purchase investment portfolio securities with complicated structures. Pricing for the Company’s investment securities is fairly generic and is easily obtained.

Impaired loans that are collateral dependent are the only material financial assets valued on anon-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 ~~$83.2~~$75.2 million and ~~$87.2~~$91.5 million as of June 30, ~~2016~~2017 and December 31, ~~2015,~~2016, respectively. This valuation is considered Level 3, consisting of appraisals of underlying collateral. The Company reversed approximately ~~$239,000~~$111,000 and ~~$255,000~~$239,000 of accrued interest receivable whennon-covered impaired loans were put onnon-accrual status during the three months ended June 30, ~~2016~~2017 and ~~2015,~~2016, respectively. The Company reversed approximately ~~$307,000~~$209,000 and ~~$306,000~~$307,000 of accrued interest receivable whennon-covered impaired loans were put onnon-accrual status during the six months ended June 30, ~~2016~~2017 and ~~2015,~~2016, respectively.

Foreclosed assets held for sale are the only materialnon-financial assets valued on anon-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 June 30, ~~2016~~2017 and December 31, ~~2015,~~2016, the fair value of foreclosed assets held for sale, ~~not covered by loss share,~~ less estimated costs to sell, was ~~$17.6~~$18.8 million and ~~$18.5~~$16.0 million, respectively.

Foreclosed assets held for sale with a carrying value of approximately ~~$3.8 million~~$144,000 were remeasured during the six months ended June 30, ~~2016,~~2017, resulting in a write-down of approximately ~~$1.1 million.~~$144,000.

Regulatory guidelines require us to reevaluate the fair value of foreclosed assets held for sale on at least an annual basis. ~~Our~~The Company’s policy is to comply with the regulatory guidelines.

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 acquired loans are based on a discounted cash flow methodology that considers factors including the type of loan and related collateral, classification status, fixed or variable interest rate, term of loan, current discount rates and whether or not the loan is amortizing. Loans are grouped together according to similar characteristics and are treated in the aggregate when applying various valuation techniques. The discount rates used for loans are based on current market rates for new originations of comparable loans and include adjustments for liquidity concerns. The discount rate does not include a factor for credit losses as that has been included in the estimated cash flows.

~~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.

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

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 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.


	June 30, 2016
	Carrying						June 30, 2017
	Amount		Fair Value		Level		Carrying Amount		Fair Value		Level
	(In thousands)						(In thousands)
Financial assets:
Cash and cash equivalents	$	185,394	$	185,394		1	$	460,488	$	460,488		1
Federal funds sold		525		525		1		—		—		N/A
Investment securities – held-to-maturity		287,725		296,419		2		254,161		258,682		2
Loans receivable not covered by loss share, net of non-covered impaired loans and allowance		6,809,681		6,755,863		3
Loans receivable covered by FDIC loss share, net of allowance		54,913		54,913		3
FDIC indemnification asset		8,130		8,130		3
Loans receivable, net of impaired loans and allowance								7,679,164		7,517,442		3
Accrued interest receivable		28,548		28,548		1		32,445		32,445		1

Financial liabilities:
Deposits:
Demand and non-interest bearing	$	1,645,472	$	1,645,472		1	$	1,957,677	$	1,957,677		1
Savings and interest-bearing transaction accounts		3,678,546		3,678,546		1		4,335,456		4,335,456		1
Time deposits		1,388,930		1,378,634		3		1,474,255		1,459,915		3
Federal funds purchased		—		—		N/A		—		—		N/A
Securities sold under agreements to repurchase		111,072		111,072		1		133,741		133,741		1
FHLB and other borrowed funds		1,380,889		1,384,587		2		1,099,478		1,100,398		2
Accrued interest payable		1,907		1,907		1		6,619		6,619		1
Subordinated debentures		60,826		60,826		3		357,838		357,838		3


	December 31, 2015
	Carrying						December 31, 2016
	Amount		Fair Value		Level		Carrying Amount		Fair Value		Level
	(In thousands)						(In thousands)
Financial assets:
Cash and cash equivalents	$	255,823	$	255,823		1	$	216,649	$	216,649		1
Federal funds sold		1,550		1,550		1		1,550		1,550		1
Investment securities – held-to-maturity		309,042		313,944		2		284,176		287,038		2
Loans receivable not covered by loss share, net of non-covered impaired loans and allowance		6,425,543		6,380,927		3
Loans receivable covered by FDIC loss share, net of allowance		59,582		59,582		3
FDIC indemnification asset		9,284		9,284		3
Loans receivable, net of impaired loans and allowance								7,216,199		7,131,199		3
Accrued interest receivable		29,132		29,132		1		30,838		30,838		1

Financial liabilities:
Deposits:
Demand and non-interest bearing	$	1,456,624	$	1,456,624		1	$	1,695,184	$	1,695,184		1
Savings and interest-bearing transaction accounts		3,551,684		3,551,684		1		3,963,241		3,963,241		1
Time deposits		1,430,201		1,418,462		3		1,284,002		1,275,634		3
Federal funds purchased		—		—		N/A
Securities sold under agreements to repurchase		128,389		128,389		1		121,290		121,290		1
FHLB and other borrowed funds		1,405,945		1,410,019		2		1,305,198		1,311,280		2
Accrued interest payable		1,804		1,804		1		1,920		1,920		1
Subordinated debentures		60,826		60,826		3		60,826		60,826		3

In May 2014, the FASB issued ASU2014-09,Revenue from Contracts with Customers (Topic 606). ASU2014-09 provides guidance that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. In August 2015, the FASB issued ASUNo. 2015-14,Revenue from Contracts with Customers (Topic 606), which defers the effective date of this standard to annual and interim periods beginning after December 15, 2017; however, early adoption is permitted for annual and interim reporting periods beginning after December 15, 2016. In April 2016, the FASB issued ASU2016-10,Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, which amends certain aspects of the guidance in ASU2014-09 (FASB’s new revenue standard) on (1) identifying performance obligations and (2) licensing. ASU2014-10’s effective date and transition provisions are aligned with the requirements in ASU2014-09. In May 2016, the FASB issued ASU2016-12,Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients, which amends certain aspects of the FASB’s new revenue standard, ASU2014-09. ASU2016-12’s effective date and transition provisions are aligned with the requirements in ASU2014-09

The guidance issued in ASU2014-09, ASU2015-14, ASU2016-10 and ASU2016-12 permit two implementation approaches, one requiring retrospective application of the new standard with restatement of prior years and one requiring prospective application of the new standard with disclosure of results under old standards. The Company plans to adopt the new standard effective January 1, 2018 and apply it prospectively. The Company is currently evaluating the impact ~~if any, ASU 2014-09~~this guidance will have on its consolidated financial ~~position, results~~statements. Only a portion of ~~operations, and its financial statement disclosures.~~

~~In June 2014,~~ the ~~FASB issued ASU 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 applyCompany’s revenues are impacted by this guidance ~~as it relates~~because the guidance does not apply to ~~awards with performance conditions that affect vesting~~revenue on contracts accounted for under the financial instruments or insurance contracts standards. The Company’s evaluation process includes, but is not limited to, ~~account for such awards. As such,~~identifying contracts within the ~~performance target should not be reflected in estimating the grant-date fair value~~scope of the ~~award. Compensation cost should be recognized in~~guidance, reviewing and documenting its accounting for these contracts, and identifying and determining the ~~period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period~~accounting for ~~which the service has already been rendered. The amendments in this update became effective for annual periods and interim periods within those annual periods beginning after December 15, 2015.~~any related contract costs. The Company ~~has adopted~~is also identifying and implementing changes to its business processes, systems and controls to support adoption of the new ~~guidance on the consolidated financial statements, which has made no impact to the Company’s financial statements.~~standard in 2018.

~~In February 2015, the FASB issued ASU 2015-02,~~~~Consolidation (Topic 810): Amendments to the Consolidation Analysis,~~ which amends the consolidation requirements of ASU 810 by changing the consolidation analysis required under GAAP. The revised guidance amends the consolidation analysis based on certain fee arrangements or relationships to the reporting entity and, for limited partnerships, requires entities to consider the limited partner’s rights relative to the general partner. ASU 2015-02 became effective for annual and interim periods beginning after December 15, 2015. ASU 2015-02 did not have an impact on the Company’s financial position, results of operations, or its financial statement disclosures.

~~In September 2015, the FASB issued ASU 2015-16,~~~~Simplifying the Accounting for Measurement-Period Adjustments~~. ASU 2015-16 requires entities to recognize measurement period adjustments during the reporting period in which the adjustments are determined. The income effects, if any, of a measurement period adjustment are cumulative and are to be reported in the period in which the adjustment to a provisional amount is determined. Also, ASU 2015-16 requires presentation on the face of the income statement or in the notes, the effect of the measurement period adjustment as if the adjustment had been recognized at acquisition date. ASU 2015-16 is effective for fiscal periods beginning after December 15, 2015 for public business entities and should be applied prospectively to measurement period adjustments that occur after the effective date. Adoption of ASU 2015-16 did not have an impact on the Company’s financial position, results of operations or its financial statement disclosures.

In January 2016, the FASB issued ASU2016-01,Financial Instruments - Overall ~~(Subtopic~~ (Subtopic825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. Changes to the current GAAP model primarily affect the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. In addition, ASU2016-01 clarifies guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses onavailable-for-sale securities. The new guidance is effective for annual reporting period and interim reporting periods within those annual periods, beginning after December 15, 2017. Management is currently evaluating the impact of the adoption of this guidance to the Company’s financial ~~statements.~~statements, but does not anticipate the guidance to have a material effect on the Company’s financial position or results of operations as the Company’s equity investments are immaterial. However, the amendments will have an impact on certain items that are disclosed at fair value that are not currently utilizing the exit price notion when measuring fair value. At this time, the Company cannot quantify the change in the fair value of such disclosures since the Company is currently evaluating the full impact of the standards and is in the planning stages of developing appropriate procedures and processes to comply with the disclosure requirements of such amendments. The current accounting policies and procedures will be adjusted after the Company has fully evaluated the standard to comply with the accounting changes mentioned above. For additional information on fair value of assets and liabilities, see Note 20.

In February 2016, the FASB issued ASU2016-02,Leases (Topic 842). The amendments in ASU2016-02 ~~introduces a lessee model that brings most~~ address several aspects of lease accounting with the significant change being the recognition of lease assets and lease liabilities for leases ~~on the balance sheet and aligns many of the underlying principles of the new lessor model with those in~~previously classified as operating leases. ASU ~~2014-09, the FASB’s new revenue recognition standard. ASU~~ 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application of the amendments in ~~the~~ ASU2016-02 is permitted for all entities. ~~Management~~The Company has several lease agreements for which the amendments will require the Company to recognize a lease liability to make lease payments and aright-of-use asset which will represent its right to use the underlying asset for the lease term. The Company is currently ~~evaluating~~reviewing the ~~impact of~~amendments to ensure it is fully compliant by the adoption ~~of this guidance~~date and doesn’t expect to early adopt. The impact is not expected to have a material effect on the Company’s financial ~~statements.~~position or results of operations as the Company does not have a material amount of lease agreements. In addition, the Company will change its current accounting policies to comply with the amendments with such changes as mentioned above. For additional information on the Company’s leases, see Note 18 “Leases” in the Notes to Consolidated Financial Statements in the Company’s Annual Report on Form10-K for the year ended December 31, 2016.

In March 2016, the FASB issued ASU2016-09,Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, which simplifies several aspects of the accounting for employee share-based payment transactions for both public and nonpublic entities, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. ~~The~~ ASU2016-09 is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. ~~Early adoption is permitted~~The Company adopted the amendments effective January 1, 2017. The Company has a stock-based compensation plan for which the ASU2016-09 guidance results in the associated excess tax benefits or deficiencies being recognized as tax expense or benefit in the income statement instead of the previous accounting treatment, which requires excess tax benefits to be recognized as an adjustment to additionalpaid-in capital and excess tax deficiencies to be recognized as either an offset to accumulated excess tax benefits, if any, ~~interim~~ or ~~annual period. Management is currently evaluating~~to the ~~impact~~income statement. In addition, such amounts are now classified as an operating activity in the statement of cash flows instead of the current accounting treatment, which required it to be classified as both an operating and a financing activity. The Company’s stock-based compensation plan has not historically generated material amounts of excess tax benefits or deficiencies and, therefore, the Company has not experienced a material change in the Company’s financial position or results of operation as a result of the adoption and implementation of ~~this guidance to~~ASU2016-09. For additional information on the ~~Company’s financial statements.~~stock-based compensation plan, see Note 14.

~~On April 14,~~In May 2016, the FASB issued ASU ~~2016-10,~~~~Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing~~, which amends certain aspects of the guidance in ASU 2014-09 (FASB’s new revenue standard) on (1) identifying performance obligations and (2) licensing. The ASU’s effective date and transition provisions are aligned with the requirements in ASU 2014-09, which is not yet effective. The Company is currently evaluating the impact, if any, ASU 2016-10 will have on its financial position, results of operations, and its financial statement disclosures.

~~On May 3, 2016, the FASB issued ASU~~ 2016-11,Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815): Rescission of SEC Guidance Because of Accounting Standards Updates2014-09 and2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting (SEC Update), which rescinds certain SEC guidance from the FASB Accounting Standards Codification in response to announcements made by the SEC staff at the ~~EITF’s~~Emerging Issues Task Force’s (“EITF”) March 3, 2016, meeting. ~~The~~ ASU2016-11 is effective at the same time as ASU2014-09 and ASU2014-16. The Company is currently evaluating the impact, if any, ASU2016-11 will have on its financial position, results of operations, and its financial statement disclosures.

~~On May 9, 2016,~~ The Company’s evaluation process includes, but is not limited to, identifying transactions and accounts within the ~~FASB issued ASU 2016-12,~~~~Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients~~~~, which amends certain aspects~~scope of the ~~FASB’s new revenue standard, ASU 2014-09. The ASU’s effective date~~guidance, reviewing its accounting and ~~transition provisions are aligned with~~disclosures for these transactions and accounts, and identifying and implementing any necessary changes to its accounting and disclosures as a result of the ~~requirements in ASU 2014-09, which is not yet effective.~~guidance. The Company is ~~currently evaluating~~also identifying and implementing changes to its business processes, systems and controls to support adoption of the ~~impact, if any, ASU 2016-11 will have on its financial position, results of operations, and its financial statement disclosures.~~new standard in 2018.

In June 2016, the FASB issued ASU2016-13,Measurement of Credit Losses on Financial Instruments, which amends the FASB’s guidance on the impairment of financial instruments. The amendments in ASU ~~adds~~2016-13 replace the incurred loss model with a methodology that reflects expected credit losses over the life of the loan and requires consideration of a broader range of reasonable and supportable information to ~~U.S. GAAP an impairment model (known~~calculate credit loss estimates, known as the current expected credit loss ~~(CECL) model) that is based on expected losses rather than incurred losses.~~(“CECL”) model. Under the new guidance, an entity recognizes as an allowance its estimate of expected credit losses, which the FASB believes will result in more timely recognition of such losses. ~~The~~ ASU2016-13 is also intended to reduce the complexity of U.S. GAAP by decreasing the number of credit impairment models that entities use to account for debt instruments. ~~The~~ ASU2016-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The allowance for loan losses is a material estimate of the Company and given the change from an incurred loss model to a methodology that considers the credit loss over the life of the loan, there is the potential for an increase in the allowance for loan losses at adoption date. The Company is anticipating a significant change in the processes and procedures to calculate the allowance for loan losses, including changes in assumptions and estimates to consider expected credit losses over the life of the loan versus the current accounting practice that utilizes the incurred loss model. The Company will also develop new procedures for determining an allowance for credit losses relating toheld-to-maturity investment securities. In addition, the current accounting policy and procedures for other-than-temporary impairment onavailable-for-sale investment securities will be replaced with an allowance approach. The Company is currently evaluating the impact, if any, ASU2016-13 will have on its financial position and results of operations and currently does not know or cannot reasonably quantify the impact of the adoption of the amendments as a result of the complexity and extensive changes from the amendments. It is too early to assess the impact that the implementation of this guidance will have on the Company’s consolidated financial statements; however, the Company has begun developing processes and procedures to ensure it is fully compliant with the amendments at the required adoption date. Among other things, the Company has initiated data gathering and assessment to support forecasting of asset quality, loan balances, and portfolio net charge-offs and have developed anin-house data warehouse as well as developed asset quality forecast models in preparation for the implementation of this standard. For additional information on the allowance for loan losses, see Note 5.

In August 2016, the FASB issued ASU2016-15,Classification of Certain Cash Receipts and Cash Payments,which amends the guidance in ASC 230 on the classification of certain cash receipts and payments in the statement of cash flows. The primary purpose of ASU2016-15 is to reduce the diversity in practice that has resulted from the lack of consistent principles on this topic. ASU2016-15’s amendments add or clarify guidance on eight cash flow issues including debt prepayment or debt extinguishment costs; settlement ofzero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing; contingent consideration payments made after a business combination; proceeds from the settlement of insurance claims; proceeds from the settlement of corporate-owned life insurance policies; including bank-owned life insurance policies; distributions received from equity method investees; beneficial interests in securitization transactions and separately identifiable cash flows and application of the predominance principle. ASU2016-15 is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted and the guidance must be applied retrospectively to all periods presented but may be applied prospectively from the earliest date practicable if retrospective application would be impracticable. The Company is currently evaluating the impact, if any, ASU2016-15 will have on its financial position, results of operations, and its financial statement disclosures. The Company’s evaluation process includes, but is not limited to, identifying transactions and accounts within the scope of the guidance, reviewing its accounting and disclosures for these transactions and accounts, and identifying and implementing any necessary changes to its accounting and disclosures as a result of the guidance. The Company is also identifying and implementing changes to its business processes, systems and controls to support adoption of the new standard in 2018.

In October 2016, the FASB issued ASU2016-16,Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory, which requires an entity to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. The amendments are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, and should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings at the beginning period of adoption. Early adoption is permitted in the first interim period of an annual reporting period for which financial statements have not been issued. The Company is currently evaluating the impact, if any, ASU2016-16 will have on its financial position, results of operations, and its financial statement disclosure. The Company’s evaluation process includes, but is not limited to, identifying transactions and accounts within the scope of the guidance, reviewing its accounting and disclosures for these transactions and accounts, and identifying and implementing any necessary changes to its accounting and disclosures as a result of the guidance. The Company is also identifying and implementing changes to its business processes, systems and controls to support adoption of the new standard in 2018.

~~On July 27,~~In November 2016, ~~Centennial entered into an agreement~~the FASB issued ASU2016-18,Statement of Cash Flows (Topic 230): Restricted Cash (a consensus of the FASB Emerging Issues Task Force), which clarifies how entities should present restricted cash and restricted cash equivalents in the statement of cash flows, and, as a result, entities will no longer present transfers between cash and cash equivalents and restricted cash and restricted cash equivalents in the statement of cash flows. An entity with a material balance of restricted cash and restricted cash equivalents must disclose information about the ~~FDIC~~nature of the restrictions. The new standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. Early adoption is permitted and the new guidance must be applied retrospectively to ~~terminate~~ all ~~loss share agreements~~periods presented. The Company is currently evaluating the impact, if any, ASU2016-18 will have on its financial position, results of operations, and its financial statement disclosure. The Company’s evaluation process includes, but is not limited to, identifying transactions and accounts within the scope of the guidance, reviewing its accounting and disclosures for these transactions and accounts, and identifying and implementing any necessary changes to its accounting and disclosures as a result of the guidance. The Company is also identifying and implementing changes to its business processes, systems and controls to support adoption of the new standard in 2018.

In January 2017, the FASB issued ASU2017-01,Business Combinations (Topic 805): Clarifying the Definition of a Business, which ~~were entered into in 2010 in conjunction~~provides guidance to entities to assist with ~~Centennial’s acquisition~~evaluating when a set of transferred assets and activities (collectively, the “set”) is a business and provides a screen to determine when a set is not a business. Under the new guidance, when substantially all of the fair value of gross assets ~~(“covered assets”)~~acquired (or disposed of) is concentrated in a single identifiable asset, or group of similar assets, the assets acquired would not represent a business. Also, to be considered a business, an acquisition would have to include an input and ~~assumption~~a substantive process that together significantly contribute to the ability to produce outputs. The new standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, and should be applied on a prospective basis to any transactions occurring within the period of ~~substantially all~~adoption. Early adoption is permitted for interim or annual periods in which the financial statements have not been issued. The Company is currently evaluating the impact, if any, ASU2017-01 will have on its financial position, results of operations, and its financial statement disclosure. The Company’s evaluation process includes, but is not limited to, identifying transactions and accounts within the scope of the guidance, reviewing its accounting and disclosures for these transactions and accounts, and identifying and implementing any necessary changes to its accounting and disclosures as a result of the guidance. The Company is also identifying and implementing changes to its business processes, systems and controls to support adoption of the new standard in 2018.

In January 2017, the FASB issued ASU2017-03,Accounting Changes and Error Corrections (Topic 250) and Investments—Equity Method and Joint Ventures (Topic 323). The amendments in the update relate to SEC paragraphs pursuant to Staff Announcements at the September 22, 2016 and November 17, 2016 EITF meetings related to disclosure of the impact of recently issued accounting standards. The SEC staff’s view that a registrant should evaluate ASC updates that have not yet been adopted to determine the appropriate financial disclosures about the potential material effects of the updates on the financial statements when adopted. If a registrant does not know or cannot reasonably estimate the impact of an update, then in addition to making a statement to that effect, the registrant should consider additional qualitative financial statement disclosures to assist the reader in assessing the significance of the impact. The staff expects the additional qualitative disclosures to include a description of the effect of the accounting policies expected to be applied compared to current accounting policies. Also, the registrant should describe the status of its process to implement the new standards and the significant implementation matters yet to be addressed. The amendments specifically addressed recent ASC amendments to ASU2016-02,Leases, and ASU2014-09,Revenue from Contracts with Customers, although, the amendments apply to any subsequent amendments to guidance in the ASC. The Company adopted the amendments in this update during the fourth quarter of 2016 and appropriate disclosures have been included in this Note for each recently issued accounting standard.

In January 2017, the FASB issued ASU2017-04,Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, which eliminates the requirement to determine the fair value of individual assets and liabilities of ~~six failed banks in FDIC-assisted transactions.~~a reporting unit to measure goodwill impairment. Under the ~~early termination, all rights and obligations of Centennial and~~amendments in the ~~FDIC under~~new ASU, goodwill impairment testing will be performed by comparing the ~~FDIC loss share agreements, including the clawback provisions and the settlement of loss share and expense reimbursement claims, have been resolved and terminated.~~

~~Under the terms~~fair value of the ~~agreement, Centennial made a net payment of $6.6 million to the FDIC as consideration~~reporting unit with its carrying amount and recognizing an impairment charge for the ~~early termination~~amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss should not exceed the total amount of goodwill allocated to that reporting unit. The new standard is effective for annual and interim goodwill impairment tests in fiscal years beginning after December 15, 2019, and should be applied on a prospective basis. Early adoption is permitted for annual or interim goodwill impairment testing performed after January 1, 2017. The Company has goodwill from prior business combinations and performs an annual impairment test or more frequently if changes or circumstances occur that wouldmore-likely-than-not reduce the fair value of the ~~loss share agreements. The early termination~~reporting unit below its carrying value. During 2016, the Company performed its impairment assessment and determined the fair value of the aggregated reporting units exceed the carrying value, such that the Company’s goodwill was ~~recorded in~~not considered impaired. Although the Company cannot anticipate future goodwill impairment assessments, based on the most recent assessment it is unlikely that an impairment amount would need to be calculated and, therefore, does not anticipate a material impact from these amendments to the Company’s financial ~~statements by removing~~position and results of operations. The current accounting policies and processes are not anticipated to change, except for the ~~FDIC Indemnification Asset, receivable~~elimination of the Step 2 analysis.

In February 2017, the FASB issued ASU2017-05,Other Income: Gains and Losses from ~~FDIC,~~ the ~~FDIC True-up liability~~Derecognition of Nonfinancial Assets, which clarifies the scope of the FASB’s guidance on nonfinancial asset derecognition (ASC610-20) as well as the accounting for partial sales of nonfinancial assets. The ASU conforms the derecognition guidance on nonfinancial assets with the model for transactions in the new revenue standard (ASC 606, as amended). The ASU requires an entity to derecognize the nonfinancial asset orin-substance nonfinancial asset in a partial sale transaction when (1) the entity ceases to have a controlling financial interest in a subsidiary under ASC 810 and ~~recording~~(2) control of the asset is transferred in accordance with ASC 606. The entity therefore has to consider repurchase agreements (e.g., a ~~one-time, pre-tax charge~~call option to repurchase the ownership interest in a subsidiary) in its assessment and may not be able to derecognize the nonfinancial assets, even though it no longer has a controlling financial interest in a subsidiary in accordance with ASC 810. The ASU illustrates the application of ~~approximately $3.9 million.~~this guidance in ASC610-20-55-15 and55-16. The effective date of the new guidance is aligned with the requirements in the new revenue standard, which is effective for public entities for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2017, and for nonpublic entities for annual reporting periods beginning after December 15, 2018, and interim reporting periods within annual reporting periods beginning after December 15, 2019. If the entity decides to early adopt the ASU’s guidance, it must also early adopt ASC 606 (and vice versa). The Company is currently evaluating the impact, if any, ASU2017-05 will have on its financial position, results of operations, and its financial statement disclosures. The Company’s evaluation process includes, but is not limited to, identifying transactions and accounts within the scope of the guidance, reviewing its accounting and disclosures for these transactions and accounts, and identifying and implementing any necessary changes to its accounting and disclosures as a result of the guidance. The Company is also identifying and implementing changes to its business processes, systems and controls to support adoption of the new standard in 2018.

In March 2017, the FASB issued ASU2017-08,Receivables - Nonrefundable Fees and Other Costs (Topic 310): Premium Amortization on Purchased Callable Debt Securities, which amends the amortization period for certain purchased callable debt securities held at a premium. This ASU will shorten the amortization period for the premium to be amortized to the earliest call date. This ASU does not apply to securities held at a discount, which will continue to be amortized to maturity. This ASU is effective for interim and annual reporting periods beginning after December 15, 2018. The guidance should be applied using a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. Early adoption is permitted, including adoption in an interim period. The Company is currently evaluating the impact, if any, ASU2017-08 will have on its financial position, results of operations, and its financial statement disclosures. The Company’s evaluation process includes, but is not limited to, identifying transactions and accounts within the scope of the guidance, reviewing its accounting and disclosures for these transactions and accounts, and identifying and implementing any necessary changes to its accounting and disclosures as a result of the guidance. The Company is also identifying and implementing changes to its business processes, systems and controls to support adoption of the new standard in 2018.

In May 2017, the FASB issued ASU2017-09,Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting, which amends the scope of modification accounting for share-based payment arrangements. Specifically, an entity would not apply modification accounting if the fair value, vesting conditions, and classification of the awards are the same immediately before and after the modification. The amendments in ASU2017-09 should be applied prospectively to an award modified on or after the adoption date. This ASU is effective for interim and annual reporting periods beginning after December 15, 2017. Early adoption is permitted, including adoption in an interim period. The Company does not anticipate any modifications to its existing awards and therefore the adoption of ASU2017-09 is not expected to have a significant impact on the Company’s financial position, results of operations, or its financial statement disclosures.

In July 2017, the FASB issued ASU2017-11,Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480) and Derivatives and Hedging (Topic 815): I. Accounting for Certain Financial Instruments with Down Round Features; II. Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily RedeemableNon-controlling Interests with a Scope Exception. Part I of this update addresses the complexity of accounting for certain financial instruments with down round features. Down round features are features of certain equity-linked instruments (or embedded features) that result in the strike price being reduced on the basis of the pricing of future equity offerings. Current accounting guidance creates cost and complexity for entities that issue financial instruments (such as warrants and convertible instruments) with down round features that require fair value measurement of the entire instrument or conversion option. Part II of this update addresses the difficulty of navigatingTopic 480, Distinguishing Liabilities from Equity, because of the existence of extensive pending content in the FASB Accounting Standards Codification. This pending content is the result of the indefinite deferral of accounting requirements about mandatorily redeemable financial instruments of certain nonpublic entities and certain mandatorily redeemablenon-controlling interests. The amendments in Part II of this update do not have an accounting effect. This ASU is effective for interim and annual reporting periods beginning after December 15, 2018. Early adoption is permitted, including adoption in an interim period. The Company is currently evaluating the impact, if any, ASU2017-11 will have on its financial position, results of operations, and its financial statement disclosures. The Company’s evaluation process includes, but is not limited to, identifying transactions and accounts within the scope of the guidance, reviewing its accounting and disclosures for these transactions and accounts, and identifying and implementing any necessary changes to its accounting and disclosures as a result of the guidance. The Company is also identifying and implementing changes to its business processes, systems and controls to support adoption of the new standard in 2018.

We have reviewed the accompanying condensed consolidated balance sheet of Home BancShares, Inc. (the Company) as of June 30, ~~2016,~~2017, and the related condensed consolidated statements of income and comprehensive income for the three- andsix-month periods ended June 30, ~~2016~~2017 and ~~2015,~~2016, and the related statements of stockholders’ equity and cash flows for thesix-month periods ended June 30, ~~2016~~2017 and ~~2015.~~2016. 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, ~~2015,~~2016, 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 ~~26, 2016,~~28, 2017, 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, ~~2015,~~2016, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been ~~derived~~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 Form10-K, filed with the Securities and Exchange Commission on February ~~26, 2016,~~28, 2017, which includes the audited financial statements for the year ended December 31, ~~2015.~~2016.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 bank subsidiary, Centennial Bank (sometimes referred to as “Centennial” or the “Bank”). As of June 30, ~~2016,~~2017, we had, on a consolidated basis, total assets of ~~$9.58~~$10.87 billion, loans receivable, net of ~~$6.95~~$7.75 billion, total deposits of ~~$6.71~~$7.77 billion, and stockholders’ equity of ~~$1.26~~$1.48 billion.

We generate most of our revenue from interest on loans and investments, service charges, and mortgage banking income. Deposits and Federal Home Loan Bank (“FHLB”) and other 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 dividingnon-interest expense less amortization of core deposit intangibles by the sum of net interest income on a tax equivalent basis andnon-interest income.

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 a projected credit improvement in certain loan pools. As a result of these improvements, we are recognizing additional adjustments to yield over the weighted-average life of the loans. Improvements in credit quality for covered loans have decreased the basis in the related indemnification asset and increased our FDIC true-up liability. These positive events have reduced the indemnification asset and increased our FDIC true-up liability. The indemnification asset reduction is amortized over the weighted-average life of the shared-loss agreements. This amortization is shown as a reduction to FDIC indemnification non-interest income. The true-up liability is 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 six-month periods ended June 30, 2016 and 2015:~~

~~Table 2: Overall Estimated Impact to Financial Statements Initially Reported~~

Results of Operations for Three Months Ended June 30, ~~2016~~2017 and ~~2015~~2016

Our net income increased ~~$9.6~~$6.6 million, or ~~28.3%~~15.1%, to ~~$43.5~~$50.1 million for the three-month period ended June 30, ~~2016,~~2017, from ~~$33.9~~$43.5 million for the same period in ~~2015.~~2016. On a diluted earnings per share basis, our earnings were ~~$0.31~~$0.35 per share and ~~$0.25~~$0.31 per share ~~(split adjusted)~~ for the three-month periods ended June 30, 2017 and 2016, respectively. Excluding the $789,000 of merger expenses, net income was $50.7 million, and ~~2015, respectively.~~diluted earnings per share was $0.35 per share for the three months ended June 30, 2017. The ~~$9.6~~$7.2 million increase in net income, excluding merger expenses, is primarily associated with additional net interest income largely resulting from our acquisitions and our organic loan growth plus a decrease in provision for loan losses in second quarter of 2017, growth innon-interest income and the reduced amortization of the indemnification asset when compared to the same period in ~~2015.~~2016. These improvements were partially offset by ~~a slight increase in provision for loan losses in second quarter of 2016 and a modest~~an increase in the costs associated with the asset growth plus an increase in interest expense related to the issuance of $300 million of subordinated notes during the second quarter of 2017 when compared to the same period in ~~2015.~~2016.

Our GAAP net interest margin decreased from ~~5.00% for the three-month period ended June 30, 2015 to~~ 4.83% for the three-month period ended June 30, ~~2016.~~2016 to 4.50% for the three-month period ended June 30, 2017. The yield on loans was ~~5.81%~~5.78% and ~~6.01%~~5.81% for the three months ended June 30, ~~2016~~2017 and ~~2015,~~2016, respectively. For ~~both~~ the three months ended June 30, ~~2016~~2017 and ~~2015,~~2016, we recognized $8.5 million and $11.0 million, respectively, in total net accretion for acquired loans and deposits. Thenon-GAAP margin excluding accretion income was ~~relatively flat at~~4.11% and 4.24% ~~and 4.27%~~ for the three months ended June 30, ~~2016~~2017 and ~~2015,~~2016, respectively. Additionally, thenon-GAAP yield on loans excluding accretion income was ~~also relatively flat at~~5.28% and 5.09% ~~and 5.07%~~ for the three months ended June 30, 2017 and 2016, ~~and 2015,~~ respectively. ~~Consequently, with a growth of the average loan balance of $1.46 billion, we experienced a decline in the GAAP yield on loans and~~The net interest margin ~~because~~was negatively impacted by our April 2017 issuance of $300 million of 5.625%fixed-to-floating rate subordinated notes, which added approximately $4.3 million of interest expense when compared to the ~~organic loan growth was approximately at~~same quarter in 2016, and by our ~~lower non-GAAP loan yields.~~strategic decision to keep excess cash liquidity on the books during the second quarter of 2017.

Our efficiency ratio was ~~37.52%~~37.48% for the three months ended June 30, ~~2016,~~2017, compared to ~~40.39%~~37.52% for the same period in ~~2015.~~2016. For the second quarter of ~~2016,~~2017, our core efficiency ratio was ~~36.84%~~37.29%, which ~~is improved~~increased from the ~~40.30%~~36.84% reported for second quarter of 2015. While we have realized the cost savings from our acquisitions and reduced costs from our recent branch closures, the improvement in the core efficiency ratio was primarily achieved through revenue from additional net interest income resulting from our acquisitions and our organic loan growth plus growth in non-interest income.2016. The core efficiency ratio is anon-GAAP measure and is calculated by dividingnon-interest expense less amortization of core deposit intangibles by the sum of net interest income on a tax equivalent basis andnon-interest income excludingnon-fundamental items such as merger expenses, FDIC loss sharebuy-out expense and/or gains and losses.

Our annualized return on average assets was ~~1.83%~~1.86% for the three months ended June 30, ~~2016,~~2017, compared to ~~1.72%~~1.83% for the same period in ~~2015.~~2016. Our annualized return on average common equity was ~~14.11%~~13.83% for the three months ended June 30, ~~2016,~~2017, compared to ~~12.98%~~14.11% for the same period in 2015. We have been making notable progress in improving the performance of our legacy and acquired franchises, which is reflected in the improvement in our return on average assets and return on average common equity from 2015 to 2016.

Results of Operations for Six Months Ended June 30, ~~2016~~2017 and ~~2015~~2016

Our net income increased ~~$19.9~~$12.0 million, or ~~30.6%~~14.1%, to ~~$84.9~~$97.0 million for thesix-month period ended June 30, ~~2016,~~2017, from ~~$65.0~~$84.9 million for the same period in ~~2015.~~2016. On a diluted earnings per share basis, our earnings were $0.68 per share and $0.60 per share ~~and $0.48 per share (split adjusted)~~ for thesix-month periods ended June 30, 2017 and 2016, respectively. Excluding the $3.8 million of gain on acquisition and ~~2015, respectively.~~$7.5 million of merger expenses, net income was $98.1 million and diluted earnings per share was $0.68 per share for the six months ended June 30, 2017. The ~~$19.9~~$13.1 million increase in net income, excluding gain on acquisitions and merger expenses, is primarily associated with additional net interest income largely resulting from our acquisitions and our organic loan growth plus a decrease in provision for loan losses in first six months of 2017, growth innon-interest income and the reduced amortization of the indemnification asset when compared to the same period in ~~2015.~~2016. These improvements were partially offset by an increase in ~~provision for loan losses during the first six months of 2016 and a modest increase in~~ the costs associated with the asset growth plus an increase in interest expense related to the issuance of $300 million of subordinated notes during the second quarter of 2017 when compared to the same period in ~~2015.~~2016.

Our GAAP net interest margin decreased from ~~4.97%~~4.82% for thesix-month period ended June 30, ~~2015~~2016 to ~~4.82%~~4.60% for thesix-month period ended June 30, ~~2016.~~2017. The yield on loans was 5.72% and 5.80% for the six months ended June 30, 2017 and 2016, respectively. For the six months ended June 30, ~~2016~~2017 and ~~2015,~~2016, we recognized ~~$21.7~~$16.1 million and ~~$21.3~~$21.7 million, respectively, in total net accretion for acquired loans and deposits. Thenon-GAAP margin excluding accretion income was ~~flat at~~4.21% and 4.23% for the six months ended June 30, 2017 and 2016, ~~and 2015.~~respectively. Additionally, thenon-GAAP yield on loans excluding accretion income was ~~also relatively flat at 5.08%~~5.24% and ~~5.06%~~5.09% for the six months ended June 30, 2017 and 2016, ~~and 2015,~~ respectively. ~~Consequently, with a growth of the average loan balance of $1.56 billion, we experienced a decline in the GAAP yield on loans and~~The net interest margin ~~because~~was negatively impacted by our April 2017 issuance of $300 million of 5.625%fixed-to-floating rate subordinated notes, which added approximately $4.3 million of interest expense when compared to the ~~organic loan growth was approximately at~~same period in 2016, and by our ~~lower non-GAAP loan yields.~~strategic decision to keep excess cash liquidity on the books during the first six months of 2017.

Our efficiency ratio was ~~37.51%~~39.12% for the six months ended June 30, ~~2016,~~2017, compared to ~~40.88%~~37.51% for the same period in ~~2015.~~2016. For the first six months of ~~2016,~~2017, our core efficiency ratio was ~~36.88%~~37.13%, which ~~is improved~~increased from the ~~40.55%~~36.88% reported for ~~the~~ first six months of ~~2015. While we have realized the cost savings from our acquisitions and reduced costs from our recent branch closures, the improvement in the~~2016. The core efficiency ratio ~~was primarily achieved through revenue from additional net interest income resulting from our acquisitions~~is anon-GAAP measure and ~~our organic loan growth plus growth in non-interest income. Core efficiency ratio~~ is calculated by dividingnon-interest expense less amortization of core deposit intangibles by the sum of net interest income on a tax equivalent basis andnon-interest income excludingnon-fundamental items such as merger expenses and/or gains and losses.

Our annualized return on average assets was ~~1.81%~~1.86% for the six months ended June 30, ~~2016,~~2017, compared to ~~1.70%~~1.81% for the same period in ~~2015.~~2016. Our annualized return on average common equity was ~~13.94%~~13.84% for the six months ended June 30, ~~2016,~~2017, compared to ~~12.66%~~13.94% for the same period in 2015. As noted previously, we have been making notable progress in improving the performance of our legacy and acquired franchises, which is reflected in the improvement in our return on average assets and return on average common equity from 2015 to 2016.

Financial Condition as of and for the Period Ended June 30, ~~2016~~2017 and December 31, ~~2015~~2016

Our total assets as of June 30, ~~2016~~2017 increased ~~$293.0 million~~$1.06 billion to ~~$9.58~~$10.87 billion from the ~~$9.29~~$9.81 billion reported as of December 31, ~~2015.~~2016. Our loan portfolio ~~not covered by loss share~~ increased ~~$385.3~~$446.8 million to ~~$6.96~~$7.83 billion as of June 30, ~~2016,~~2017, from ~~$6.58~~$7.39 billion as of December 31, ~~2015.~~2016. This increase is a result of our ~~organic loan growth~~acquisitions since December 31, 2015. Our loan portfolio covered by loss share decreased $4.7 million to $57.4 million as of June 30, 2016, from $62.2 million as of December 31, 2015. This decrease is primarily associated with normal pay-downs and payoffs.2016. Stockholders’ equity increased ~~$65.2~~$148.5 million to ~~$1.26~~$1.48 billion as of June 30, ~~2016,~~2017, compared to ~~$1.20~~$1.33 billion as of December 31, ~~2015.~~2016. The increase in stockholders’ equity is primarily associated with the $77.5 million of common stock issued to the GHI shareholders plus the $71.4 million increase in retained earnings combined with the $6.0 million of comprehensive income during the first six months offset by the repurchase of $10.3 million of our common stock. The annualized improvement in stockholders’ equity for the first six months of ~~2016~~2017, excluding the $77.5 million of common stock issued to the GHI shareholders, was ~~10.9%~~10.8%. ~~The increase in stockholders’ equity is primarily associated with the $62.1 million increase in retained earnings.~~

As of June 30, ~~2016,~~2017, ournon-performing ~~non-covered~~ loans decreased to ~~$56.0~~$46.9 million, or ~~0.80%~~0.60%, of total ~~non-covered~~ loans from ~~$60.2~~$63.1 million, or ~~0.92%~~0.85%, of total ~~non-covered~~ loans as of December 31, ~~2015.~~2016. The allowance for loan losses ~~for non-covered loans~~ as a percent ofnon-performing ~~non-covered~~ loans increased to ~~128.33%~~170.99% as of June 30, ~~2016,~~2017, compared to ~~110.66%~~126.74% as of December 31, ~~2015.~~ 2016.Non-performing ~~non-covered~~ loans from our Arkansas franchise were ~~$27.3~~$22.0 million at June 30, ~~2016~~2017 compared to ~~$28.3~~$28.5 million as of December 31, ~~2015.~~ 2016.Non-performing ~~non-covered~~ loans from our Florida franchise were ~~$28.3~~$24.6 million at June 30, ~~2016~~2017 compared to ~~$31.8~~$34.0 million as of December 31, ~~2015.~~ 2016.Non-performing ~~non-covered~~ loans from our Alabama franchise were ~~$397,000~~$306,000 at June 30, ~~2016~~2017 compared to ~~$132,000~~$656,000 as of December 31, ~~2015.~~2016. There were nonon-performing ~~non-covered~~ loans from our Centennial CFG franchise.

As of June 30, ~~2016,~~2017, ournon-performing ~~non-covered~~ assets decreased to ~~$73.5~~$65.7 million, or ~~0.77%~~0.60%, of total ~~non-covered~~ assets from ~~$78.8~~$79.1 million, or ~~0.85%~~0.81%, of total ~~non-covered~~ assets as of December 31, ~~2015.~~ 2016.Non-performing ~~non-covered~~ assets from our Arkansas franchise were ~~$40.6~~$33.4 million at June 30, ~~2016~~2017 compared to ~~$40.3~~$41.0 million as of December 31, ~~2015.~~ 2016.Non-performing ~~non-covered~~ assets from our Florida franchise were ~~$31.9~~$31.3 million at June 30, ~~2016~~2017 compared to ~~$37.5~~$36.8 million as of December 31, ~~2015.~~ 2016.Non-performing ~~non-covered~~ assets from our Alabama franchise were ~~$1.0 million~~$947,000 at June 30, ~~2016~~2017 compared to ~~$892,000~~$1.2 million as of December 31, ~~2015.~~2016. There were nonon-performing ~~non-covered~~ assets from our Centennial CFG franchise.

Overview. We prepare our consolidated financial statements based on the selection of certain accounting policies, generally accepted accounting principles and customary practices in the banking industry. These policies, in certain areas, require us to make significant estimates and assumptions. Our accounting policies are described in detail in the notes to our consolidated financial statements included as part of this document.

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

Investments –Available-for-sale. Securitiesavailable-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 asavailable-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 asavailable-for-sale.

Investments –Held-to-Maturity. Securitiesheld-to-maturity, which include any security for which we have the positive intent and ability to hold until maturity, are reported at historical cost adjusted for amortization of premiums and accretion of discounts. Premiums and discounts are amortized 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 coversnon-classified loans and is based on historicalcharge-off experience and expected loss given default derived from the ~~Bank’s~~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 ASC310-10-35, are loans for which, based on current information and events, it is probable that we will be unable to collect all amounts due according to the contractual terms of the loan agreement. We apply 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 onnon-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 tonon-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 onnon-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 and Acquired ~~Loans and Related Indemnification Asset.~~Loans.We account for our acquisitions under FASB 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 purchased loans ~~acquired~~ incorporates assumptions regarding credit risk. All purchased loans ~~acquired~~ are recorded at fair value in accordance with the fair value methodology prescribed in FASB ASC Topic 820,Fair Value Measurements~~. For covered acquired loans fair value is exclusive of the shared-loss agreements with the Federal Deposit Insurance Corporation (“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,~~ we continue 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. We evaluate at each balance sheet date whether the present value of our pools of loans determined using the effective interest rates has decreased and if so, recognize a provision for loan loss in its consolidated statement of income. For any increases in cash flows expected to be collected, we adjust the amount of accretable yield recognized on a prospective basis over the pool’s remaining life.

Because the FDIC will reimburse us for certain acquired loans should we 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 are measured on the same basis as the related indemnified loans. Because the acquired loans are subject to the accounting prescribed by FASB ASC Topic 310,~~Receivables~~, 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 is 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 costs to sell. Gains and losses from the sale of other real estate and personal properties are recorded innon-interest income, and expenses used to maintain the properties are included innon-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 months on a straight-line basis. Goodwill is not amortized but rather is evaluated for impairment on at least an annual basis. We perform an annual impairment test of goodwill and core deposit intangibles as required by FASB ASC 350,Intangibles - Goodwill and Other, in the fourth quarter.

Income Taxes. We account for income taxes in accordance with income tax accounting guidance (ASC 740,Income Taxes). The income tax accounting guidance results in two components of income tax expense: current and deferred. Current income tax expense reflects taxes to be paid or refunded for the current period by applying the provisions of the enacted tax law to the taxable income or excess of deductions over revenues. We determine deferred income taxes using the liability (or balance sheet) method. Under this method, the net deferred tax asset or liability is based on the tax effects of the differences between the book and tax 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 themore-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 themore-likely-than-not recognition threshold considers the facts, circumstances and information available at the reporting date and is subject to the management’s judgment. Deferred tax assets are reduced by a valuation allowance if, based on the weight of evidence available, it is more likely than not that some portion or all of a deferred tax asset will not be realized.

Both we and our subsidiary file consolidated tax returns. Our subsidiary provides for income taxes on a separate return basis, and remits to us amounts determined to be currently payable.

Stock ~~Options.~~Compensation. In accordance with FASB ASC 718,Compensation - Stock Compensation,and FASB ASC505-50,Equity-Based Payments toNon-Employees, the fair value of each option award is estimated on the date of grant. We recognize compensation expense for the grant-date fair value of the option award over the vesting period of the award.

On ~~October 1, 2015, we~~February 23, 2017, the Company completed ~~our~~its acquisition of ~~Florida Business BancGroup,~~Giant Holdings, Inc. (“~~FBBI”~~GHI”), parent company of ~~Bay Cities~~Landmark Bank, N.A. (“~~Bay Cities”~~Landmark”)~~. We~~, pursuant to a previously announced definitive agreement and plan of merger whereby GHI merged with and into HBI and, immediately thereafter, Landmark merged with and into Centennial. The Company paid a purchase price to the ~~FBBI~~GHI shareholders of ~~$104.1~~approximately $96.0 million for the ~~FBBI~~GHI acquisition. Under the terms of the agreement, shareholders of ~~FBBI~~GHI received ~~4,159,708~~2,738,038 shares ~~(split adjusted)~~ of ~~our~~its common stock valued at approximately ~~$83.8~~$77.5 million as of ~~October 1, 2015,~~February 23, 2017, plus approximately ~~$20.3~~$18.5 million in cash in exchange for all outstanding shares of ~~FBBI~~GHI common stock. A portion of the cash consideration, $2.0 million, has been placed into escrow, and FBBI shareholders will have a contingent right to receive their pro-rata portions of such amount. The amount, if any, of such escrowed funds to be released to FBBI shareholders will depend upon the amount of losses that we incur in the two years following the completion of the merger related to two class action lawsuits that are pending against Bay Cities.

See Note 2 “Business Combinations” in the Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2015 for an additional discussion regarding the acquisition of FBBI.

On April 1, 2015, our wholly-owned bank subsidiary, Centennial, acquired a pool of national commercial real estate loans from AM PR LLC, an affiliate of J.C. Flowers & Co., totaling approximately $289.1 million for a purchase price of 99% of the total principal value of the acquired loans. The acquired loans were originated by the former Doral Bank within its Doral Property Finance 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 Commercial Finance Group (“Centennial CFG”). Centennial CFG is responsible for servicing the acquired loan pool and originating new loan production.

In connection with this acquisition of loans, we opened a loan production office on April 23, 2015 in New York City. Through the loan production office, Centennial CFG is building out a national lending platform focusing on commercial real estate plus commercial and industrial loans. As of June 30, 2016 and December 31, 2015, Centennial CFG had $891.3 million and $715.7 million in total loans net of discount, respectively. Centennial CFG currently anticipates building this loan portfolio to approximately $1.1 billion by the end of 2016. During 2016, we have plans to open a deposit-only branch location in New York City.

~~Acquisition of Doral Bank’s~~Ft. Lauderdale, Florida ~~Panhandle operations~~

On February 27, 2015, our bank 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.area. Including the effects of the purchase accounting adjustments, ~~the~~as of acquisition ~~provided us with~~date, GHI had approximately $398.1 million in total assets, $327.8 million in loans ~~of approximately $37.9~~after $8.1 million ~~net~~ of loan discounts, ~~deposits of approximately $467.6~~and $304.0 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, we closed all five branch locations during the July 2015 systems conversion and returned the facilities back to the FDIC.

On ~~October 23, 2014, we~~February 28, 2017, the Company completed ~~our~~its previously announced acquisition of all of the issued and outstanding shares of common stock of ~~Broward Financial~~The Bank of Commerce, a Florida state-chartered bank that operated in the Sarasota, Florida area (“BOC”), pursuant to an acquisition agreement, dated December 1, 2016, by and between the Company and Bank of Commerce Holdings, Inc. (“~~Broward”~~BCHI”), parent company of ~~Broward Bank,~~BOC. The Company merged BOC with and ~~merged Broward Bank~~ into Centennial ~~Bank. At acquisition, we agreed to pay the Broward shareholders at an undetermined date up to approximately $751,000 in additional consideration. The amount and timing~~effective as of the ~~additional payment, if any,~~close of business on February 28, 2017.

The acquisition of BOC was ~~contingent upon future payments received or losses incurred by Centennial Bank from certain current Broward Bank loans. During the first quarter of 2016, we reached an agreement~~conducted in accordance with the ~~Broward shareholders and determined no additional consideration need be paid.~~

~~See Note 2 “Business Combinations” in~~provisions of Section 363 of the ~~Notes~~United States Bankruptcy Code (the “Bankruptcy Code”) pursuant to ~~Consolidated Financial Statements in our Annual Report on Form 10-K~~a voluntary petition for relief under Chapter 11 of the Bankruptcy Code filed by BCHI with the United States Bankruptcy Court for the ~~year ended~~Middle District of Florida (the “Bankruptcy Court”). The sale of BOC by BCHI was subject to certain bidding procedures approved by the Bankruptcy Court. On November 14, 2016, the Company submitted an initial bid to purchase the outstanding shares of BOC in accordance with the bidding procedures approved by the Bankruptcy Court. An auction was subsequently conducted on November 16, 2016, and the Company was deemed to be the successful bidder. The Bankruptcy Court entered a final order on December ~~31, 2015 for an additional discussion regarding~~9, 2016 approving the sale of BOC to the Company pursuant to and in accordance with the acquisition agreement.

~~In conjunction with~~the acquisition agreement, the Company paid an aggregate of approximately $4.2 million in cash for the acquisition, which included the purchase of all outstanding shares of BOC common stock, the discounted purchase of certain FDIC-assisted transactions, we 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 separatelysubordinated debentures issued by BOC from the loan portfolios because they are not contractually embedded in the loans and are not transferable with the loans should we 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. Reimbursements received from the FDIC for actual incurred losses subsequent to the acquisition date, 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, 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.

~~Table 4 summarizes the activity in our FDIC indemnification asset during the periods indicated:~~

~~Our purchase and assumption agreements in connection with certain of our FDIC-assisted acquisitions allow the FDIC to recover a portion~~existing holders of the ~~loss share funds previously paid out under the indemnification agreements in the event losses fail~~subordinated debentures, and an expense reimbursement 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,~~BCHI for approved administrative claims in connection with the ~~Old Southern and Key West acquisitions, such “true-up” payments would be equal to 50%~~bankruptcy proceeding.

BOC formerly operated three branch locations in the Sarasota, Florida area. Including the effects of the ~~excess, if any,~~purchase accounting adjustments, as of ~~(i) 20% of a stated threshold of $110.0~~acquisition date, BOC had approximately $178.1 million in ~~the case of Old Southern and $23.0~~total assets, $118.5 million in ~~the case~~loans after $5.8 million 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 toloan discounts, 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~~$139.8 million in ~~the case~~deposits.

Termination 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.Remaining Loss-Share Agreements

~~The amount of FDIC-assisted acquisitions true-up accrued at June 30, 2016 and December 31, 2015 was $11.4 million.~~

Effective July 27, 2016, we reached an agreement terminating our remaining loss-share agreements with the FDIC. Under the terms of the agreement, Centennial made a net payment of $6.6 million to the FDIC as consideration for the early termination of the loss share agreements, and all rights and obligations of Centennial and the FDIC under the loss share agreements, including the clawback provisions and the settlement of loss share and expense reimbursement claims, have been resolved and terminated. ~~As of June 30, 2016, we had an indemnification asset of $8.1 million remaining for the acquired loss-share loans.~~ This transaction with the FDIC ~~creates~~created aone-time acceleration of the indemnification asset plus the negotiated settlement for thetrue-up ~~liability. This transaction will create~~ liability, and resulted in a negative ~~$3.9~~$3.8 millionpre-tax financial impact to the third quarter of 2016. ~~However, it~~It has and will create a positive financial impact to earnings of approximately $1.5 million annually on apre-tax basis through the year 2020 as a result of theone-time acceleration of the indemnification asset amortization.

In our continuing evaluation of our growth plans, we believe properly priced bank acquisitions can complement our organic growth andde novo branching growth strategies. In the near term, our principal acquisition focus will be to continue to expand our presence in Arkansas, Florida and Alabama and into other contiguous markets through pursuing bothnon-FDIC-assisted and FDIC-assisted bank acquisitions. However, as financial opportunities in other market areas arise, we may expand into those areas.

On March 27, 2017, the Company and Centennial entered into a definitive agreement and plan of merger with Stonegate Bank (“Stonegate”). The merger agreement provides that Stonegate will merge with and into Centennial (the “Merger”). Under the terms of the acquisition agreement, shareholders of Stonegate will receive, in the aggregate, proceeds from the transaction of approximately $749.8 million, consisting of $50.0 million in cash and $699.7 million of HBI common stock. In addition, the holders of outstanding stock options of Stonegate will receive approximately $28.6 million in cash in connection with the cancellation of their options immediately before the Merger, for a total transaction value of approximately $778.4 million. The number of shares of HBI common stock to be issued to Stonegate shareholders will be determined based on the volume-weighted average closing price per share of HBI common stock for the 20 consecutive trading days ending on the third trading day prior to the closing date (the “Average Closing Price”). In addition, if the Average Closing Price of HBI common stock as of the closing date is equal to $35.19 or greater or $22.52 or less, then the Average Closing Price will be fixed at $35.19 or $22.52, respectively. The acquisition is expected to close early in the fourth quarter of 2017, and is subject to the approval of the shareholders of the Company and Stonegate, regulatory approvals, and other customary conditions set forth in the agreement

We will continue evaluating all types of potential bank acquisitions to determine what is in the best interest of our Company. Our goal in making these decisions is to maximize the return to our investors.

As opportunities arise, we will continue to open new (commonly referred to asde novo) branches in our current markets and in other attractive market areas. During the ~~third~~second quarter of ~~2016, we have plans to open~~2017, the Company opened a ~~deposit-only~~ branch location in ~~New York City.~~Clearwater, Florida and a loan production office in Los Angeles under the management of Centennial CFG.

During 2014, we initiated a branch efficiency study. Since that time, we have gathered data and evaluated over 40 branch locations across our footprint. The branch efficiency study considers many variables, such as proximity to other branches, deposits, transactions, market share and profitability. As a result of ~~the study, we closed two Arkansas and two Florida locations~~our continued focus on efficiency, during ~~the first quarter of 2016. During~~ the second quarter ~~of 2016, we~~the Company closed one branch in Sarasota, Florida and ~~sold our Clermont, Florida location for a gain of $738,000.~~two branches in Ft. Lauderdale, Florida. During the remainder of ~~2016,~~2017, we ~~have plans to close one Arkansas location and~~ may announce additional strategic consolidations where it improves efficiency in certain markets.

As of June 30, ~~2016,~~2017, we had 7776 branches in Arkansas, 5865 branches in Florida, 6 branches in Alabama and ~~a loan production office~~one branch in New York City.

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, rates paid on deposits and other borrowings, the level ofnon-performing loans and the amount ofnon-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 dividingtax-exempt income by one minus the combined federal and state income tax rate (39.225% for the ~~three-month~~three andsix-month periods ended June 30, ~~2016~~2017 and ~~2015)~~2016).

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 target 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 remained until December 16, 2015, when the target rate was increased slightly to 0.50% to 0.25%. Since December 31, 2016, the Federal Funds target rate has increased 75 basis points and is currently at 1.25% to 1.00%.

Our GAAP net interest margin decreased from ~~5.00%~~4.83% for the three-month period ended June 30, ~~2015~~2016 to ~~4.83%~~4.50% for thethree-month period ended June 30, ~~2016.~~2017. The yield on loans was ~~5.81%~~5.78% and ~~6.01%~~5.81% for the three months ended June 30, ~~2016~~2017 and ~~2015,~~2016, respectively. For ~~both~~ the three months ended June 30, ~~2016~~2017 and ~~2015,~~2016, we recognized $11.0 million in total net accretion for acquired loans and deposits. The non-GAAP margin excluding accretion income was, relatively flat at 4.24% and 4.27% for the three months ended June 30, 2016 and 2015, respectively. Additionally, the non-GAAP yield on loans excluding accretion income was also relatively flat at 5.09% and 5.07% for the three months ended June 30, 2016 and 2015, respectively. Consequently, with a growth of the average loan balance of $1.46 billion we experienced a decline in the GAAP yield on loans and net interest margin because the organic loan growth was approximately at our lower non-GAAP loan yields.

Our GAAP net interest margin decreased from 4.97% for the six-month period ended June 30, 2015 to 4.82% for the six-month period ended June 30, 2016. For the six months ended June 30, 2016 and 2015, we recognized $21.7$8.5 million and ~~$21.3~~$11.0 million, respectively, in total net accretion for acquired loans and deposits. Thenon-GAAP margin excluding accretion income was ~~flat at~~4.11% and 4.24% for the three months ended June 30, 2017 and 2016, respectively. Additionally, thenon-GAAP yield on loans excluding accretion income was 5.28% and 5.09% for the three months ended June 30, 2017 and 2016, respectively. The net interest margin was negatively impacted by our April 2017 issuance of $300 million of 5.625%fixed-to-floating rate subordinated notes, which added approximately $4.3 million of interest expense when compared to the same quarter in 2016, and by our strategic decision to keep excess cash liquidity on the books during the second quarter of 2017.

Our GAAP net interest margin decreased from 4.82% for thesix-month period ended June 30, 2016 to 4.60% for thesix-month period ended June 30, 2017. The yield on loans was 5.72% and 5.80% for the six months ended June 30, 2017 and 2016, respectively. For the six months ended June 30, 2017 and 2016, we recognized $16.1 million and $21.7 million, respectively, in total net accretion for acquired loans and deposits. Thenon-GAAP margin excluding accretion income was 4.21% and 4.23% for the six months ended June 30, 2017 and 2016, ~~and 2015.~~respectively. Additionally, thenon-GAAP yield on loans excluding accretion income was ~~also relatively flat at 5.08%~~5.24% and ~~5.06%~~5.09% for the six months ended June 30, 2017 and 2016, ~~and 2015,~~ respectively. ~~Consequently, with a growth of the average loan balance of $1.56 billion we experienced a decline in the GAAP yield on loans and~~The net interest margin ~~because~~was negatively impacted by our April 2017 issuance of $300 million of 5.625%fixed-to-floating rate subordinated notes, which added approximately $4.3 million of interest expense when compared to the ~~organic loan growth was approximately at~~same period in 2016, and by our ~~lower non-GAAP loan yields.~~strategic decision to keep excess cash liquidity on the books during the first six months of 2017.

Net interest income on a fully taxable equivalent basis increased ~~$15.7~~$6.3 million, or ~~18.0%~~6.2%, to ~~$103.0~~$109.4 million for the three-month period ended June 30, ~~2016,~~2017, from ~~$87.3~~$103.0 million for the same period in ~~2015.~~2016. This increase in net interest income for the three-month period ended June 30, ~~2016~~2017 was the result of a $14.4 million increase in interest income offset by an ~~$18.3~~$8.1 million increase in interest expense. The $14.4 million increase in interest income was primarily the result of a higher level of earning assets combined with higher yields on our interest earning assets, primarily taxable investment securities. The higher level of earning assets resulted in an increase in interest income of approximately $13.3 million. The rising yield on our interest earning assets, primarily taxable investment securities, offset by a $2.5 million reduction in loan accretion income resulted in an approximately $1.1 million increase in interest income. The $8.1 million increase in interest expense for the three-month period ended June 30, 2017, is primarily the result of an increase in interest bearing liabilities repricing in a rising interest rate environment combined with an increase in the higher level of our interest bearing liabilities. The repricing of our interest bearing liabilities in a rising interest rate environment resulted in an approximately $4.6 million increase in interest expense. The higher level of our interest bearing liabilities resulted in an increase in interest expense of approximately $3.5 million.

Net interest income on a fully taxable equivalent basis increased $13.1 million, or 6.5%, to $216.2 million for thesix-month period ended June 30, 2017, from $203.0 million for the same period in 2016. This increase in net interest income for thesix-month period ended June 30, 2017 was the result of a $23.7 million increase in interest income offset by a ~~$2.6~~$10.5 million increase in interest expense. The ~~$18.3~~$23.7 million increase in interest income was primarily the result of a higher level of earning assets offset by lower yields on our ~~loans. The higher level of~~interest earning assets, resulted in an increase in interest income of approximately $21.7 million. The lower yield on our loans resulted in an approximately $3.4 million decrease in interest income. The $2.6 million increase in interest expense for the three-month period ended June 30, 2016, is primarily the result of an increase in higher level of our interest bearing liabilities combined with our interest bearing liabilities repricing in a slightly higher interest rate environment. The higher level of our interest bearing liabilities resulted in an increase in interest expense of approximately $1.7 million. The repricing of our interest bearing liabilities in a slightly higher interest rate environment resulted in an approximately $928,000 increase in interest expense.

Net interest income on a fully taxable equivalent basis increased $34.8 million, or 20.7%, to $203.0 million for the six-month period ended June 30, 2016, from $168.3 million for the same period in 2015. This increase in net interest income for the six-month period ended June 30, 2016 was the result of a $39.8 million increase in interest income offset by a $5.0 million increase in interest expense. The $39.8 million increase in interest income was primarily the result of a higher level of earning assets offset by lower yieldsspecifically on our loans. The higher level of earning assets resulted in an increase in interest income of approximately ~~$46.3~~$25.2 million. The lower yield, ~~on our loans~~primarily caused by a $5.6 million reduction in loan accretion income, resulted in an approximately ~~$6.5~~$1.5 million decrease in interest income. The ~~$5.0~~$10.5 million increase in interest expense for thesix-month period ended June 30, ~~2016,~~2017, is primarily the result of an increase in interest bearing liabilities repricing in a rising interest rate environment combined with an increase in the higher level of our interest bearing ~~liabilities combined with~~liabilities. The repricing of our interest bearing liabilities ~~repricing~~ in a ~~slightly higher~~rising interest rate ~~environment.~~environment resulted in an approximately $7.1 million increase in interest expense. The higher level of our interest bearing liabilities resulted in an increase in interest expense of approximately ~~$3.5~~$3.4 million. ~~The repricing of our interest bearing liabilities in a slightly higher interest rate environment resulted in approximately $1.5 million increase in interest expense.~~

~~Net interest margin, on a fully taxable equivalent basis, was 4.83% and 4.82% for the three and six months ended June 30, 2016, respectively, compared to 5.00% and 4.97% for the same period in 2015.~~

Additional information and analysis for our net interest margin can be found in Tables 2318 through 2520 of ourNon-GAAP Financial Measurements section of the Management Discussion and Analysis.

Tables 52 and 63 reflect an analysis of net interest income on a fully taxable equivalent basis for the three andsix-month periods ended June 30, ~~2016~~2017 and ~~2015,~~2016, as well as changes in fully taxable equivalent net interest margin for the three andsix-month periods ended June 30, ~~2016,~~2017 compared to the same periods in ~~2015.~~2016.


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015			2017			2016			2017			2016
	(Dollars in thousands)												(Dollars in thousands)
Interest income	$	108,490		$	90,311		$	213,774		$	174,192		$	122,863		$	108,490		$	237,357		$	213,774
Fully taxable equivalent adjustment		1,974			1,879			3,947			3,734			2,016			1,974			4,027			3,947

Interest income – fully taxable equivalent		110,464			92,190			217,721			177,926			124,879			110,464			241,384			217,721
Interest expense		7,449			4,862			14,676			9,672			15,511			7,449			25,190			14,676

Net interest income – fully taxable equivalent	$	103,015		$	87,328		$	203,045		$	168,254		$	109,368		$	103,015		$	216,194		$	203,045

Yield on earning assets – fully taxable equivalent		5.17	%		5.28	%		5.17	%		5.26	%		5.14	%		5.17	%		5.14	%		5.17	%
Cost of interest-bearing liabilities		0.45			0.36			0.45			0.36			0.84			0.45			0.70			0.45
Net interest spread – fully taxable equivalent		4.72			4.92			4.72			4.90			4.30			4.72			4.44			4.72
Net interest margin – fully taxable equivalent		4.83			5.00			4.82			4.97			4.50			4.83			4.60			4.82


							Three Months Ended June 30, 2017 vs. 2016			Six Months Ended June 30, 2017 vs. 2016

	Three Months Ended June 30, 2016 vs. 2015			Six Months Ended June 30, 2016 vs. 2015
	(In thousands)						(In thousands)
Increase (decrease) in interest income due to change in earning assets	$	21,688		$	46,268		$	13,326		$	25,213
Increase (decrease) in interest income due to change in earning asset yields		(3,414	)		(6,473	)		1,089			(1,550	)
(Increase) decrease in interest expense due to change in interest-bearing liabilities		(1,659	)		(3,498	)		(3,492	)		(3,395	)
(Increase) decrease in interest expense due to change in interest rates paid on interest-bearing liabilities		(928	)		(1,506	)		(4,570	)		(7,119	)

Increase (decrease) in net interest income	$	15,687		$	34,791		$	6,353		$	13,149

Table 74 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 andsix-month periods ended June 30, ~~2016~~2017 and ~~2015,~~2016, 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 June 30,															Three Months Ended June 30,
	2016							2015								2017							2016
	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	$	112,537	$	106		0.38	%	$	84,443	$	44		0.21	%		$	303,997	$	727		0.96	%	$	112,537	$	106		0.38	%
Federal funds sold		1,509		1		0.27			4,355		3		0.28				1,427		4		1.12			1,509		1		0.27
Investment securities – taxable		1,170,091		5,145		1.77			1,082,113		5,130		1.90				1,256,202		6,434		2.05			1,170,091		5,145		1.77
Investment securities – non-taxable		332,091		4,611		5.58			327,088		4,543		5.57				346,708		4,812		5.57			332,091		4,611		5.58
Loans receivable		6,969,727		100,601		5.81			5,507,405		82,470		6.01				7,829,615		112,902		5.78			6,969,727		100,601		5.81

Total interest-earning assets		8,585,955	$	110,464		5.17			7,005,404	$	92,190		5.28				9,737,949	$	124,879		5.14			8,585,955	$	110,464		5.17

Non-earning assets		976,669							895,317								1,055,821							976,669

Total assets	$	9,562,624						$	7,900,721							$	10,793,770						$	9,562,624

LIABILITIES AND STOCKHOLDERS’ EQUITY															LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities
Interest-bearing liabilities
Savings and interest-bearing transaction accounts	$	3,677,650	$	2,141		0.23	%	$	3,149,490	$	1,576		0.20	%		$	4,292,389	$	4,313		0.40	%	$	3,677,650	$	2,141		0.23	%
Time deposits		1,393,023		1,713		0.49			1,418,803		1,735		0.49				1,443,228		2,497		0.69			1,393,023		1,713		0.49

Total interest-bearing deposits		5,070,673		3,854		0.31			4,568,293		3,311		0.29				5,735,617		6,810		0.48			5,070,673		3,854		0.31

Federal funds purchased		330		1		1.22			213		1		1.88				—		—		—			330		1		1.22
Securities sold under agreement to repurchase		115,849		134		0.47			168,314		163		0.39				128,661		196		0.61			115,849		134		0.47
FHLB and other borrowed funds		1,402,465		3,074		0.88			677,108		1,053		0.62				1,177,510		3,710		1.26			1,402,465		3,074		0.88
Subordinated debentures		60,826		386		2.55			60,826		334		2.20				351,659		4,795		5.47			60,826		386		2.55

Total interest-bearing liabilities		6,650,143		7,449		0.45			5,474,754		4,862		0.36				7,393,447		15,511		0.84			6,650,143		7,449		0.45

Non-interest bearing liabilities
Non-interest bearing deposits		1,611,282							1,344,580								1,899,865							1,611,282
Other liabilities		61,119							33,622								47,359							61,119

Total liabilities		8,322,544							6,852,956								9,340,671							8,322,544
Stockholders’ equity		1,240,080							1,047,765								1,453,099							1,240,080

Total liabilities and stockholders’ equity	$	9,562,624						$	7,900,721							$	10,793,770						$	9,562,624

Net interest spread						4.72	%						4.92	%							4.30	%						4.72	%
Net interest income and margin			$	103,015		4.83	%			$	87,328		5.00	%				$	109,368		4.50	%			$	103,015		4.83	%


	Six Months Ended June 30,															Six Months Ended June 30,
	2016							2015								2017							2016
	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	$	110,842	$	208		0.38	%	$	117,883	$	135		0.23	%		$	237,617	$	1,035		0.88	%	$	110,842	$	208		0.38	%
Federal funds sold		2,279		5		0.44			9,792		11		0.23				1,305		6		0.93			2,279		5		0.44
Investment securities – taxable		1,173,843		10,595		1.82			1,081,864		10,673		1.99				1,183,588		11,912		2.03			1,173,843		10,595		1.82
Investment securities – non-taxable		335,539		9,209		5.52			327,534		9,047		5.57				346,895		9,598		5.58			335,539		9,209		5.52
Loans receivable		6,849,394		197,704		5.80			5,289,205		158,060		6.03				7,708,264		218,833		5.72			6,849,394		197,704		5.80

Total interest-earning assets		8,471,897		217,721		5.17			6,826,278	$	177,926		5.26				9,477,669	$	241,384		5.14			8,471,897	$	217,721		5.17

Non-earning assets		974,726							895,978								1,020,474							974,726

Total assets	$	9,446,623						$	7,722,256							$	10,498,143						$	9,446,623

LIABILITIES AND STOCKHOLDERS’ EQUITY															LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities
Interest-bearing liabilities
Savings and interest-bearing transaction accounts	$	3,635,782	$	4,159		0.23	%	$	3,095,483	$	3,050		0.20	%		$	4,216,025	$	7,690		0.37	%	$	3,635,782	$	4,159		0.23	%
Time deposits		1,393,307		3,329		0.48			1,377,623		3,519		0.52				1,400,501		4,606		0.66			1,393,307		3,329		0.48

Total interest-bearing deposits		5,029,089		7,488		0.30			4,473,106		6,569		0.30				5,616,526		12,296		0.44			5,029,089		7,488		0.30

Federal funds purchased		470		2		0.86			666		2		0.61				—		—		0.00			470		2		0.86
Securities sold under agreement to repurchase		122,373		279		0.46			173,906		335		0.39				126,390		361		0.58			122,373		279		0.46
FHLB and other borrowed funds		1,385,461		6,144		0.89			658,284		2,103		0.64				1,274,823		7,299		1.15			1,385,461		6,144		0.89
Subordinated debentures		60,826		763		2.52			60,826		663		2.20				207,043		5,234		5.10			60,826		763		2.52

Total interest-bearing liabilities		6,598,219		14,676		0.45			5,366,788		9,672		0.36				7,224,782		25,190		0.70			6,598,219		14,676		0.45

Non-interest bearing liabilities
Non-interest bearing deposits		1,562,725							1,286,275								1,808,660							1,562,725
Other liabilities		60,505							33,502								52,062							60,505

Total liabilities		8,221,449							6,686,565								9,085,504							8,221,449
Stockholders’ equity		1,225,174							1,035,691								1,412,639							1,225,174

Total liabilities and stockholders’ equity	$	9,446,623						$	7,722,256							$	10,498,143						$	9,446,623

Net interest spread						4.72	%						4.90	%							4.44	%						4.72	%
Net interest income and margin			$	203,045		4.82	%			$	168,254		4.97	%				$	216,194		4.60	%			$	203,045		4.82	%

Table 85 shows changes in interest income and interest expense resulting from changes in volume and changes in interest rates for the three andsix-month periods ended June 30, ~~2016~~2017 compared to the same periods in ~~2015,~~2016, 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 June 30, 2016 over 2015									Six Months Ended June 30, 2016 over 2015									Three Months Ended June 30, 2017 over 2016									Six Months Ended June 30, 2017 over 2016
	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	$	18		$	44		$	62		$	(8	)	$	81		$	73		$	326		$	295		$	621		$	384		$	443		$	827
Federal funds sold		(2	)		—			(2	)		(12	)		6			(6	)		—			3			3			(3	)		4			1
Investment securities – taxable		401			(386	)		15			869			(947	)		(78	)		398			891			1,289			89			1,228			1,317
Investment securities – non-taxable		69			(1	)		68			220			(58	)		162			203			(2	)		201			313			76			389
Loans receivable		21,202			(3,071	)		18,131			45,199			(5,555	)		39,644			12,399			(98	)		12,301			24,430			(3,301	)		21,129

Total interest income		21,688			(3,414	)		18,274			46,268			(6,473	)		39,795			13,326			1,089			14,415			25,213			(1,550	)		23,663

Interest expense:
Interest-bearing transaction and savings deposits		286			279			565			577			532			1,109			407			1,765			2,172			748			2,783			3,531
Time deposits		(32	)		10			(22	)		40			(230	)		(190	)		64			720			784			17			1,260			1,277
Federal funds purchased		—			—			—			—			—			—			—			(1	)		(1	)		(1	)		(1	)		(2	)
Securities sold under agreement to repurchase		(57	)		28			(29	)		(110	)		54			(56	)		16			46			62			9			73			82
FHLB borrowed funds		1,462			559			2,021			2,991			1,050			4,041			(551	)		1,187			636			(521	)		1,676			1,155
Subordinated debentures		—			52			52			—			100			100			3,556			853			4,409			3,143			1,328			4,471

Total interest expense		1,659			928			2,587			3,498			1,506			5,004			3,492			4,570			8,062			3,395			7,119			10,514

Increase (decrease) in net interest income	$	20,029		$	(4,342	)	$	15,687		$	42,770		$	(7,979	)	$	34,791		$	9,834		$	(3,481	)	$	6,353		$	21,818		$	(8,669	)	$	13,149

Our management assesses the adequacy of the allowance for loan losses by applying the provisions of FASB ASC310-10-35. 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 strongloan-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 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 anon-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. 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 markets have improved recently, although not topre-recession levels. Our Arkansas markets’ economies have 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.

There was ~~zero~~$387,000 and ~~$80,000~~$5.7 million of provision for ~~covered loans~~loan losses for the three months ended June 30, 2017 and 2016, ~~and 2015,~~ respectively. There was zero and $1.0 million of provision for covered loans for the six months ended June 30, 2016 and 2015, respectively. The provision for loan losses for 2015 is a result of the quarterly impairment testing on the estimated cash flows of our FDIC loss-share loans which noted a slight decline in asset quality in several of our covered loan pools.

There was $5.7 million and $11.4 million of provision for non-covered loans for the three and six months ended June 30, 2016 and 2015, respectively. There was $5.3 million and $8.2 million of provision for non-covered loans for the three and six months ended June 30, 2015, respectively.

We experienced a ~~$391,000 increase~~$5.3 million decrease in the provision for loan losses ~~for non-covered loans~~ during the second quarter of ~~2016~~2017 versus the second quarter of ~~2015.~~2016. This ~~$391,000 increase~~$5.3 million decrease is primarily a result of ~~additional~~reduced provisioning from ~~higher~~lower net charge-offs, ~~offset by~~improved asset quality and lower organic loan growth versus the second quarter of ~~2015.~~2016.

There was $4.3 million and $11.4 million of provision for loan losses for the six months ended June 30, 2017 and 2016, respectively. We experienced a ~~$3.2~~$7.1 million ~~increase~~decrease in the provision for loan losses ~~for non-covered loans~~ during the first six months of ~~2016~~2017 versus the first six months of ~~2015.~~2016. This ~~$3.2~~$7.1 million ~~increase~~decrease is primarily a result of ~~additional~~reduced provisioning from ~~higher~~lower net charge-offs, improved asset quality and ~~higher~~lower organic loan growth versus the first six months of ~~2015.~~2016.

Based upon current accounting guidance, the allowance for loan losses is not carried over in an acquisition. As a result, none of the acquired loans had any allocation of the allowance for loan losses at merger date. This is the result of all purchased loans ~~acquired~~ 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. The allowance for loan loss methodology for all originated loans as disclosed in Note 1 to the Notes to Consolidated Financial Statements in our Form10-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.

Totalnon-interest income was $24.4 million and $50.9 million for the three andsix-month periods ended June 30, 2017, compared to $21.8 million and $41.2 million for the ~~three and six-month periods ended June 30, 2016, compared to $17.0 million and $31.7 million for the~~ same periods in ~~2015,~~2016, respectively. Our recurringnon-interest income includes service charges on deposit accounts, other service charges and fees, trust fees, mortgage lending, insurance, increase in cash value of life insurance ~~dividends~~ and ~~FDIC indemnification accretion/amortization.~~dividends.

Table 96 measures the various components of ournon-interest income for the three andsix-month periods ended June 30, ~~2016~~2017 and ~~2015,~~2016, respectively, as well as changes for the three andsix-month periods ended June 30, ~~2016~~2017 compared to the same period in ~~2015.~~2016.


	Three Months Ended June 30,						2016 Change from 2015						Six Months Ended June 30,							2016 Change from 2015						Three Months Ended June 30,								2017 Change							Six Months Ended June 30,								2017 Change
	2016			2015								2016				2015				2016 Change from 2015					2017				2016				from 2016							2017				2016				from 2016
	(Dollars in thousands)																									(Dollars in thousands)
Service charges on deposit accounts	$	6,151		$	6,056		2016 Change from 2015	$	95		1.6	%		$	12,080			$	11,474		$	606		5.3	%		$	5,966			$	6,151			$	(185	)		(3.0	)%		$	11,948			$	12,080			$	(132	)		(1.1	)%
Other service charges and fees		7,968			6,499			1,469		22.6				15,085				12,715			2,370		18.6				8,576				7,968				608			7.6				17,493				15,085				2,408			16.0
Trust fees		359			1,186			(827	)	(69.7	)			763				1,618			(855	)	(52.8	)			309				359				(50	)		(13.9	)			765				763				2			0.3
Mortgage lending income		3,481			2,955			526		17.8				6,344				4,887			1,457		29.8				3,750				3,481				269			7.7				6,541				6,344				197			3.1
Insurance commissions		617			640			(23	)	(3.6	)			1,274				1,207			67		5.6				465				617				(152	)		(24.6	)			1,010				1,274				(264	)		(20.7	)
Income from title services		3			36			(33	)	(91.7	)			7				70			(63	)	(90.0	)
Increase in cash value of life insurance		353			295			58		19.7				748				603			145		24.0				463				353				110			31.2				773				748				25			3.3
Dividends from FHLB, FRB, Bankers’ bank & other		719			419			300		71.6				1,339				834			505		60.6
Dividends from FHLB, FRB, Bankers’ Bank & other																											472				719				(247	)		(34.4	)			1,621				1,339				282			21.1
Gain on acquisitions		—			—			—		0.0				—				1,635			(1,635	)	-100.0				—				—				—			—				3,807				—				3,807			100.0
Gain on sale of SBA loans		79			—			79		100.0				79				—			79		100.0				387				79				308			389.9				575				79				496			627.8
Gain (loss) on sale of branches, equipment and other assets, net		840			21			819		3,900.0				787				29			758		2,613.8				431				840				(409	)		(48.7	)			375				787				(412	)		(52.4	)
Gain (loss) on OREO, net		(941	)		(263	)		(678	)	257.8				(845	)			230			(1,075	)	(467.4	)			393				(941	)			1,334			141.8				514				(845	)			1,359			160.8
Gain (loss) on securities, net		15			—			15		100.0				25				4			21		525.0				380				15				365			2,433.3				803				25				778			3,112.0
FDIC indemnification accretion/(amortization), net		(410	)		(2,202	)		1,792		(81.4	)			(772	)			(6,158	)		5,386		(87.5	)			—				(410	)			410			100.0				—				(772	)			772			100.0
Other income		2,538			1,385			1,153		83.2				4,295				2,549			1,746		68.5				2,825				2,541				284			11.2				4,662				4,302				360			8.4

Total non-interest income	$	21,772		$	17,027		$	4,745		27.9	%		$	41,209			$	31,697		$	9,512		30.0	%		$	24,417			$	21,772			$	2,645			12.1	%		$	50,887			$	41,209			$	9,678			23.5	%

Non-interest income increased ~~$4.7~~$2.6 million, or ~~27.9%~~12.1%, to ~~$21.8~~$24.4 million for the three-month period ended June 30, ~~2016~~2017 from ~~$17.0~~$21.8 million for the same period in ~~2015.~~ 2016.Non-interest income increased ~~$9.5~~$9.7 million, or ~~30.0%~~23.5%, to ~~$41.2~~$50.9 million for thesix-month period ended June 30, ~~2016~~2017 from ~~$31.7~~$41.2 million for the same period in ~~2015.~~ 2016.Non-interest income excluding gain on acquisitions increased ~~$11.1~~$5.9 million, or ~~37.1%~~14.2%, to ~~$41.2~~$47.1 million for the six months ended June 30, ~~2016~~2017 from ~~$30.1~~$41.2 million for the same period in ~~2015.~~2016.

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

Additional details for the three months ended June 30, ~~2016~~2017 on some of the more significant changes are as follows:

Additional details for the six months ended June 30, ~~2016~~2017 on some of the more significant changes are as follows:

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

Table 107 below sets forth a summary ofnon-interest expense for the three andsix-month periods ended June 30, ~~2016~~2017 and ~~2015,~~2016, as well as changes for the three andsix-month periods ended June 30, ~~2016~~2017 compared to the same ~~periods~~period in ~~2015.~~2016.


	Three Months Ended June 30,				2016 Change from 2015					Six Months Ended June 30,				2016 Change from 2015					Three Months Ended June 30,				2017 Change					Six Months Ended June 30,				2017 Change
	2016		2015		2016 Change from 2015					2016		2015		2016 Change from 2015					2017		2016		from 2016					2017		2016		from 2016
	(Dollars in thousands)																		(Dollars in thousands)
Salaries and employee benefits	$	25,437	$	22,056	$	3,381		15.3	%	$	49,395	$	41,446	$	7,949		19.2	%	$	28,034	$	25,437	$	2,597		10.2	%	$	55,455	$	49,395	$	6,060		12.3	%
Occupancy and equipment		6,509		6,678		(169	)	(2.5	)		13,180		12,727		453		3.6			7,034		6,509		525		8.1			13,715		13,180		535		4.1
Data processing expense		2,766		3,063		(297	)	(9.7	)		5,430		5,482		(52	)	(0.9	)		2,863		2,766		97		3.5			5,586		5,430		156		2.9
Other operating expenses:
Advertising		733		657		76		11.6			1,556		1,436		120		8.4			812		733		79		10.8			1,510		1,556		(46	)	(3.0	)
Merger and acquisition expenses		—		—		—					—		1,417		(1,417	)	(100.0	)		789		—		789		100.0			7,516		—		7,516		100.0
Amortization of intangibles		763		1,100		(337	)	(30.6	)		1,608		2,229		(621	)	(27.9	)		866		763		103		13.5			1,670		1,608		62		3.9
Electronic banking expense		1,237		1,299		(62	)	(4.8	)		2,693		2,531		162		6.4			1,654		1,237		417		33.7			3,173		2,693		480		17.8
Directors’ fees		289		281		8		2.8			564		576		(12	)	(2.1	)		324		289		35		12.1			637		564		73		12.9
Due from bank service charges		337		286		51		17.8			642		501		141		28.1			456		337		119		35.3			876		642		234		36.4
FDIC and state assessment		1,446		1,172		274		23.4			2,892		2,568		324		12.6			1,182		1,446		(264	)	(18.3	)		2,470		2,892		(422	)	(14.6	)
Insurance		544		617		(73	)	(11.8	)		1,077		1,283		(206	)	(16.1	)		543		544		(1	)	(0.2	)		1,121		1,077		44		4.1
Legal and accounting		658		706		(48	)	(6.8	)		1,181		1,153		28		2.4			474		658		(184	)	(28.0	)		1,101		1,181		(80	)	(6.8	)
Other professional fees		1,044		560		484		86.4			1,969		1,048		921		87.9			1,233		1,044		189		18.1			2,386		1,969		417		21.2
Operating supplies		419		509		(90	)	(17.7	)		855		943		(88	)	(9.3	)		477		419		58		13.8			944		855		89		10.4
Postage		260		295		(35	)	(11.9	)		546		604		(58	)	(9.6	)		295		260		35		13.5			581		546		35		6.4
Telephone		455		470		(15	)	(3.2	)		942		974		(32	)	(3.3	)		398		455		(57	)	(12.5	)		722		942		(220	)	(23.4	)
Other expense		4,690		3,501		1,189		34.0			8,705		7,045		1,660		23.6			3,569		4,690		(1,121	)	(23.9	)		6,681		8,705		(2,024	)	(23.3	)

Total non-interest expense	$	47,587	$	43,250	$	4,337		10.0	%	$	93,235	$	83,963	$	9,272		11.0	%	$	51,003	$	47,587	$	3,416		7.2	%	$	106,144	$	93,235	$	12,909		13.8	%

Non-interest expense ~~for the three months ended June 30, 2016 was $47.6~~increased $3.4 million, ~~compared~~or 7.2%, to ~~$43.3~~$51.0 million for the three months ended June 30, ~~2015. Non-interest expense~~2017 from $47.6 million for the ~~six months ended June 30, 2016 was $93.2~~same period in 2016.Non-interest expense increased $12.9 million, ~~compared~~or 13.8%, to ~~$84.0~~$106.1 million for the six months ended June 30, ~~2015. Non-interest expense, excluding merger expenses, was~~2017 from $93.2 ~~million for the six months ended June 30, 2016 compared to $82.5~~ million for the same period in ~~2015.~~2016.Non-interest expense, excluding merger expenses, was $50.2 million and $98.6 million for the three and six months ended June 30, 2017, respectively, compared to $47.6 million and $93.2 million for the same periods in 2016, respectively.

The change innon-interest expense for ~~2016~~2017 when compared to ~~2015~~2016 is primarily related to the completion of our ~~2015~~ acquisitions, ~~the opening of the Centennial CFG loan production office during the second quarter of 2015, write-downs on vacant properties from closed branches and~~ the normal increased cost of doing ~~business.~~business and Centennial CFG.

~~The~~ Centennial CFG ~~loan production office~~ incurred $4.5 million and $9.1 million ofnon-interest expense during the three and six months ended June 30, 2017, respectively, compared to $3.8 million and $6.8 million ofnon-interest expense during the three and six months ended June 30, 2016, ~~respectively, compared to $2.3 million of non-interest expense during the three and six months ended June 30, 2015.~~respectively. While the cost of doing business in New York City and Los Angeles is significantly higher than our Arkansas, Florida and Alabama markets, we are still committed to cost-saving measures while achieving our goals of growing the Company.

During the second quarter and first six months of 2017, the Company had a write-down on vacant property from closed branches of approximately $47,000. This write-down is included in other expense.

During the second quarter and first six months of 2016, the Company had write-downs on vacant property from closed branches of approximately $1.2 million and $1.9 million, respectively. These write-downs are included in other expense.

The income tax expense increased ~~$6.1~~$4.3 million, or ~~30.5%~~16.4%, to ~~$26.0~~$30.3 million for the three-month period ended June 30, ~~2016,~~2017, from ~~$19.9~~$26.0 million for the same period in ~~2015.~~2016. The income tax expense increased ~~$12.7~~$4.9 million, or ~~33.5%~~9.6%, to ~~$50.8~~$55.7 million for thesix-month period ended June 30, ~~2016,~~2017, from ~~$38.1~~$50.8 million for the same period ~~ended~~ in ~~2015.~~2016. The effective income tax rate was 37.67% and 36.47% for the three andsix-month periods ended June 30, 2017, compared to 37.43% and 37.41% for the ~~three and six-month periods ended June 30, 2016, compared to 37.03% and 36.92% for the~~ same periods in ~~2015.~~2016. The primary cause of the ~~increase~~decrease in ~~taxes~~theyear-to-date effective tax rate is ~~the~~a result of ~~our higher earnings at our marginal tax rate~~the $3.8 million of ~~39.225%.~~non-taxable gain on acquisitions offset by approximately $936,000 ofnon-deductible merger expenses during the first six months of 2017.

Financial Condition as of and for the Period Ended June 30, ~~2016~~2017 and December 31, ~~2015~~2016

Our ~~non-covered~~ loan portfolio averaged ~~$6.91~~$7.83 billion and ~~$5.34~~$6.97 billion during the three-month periods ended June 30, ~~2016~~2017 and ~~2015,~~2016, respectively. Our ~~non-covered~~ loan portfolio averaged ~~$6.79~~$7.71 billion and ~~$5.10~~$6.85 billion during thesix-month periods ended June 30, 2017 and 2016, ~~and 2015,~~ respectively. ~~Non-covered loans~~Loans receivable were ~~$6.96~~$7.83 billion as of June 30, ~~2016~~2017 compared to ~~$6.58~~$7.39 billion as of December 31, ~~2015,~~2016, which is a ~~$385.3~~$446.8 million, or ~~11.8%~~12.2%, annualized increase.

~~On February 27, 2015, we~~During the first quarter of 2017, the Company acquired ~~$37.9~~$446.3 million of loans, ~~after $4.3~~net of purchase accounting discounts. From December 31, 2016 to June 30, 2017, the Company produced organic loan growth of approximately $525,000 in addition to the acquired loans. Centennial CFG produced $40.3 million of loan discounts from Doral Florida. On April 1, 2015, we acquired a pool of national commercial real estate loans from J.C. Flowers & Co. LLC totaling approximately $289.1 million. On October 1, 2015, we acquired $408.3 million of loans after $14.1 million of loan discounts from FBBI. All of these acquired loans are being accounted for in accordance with the provisions of ASC Topic 310-20 and ASC Topic 310-30.

~~We produced approximately $385.3 million of~~net organic ~~non-covered~~ loan growth ~~since December 31, 2015,~~during the first six months of ~~which $175.6 million is associated with Centennial CFG with the remaining $209.7 million being associated with loan originations in~~2017 while the legacy ~~footprint. Centennial CFG had total loans~~footprint experienced significant net payoffs during the first six months of ~~$891.3 million at June 30, 2016.~~2017, resulting in a net decline of $39.8 million.

During 2015, the five-year loss share coverage on the commercial real estate and commercial and industrial loans acquired through the FDIC-assisted acquisitions of Old Southern, Key West, Coastal, Bayside, Wakulla and Gulf State concluded. As a result, $145.2 million of these loans including their associated discounts previously classified as covered loans migrated to non-covered loans status during 2015.

The most significant components of the ~~non-covered~~ loan portfolio were commercial real estate, residential real estate, consumer and commercial and industrial ~~and agricultural~~ loans. These ~~non-covered~~loans are generally secured by residential or commercial real estate or business or personal property. Although these loans are primarily originated within our franchises in Arkansas, Florida, South Alabama and Centennial CFG, ~~and are generally secured by residential or commercial real estate or business or personal~~the property securing these loans may not physically be located within our market areas of Arkansas, Florida, Alabama and New York. ~~Non-covered loans~~Loans receivable were approximately ~~$3.54~~$3.51 billion, ~~$2.28~~$2.95 billion, ~~$248.8~~$228.1 million and ~~$891.3 million~~$1.15 billion as of June 30, ~~2016~~2017 in Arkansas, Florida, Alabama and ~~New York,~~Centennial CFG, respectively.

As of June 30, ~~2016,~~2017, we had ~~$430.9~~approximately $478.3 million of construction land development loans which were collateralized by land. This consisted of ~~$248.7~~approximately $255.8 million for raw land and ~~$182.2~~approximately $222.5 million for land with commercial and or residential lots.

Table 118 presents our ~~loan~~loans receivable balances ~~not covered by loss share~~ by category as of ~~the~~ June 30, ~~2016~~2017 and December 31, ~~2015.~~2016.

As of acquisition date, we evaluated $1.61 billion of net loans ($1.67 billion gross loans less $62.1 million discount) purchased in conjunction with the 2013 acquisition of Liberty Bancshares (“Liberty”) in accordance with the provisions of FASB ASC~~Topic 310-20,~~~~Nonrefundable Fees and Other Costs~~. As of June 30, 2016, the net loan balance of the Liberty ASC Topic 310-20 purchased loans is $696.4 million ($709.8 million gross loans less $13.4 million discount). The fair value discount is being accreted into interest income over the weighted average life of the loans using a constant yield method.

As of acquisition date, we 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 June 30, 2016, the net loan balance of the Liberty ASCTopic 310-30~~ purchased loans is $62.6 million ($86.7 million gross loans less $24.1 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.

~~Non-Covered~~ Commercial Real Estate Loans. We originatenon-farm andnon-residential loans (primarily secured by commercial real estate), construction/land development loans, and agricultural loans, which are generally secured by real estate located in our market areas. Our commercial mortgage loans are generally collateralized by first liens on real estate and amortized 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 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 acase-by-case basis.

As of June 30, ~~2016, non-covered~~2017, commercial real estate loans totaled ~~$4.03~~$4.76 billion, or ~~57.9%~~60.8% of ~~our non-covered loan portfolio,~~loans receivable, as compared to ~~$3.99~~$4.37 billion, or ~~60.6%~~59.1% of ~~our non-covered loan portfolio,~~loans receivable, as of December 31, ~~2015. Our~~2016. Commercial real estate loans originated in our Arkansas, Florida, Alabama and Centennial CFG franchises ~~non-covered commercial real estate loans~~ were ~~$1.98~~$1.95 billion, ~~$1.46~~$1.89 billion, ~~$133.8~~$119.9 million and ~~$455.7~~$801.0 million at June 30, ~~2016,~~2017, respectively.

~~Non-Covered~~ Residential Real Estate Loans. We originate one to four family, residential mortgage loans generally secured by property located in our primary market areas. Approximately ~~35.5%~~40.2% and ~~42.9%~~49.2% of our ~~non-covered~~ residential mortgage loans consist of owner occupied1-4 family properties andnon-owner occupied1-4 family properties (rental), respectively, as of June 30, ~~2016. Non-covered residential~~2017. Residential real estate loans generally have aloan-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 andloan-to-value ratio.

As of June 30, ~~2016, non-covered~~2017, residential real estate loans totaled ~~$1.60~~$1.91 billion, or ~~23.0%~~24.4%, of ~~our non-covered loan portfolio,~~loans receivable, compared to ~~$1.56~~$1.70 billion, or ~~23.7%~~23.0% of ~~our non-covered loan portfolio,~~loans receivable, as of December 31, ~~2015. Our~~2016. Residential real estate loans originated in our Arkansas, Florida, Alabama and Centennial CFG franchises ~~non-covered residential real estate loans~~ were ~~$908.3~~$871.8 million, ~~$566.9~~$799.4 million, ~~$82.6~~$78.3 million and ~~$45.0~~$163.2 million at June 30, ~~2016,~~2017, respectively.

~~Non-Covered~~ Consumer Loans. Our ~~non-covered~~ consumer ~~loan portfolio is~~loans are composed of secured and unsecured loans originated by our bank. 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 June 30, ~~2016, our non-covered~~2017, consumer ~~loan portfolio~~loans totaled ~~$48.9~~$38.4 million, or ~~0.7%~~0.5% of ~~our total non-covered loan portfolio,~~loans receivable, compared to ~~the $52.3~~$41.8 million, or ~~0.8%~~0.6% of ~~our non-covered loan portfolio~~loans receivable, as of December 31, ~~2015. Our~~2016. Consumer loans originated in our Arkansas, Florida, Alabama and Centennial CFG franchises ~~non-covered consumer loans~~ were ~~$27.8~~$23.8 million, ~~$20.2~~$13.6 million, $1.0 million and zero at June 30, ~~2016,~~2017, respectively.

~~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 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 June 30, ~~2016, non-covered~~2017, commercial and industrial loans ~~outstanding~~ totaled ~~$1.13 billion,~~$994.8 million, or ~~16.2%~~12.7% of ~~our non-covered loan portfolio,~~loans receivable, which is comparable to ~~$850.4 million,~~$1.12 billion, or ~~12.9%~~15.2% of ~~our non-covered loan portfolio,~~loans receivable, as of December 31, ~~2015. Our~~2016. Commercial and industrial loans originated in our Arkansas, Florida, Alabama and Centennial CFG franchises ~~non-covered commercial and industrial loans~~ were ~~$509.0~~$570.7 million, ~~$201.0~~$212.7 million, ~~$29.7~~$26.8 million and ~~$390.6~~$184.6 million at June 30, ~~2016,~~2017, respectively.

~~Non-Covered Agricultural Loans.~~ Our portfolio of agricultural loans includes loans for financing agricultural production, including loans to businesses or individuals engaged in the production of timber, poultry, livestock or crops and are not categorized as part of non-covered real estate loans. Our agricultural loans are generally secured by farm machinery, livestock, crops, vehicles or other agricultural-related collateral. A portion of our portfolio of agricultural loans is comprised of loans to individuals which would normally be characterized as consumer loans except for the fact that the individual borrowers are primarily engaged in the production of timber, poultry, livestock or crops.

As of June 30, 2016, our non-covered agricultural loan portfolio totaled $69.7 million, or 1.0% of our total non-covered loan portfolio, compared to the $67.1 million, or 1.0% of our non-covered loan portfolio as of December 31, 2015. Our Arkansas, Florida, Alabama and Centennial CFG franchises non-covered agricultural loans were $52.1 million, $17.6 million, zero and zero at June 30, 2016, respectively.

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

When management determines that a loan is no longer performing, and that collection of interest appears doubtful, the loan is placed onnon-accrual status. Loans that are 90 days past due are placed onnon-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 onnon-accrual status.

We have ~~non-covered~~purchased loans ~~acquired~~ with deteriorated credit quality in our June 30, ~~2016~~2017 financial statements as a result of our historical ~~acquisitions plus the migration of loans covered by FDIC loss share to loans not covered by loss share status.~~acquisitions. 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 139 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 139 sets forth information with respect to ournon-performing ~~non-covered~~ assets as of June 30, ~~2016~~2017 and December 31, ~~2015.~~2016. As of these dates, allnon-performing ~~non-covered~~ restructured loans are included innon-accrual ~~non-covered~~ loans.

Ournon-performing ~~non-covered~~ loans are comprised ofnon-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 asnon-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.

Totalnon-performing ~~non-covered~~ loans were ~~$56.0~~$46.9 million as of June 30, ~~2016,~~2017, compared to ~~$60.2~~$63.1 million as of December 31, ~~2015~~2016, for a decrease of ~~$4.2~~$16.3 million. ~~Of the $4.2~~The $16.3 million decrease innon-performing loans ~~$1.0~~ is ~~from~~the result of a $6.5 million decrease innon-performing loans in our Arkansas ~~market, $3.5~~franchise, a $9.4 million ~~from a~~ decrease innon-performing loans in our Florida ~~market offset by~~franchise and a ~~$265,000 increase~~$350,000 decrease innon-performing loans in our Alabama ~~market.~~ franchise.Non-performing loans at June 30, ~~2016~~2017 are ~~$27.3~~$22.0 million, ~~$28.3~~$24.6 million, ~~$397,000~~$306,000 and zero in the Arkansas, Florida, Alabama and Centennial CFG ~~markets,~~franchises, respectively.

Although the current state of the real estate market has improved, uncertainties still present in the economy may continue to increase our level ofnon-performing ~~non-covered~~ loans. While we believe our allowance for loan losses is adequate and our purchased loans are adequately discounted at June 30, ~~2016,~~2017, 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 ~~2016.~~2017. Our current or historical provision levels should not be relied upon as a predictor or indicator of future levels going forward.

Troubled debt restructurings (“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 TDRs that accrue interest at the time the loan is restructured, it would be a rare exception to havecharged-off any portion of the loan. Onlynon-performing restructured loans are included in ournon-performing ~~non-covered~~ loans. As of June 30, ~~2016,~~2017, we had ~~$16.0~~$21.2 million of ~~non-covered~~ restructured loans that are in compliance with the modified terms and are not reported as past due ornon-accrual in Table ~~16.~~9. Our Florida ~~market~~franchise contains ~~$14.1~~$18.3 million and our Arkansas ~~market~~franchise contains ~~$1.9~~$2.9 million of these ~~non-covered~~ restructured loans.

A loan modification that might not otherwise be considered may be granted resulting in classification as a TDR. These loans can involve loans remaining onnon-accrual, moving tonon-accrual, or continuing on an accrual status, depending on the individual facts and circumstances of the borrower. Generally, anon-accrual loan that is restructured remains onnon-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 under 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 anon-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 June 30, ~~2016,~~2017, the amount of TDRs was ~~$17.5~~$22.3 million, a decrease of ~~4.1%~~12.6% from ~~$18.2~~$25.5 million at December 31, ~~2015.~~2016. As of June 30, ~~2016~~2017 and December 31, ~~2015, 91.4%~~2016, 95.1% and ~~81.2%~~88.0%, 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 ~~$17.6~~$18.8 million as of June 30, ~~2016,~~2017, compared to ~~$18.5~~$16.0 million as of December 31, ~~2015~~2016 for ~~a decrease~~an increase of ~~$953,000.~~$2.8 million. The foreclosed assets held for sale ~~not covered by loss share~~ as of June 30, ~~2016~~2017 are comprised of ~~$13.4~~$11.5 million of assets located in Arkansas, ~~$3.6~~$6.7 million of assets located in Florida, ~~$601,000~~$641,000 located in Alabama and zero from Centennial CFG.

During the first six months of ~~2016,~~2017, we had two ~~non-covered~~ foreclosed properties with a carrying value greater than $1.0 million. ~~One of these properties~~The largest property is a development loan in Northwest Arkansas which ~~has been~~was foreclosed ~~since~~in the first quarter of 2011. The carrying value was $2.0 million at June 30, ~~2016.~~2017. The ~~remaining~~other property iswas a ~~1-4 family residential~~development property in ~~Central Arkansas and holds~~Florida acquired from BOC with a carrying value of ~~$1.0~~$2.1 million at June 30, ~~2016.~~2017. The Company does not currently anticipate any additional losses on these properties. As of June 30, ~~2016,~~2017, no other foreclosed assets held for sale ~~not covered by loss share~~ have a carrying value greater than $1.0 million.

Table 1410 shows the summary of foreclosed assets held for sale as of June 30, ~~2016~~2017 and December 31, ~~2015.~~2016.


	As of June 30, 2017		As of December 31, 2016
	(In thousands)
Real estate:
Commercial real estate loans
Non-farm/non-residential	$	8,206	$	9,423
Construction/land development		4,742		4,009
Agricultural		—		—
Residential real estate loans
Residential1-4 family		4,321		2,076
Multifamily residential		1,520		443

Total foreclosed assets held for sale	$	18,789	$	15,951

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 includenon-performing loans (loans past due 90 days or more andnon-accrual loans), criticized and/or classified loans with a specific allocation, loans categorized as TDRs and certain other loans identified by management that are still performing (loans included in multiple categories are only included once). As of June 30, ~~2016,~~2017, average ~~non-covered~~ impaired loans were ~~$88.9~~$87.7 million compared to ~~$88.1~~$89.6 million as of December 31, ~~2015.~~2016. As of June 30, ~~2016, non-covered~~2017, impaired loans were ~~$85.8~~$78.9 million compared to ~~$91.6~~$93.1 million as of December 31, ~~2015,~~2016, for a decrease of ~~$5.8~~$14.3 million. This decrease is primarily associated with the decrease in loan balances with a specific allocation combined with a decrease in the level of loans categorized as ~~TDRs.~~TDRs andnon-performing loans. As of June 30, ~~2016,~~2017, our Arkansas, Florida, Alabama and Centennial CFG ~~markets~~franchises accounted for approximately ~~$35.7~~$35.5 million, ~~$49.7~~$43.1 million, ~~$397,000~~$306,000 and zero of the ~~non-covered~~ impaired loans, respectively.

We evaluated loans purchased in conjunction with our historical acquisitions for impairment in accordance with the provisions of FASB ASC Topic310-30,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 credit impaired ~~non-covered~~ loans are not classified asnon-performing ~~non-covered~~ assets for the recognition of interest income as the pools are considered to be performing. However, for the purpose of calculating thenon-performing credit metrics, we have 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~~purchased 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 ASC310-30, individual loans are not classified as impaired. Since the loans are accounted for on a pooled basis under ASC310-30, individual loans subsequently restructured within the pools are not classified as TDRs in accordance with ASC310-30-40. For ~~non-covered~~purchased loans ~~acquired~~ with deteriorated credit quality that were deemed TDRs prior to our acquisition of them, these loans are also not considered TDRs as they are accounted for under ASC310-30.

As of June 30, ~~2016~~2017 and December 31, ~~2015,~~2016, there was not a material amount of ~~non-covered~~purchased loans ~~acquired~~ with deteriorated credit quality onnon-accrual status as a result of most 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 1511 shows the summary ofnon-accrual loans as of June 30, ~~2016~~2017 and December 31, ~~2015:~~2016:


	As of June 30, 2016						As of December 31, 2015
	Not Covered by Loss Share		Covered by FDIC Loss Share		Total		Not Covered by Loss Share		Covered by FDIC Loss Share		Total		As of June 30, 2017		As of December 31, 2016
	(In thousands)												(In thousands)
Real estate:
Commercial real estate loans
Non-farm/non-residential	$	9,690	$	—	$	9,690	$	15,811	$	—	$	15,811	$	9,675	$	17,988
Construction/land development		4,302		—		4,302		2,952		—		2,952		2,365		3,956
Agricultural		373		—		373		531		—		531		114		435
Residential real estate loans
Residential 1-4 family		14,767		—		14,767		12,574		—		12,574		15,579		20,311
Multifamily residential		1,303		—		1,303		870		—		870		—		262

Total real estate		30,435		—		30,435		32,738		—		32,738		27,733		42,952
Consumer		173		—		173		239		—		239		132		140
Commercial and industrial		4,951		—		4,951		2,363		—		2,363		3,858		3,155
Agricultural		708		—		708		—		—		—		585		—
Other		393		—		393		1,034		—		1,034		118		935

Total non-accrual loans	$	36,660	$	—	$	36,660	$	36,374	$	—	$	36,374	$	32,426	$	47,182

If the ~~non-covered~~ non-accrual loans had been accruing interest in accordance with the original terms of their respective agreements, interest income of approximately $549,000 and $506,000, ~~and $403,000~~respectively, would have been recorded for the three-month periods ended June 30, ~~2016~~2017 and ~~2015, respectively, would have been recorded.~~2016. If the ~~non-covered~~ non-accrual loans had been accruing interest in accordance with the original terms of their respective agreements, interest income of approximately $1.1 million ~~and $803,000~~would have been recorded for each of thesix-month periods ended June 30, 2017 and 2016, ~~and 2015, respectively, would have been recorded.~~respectively. The interest income recognized on the ~~non-covered~~ non-accrual loans for the three andsix-month periods ended June 30, ~~2016~~2017 and ~~2015~~2016 was considered immaterial.

Table 1612 shows the summary of accruing past due loans 90 days or more as of June 30, ~~2016~~2017 and December 31, ~~2015:~~2016:


	As of June 30, 2016						As of December 31, 2015
	Not Covered by Loss Share		Covered by FDIC Loss Share		Total		Not Covered by Loss Share		Covered by FDIC Loss Share		Total		As of June 30, 2017		As of December 31, 2016
	(In thousands)												(In thousands)
Real estate:
Commercial real estate loans
Non-farm/non-residential	$	8,467	$	—	$	8,467	$	9,247	$	—	$	9,247	$	8,202	$	9,530
Construction/land development		3,686		4		3,690		4,176		—		4,176		3,176		3,086
Agricultural		30		—		30		30		—		30		—		—
Residential real estate loans
Residential 1-4 family		3,080		3,692		6,772		3,915		3,292		7,207		1,550		2,996
Multifamily residential		1		—		1		1		—		1		1,367		—

Total real estate		15,264		3,696		18,960		17,369		3,292		20,661		14,295		15,612
Consumer		51		—		51		46		—		46		6		21
Commercial and industrial		3,978		—		3,978		6,430		—		6,430		141		309
Agricultural		9		—		9		—		—		—		—		—
Other		—		—		—		—		—		—		—		—

Total loans accruing past due 90 days or more	$	19,302	$	3,696	$	22,998	$	23,845	$	3,292	$	27,137	$	14,442	$	15,942

Our total ~~covered~~ loans accruing past due 90 days or more andnon-accrual ~~covered~~ loans to total ~~covered~~ loans was ~~6.4%~~0.60% and ~~5.3%~~0.85% as of June 30, ~~2016~~2017 and December 31, ~~2015,~~2016, 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 acharge-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 our 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 either a new appraisal or an internal validation report for the impairment analysis. The recognition of any provision or relatedcharge-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 onnon-accrual status. In any case, loans are classified asnon-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.~~losses. 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 or internal validation report is required, it is ordered and will be taken into consideration during completion of the next impairment analysis.

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 $1.0 million or greater or the total loan relationship is $2.0 million or greater, our policy requires an annual credit review. Our policy requires financial statements from the borrowers and guarantors at least annually. In addition, we calculate the global repayment ability of the borrower/guarantors at least annually.

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 asnon-performing. It will remainnon-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, acharge-off should be taken in the period it is determined. If a partialcharge-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 that fall below $2.0 million. 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~~Loans receivable collectively evaluated for impairment increased by approximately ~~$297.3~~$461.8 million from ~~$6.28~~$7.08 billion at December 31, ~~2015~~2016 to ~~$6.58~~$7.54 billion at June 30, ~~2016.~~2017. The percentage of the allowance for loan losses ~~for non-covered loans~~ allocated to ~~non-covered~~ loans receivable collectively evaluated for impairment to the total ~~non-covered~~ loans collectively evaluated for impairment ~~increased~~decreased from ~~0.99%~~1.08% at December 31, ~~2015~~2016 to ~~1.05%~~1.00% at June 30, ~~2016.~~2017. This ~~increase~~decrease is primarily the result of the $446.3 million of acquired loans, net of purchase accounting discounts, from the first quarter of 2017 combined with 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, asset quality and net charge-offs.

Charge-offs and Recoveries. Total ~~non-covered~~ charge-offs ~~increased~~decreased to ~~$4.4 million and $8.2~~$1.4 million for the three ~~and~~months ended June 30, 2017, compared to $4.4 million for the same period in 2016. Total charge-offs decreased to $6.1 million for the six months ended June 30, ~~2016,~~2017, compared to ~~$3.3 million and $6.5~~$8.3 million for the same ~~periods~~period in ~~2015.~~2016. Total ~~non-covered~~recoveries increased to $845,000 for the three months ended June 30, 2017, compared to $710,000 for the same period in 2016. Total recoveries decreased to ~~$709,000 and increased~~$1.9 million for the six months ended June 30, 2017, compared to $2.1 million for the ~~three and six months ended June 30, 2016, compared to $1.2 million and $1.7 million for the~~ same ~~periods~~period in ~~2015.~~2016. For the three months ended June 30, ~~2016,~~2017, net charge-offs were ~~$2.8 million~~$673,000 for Arkansas, ~~net charge-offs were $847,000 for Florida, and net charge-offs were zero~~$17,000 for Alabama and zero for Centennial CFG, and net recoveries were $130,000 for Florida, equaling a netcharge-off position of ~~$3.7 million.~~$560,000. For the six months ended June 30, ~~2016,~~2017, net charge-offs were ~~$6.0~~$3.7 million for Arkansas, ~~net charge-offs were $198,000~~$217,000 for Florida, ~~net charge-offs were $21,000~~$220,000 for Alabama and ~~net charge-offs were~~ zero for Centennial CFG, equaling a netcharge-off position of ~~$6.2~~$4.2 million.

~~During~~ While the ~~first six months of 2016, there were $8.2 million in non-covered charge-offs and $2.1 million in non-covered recoveries. While these~~2017 charge-offs and recoveries consisted of many relationships, there were ~~two~~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, less estimated costs to sell (for collateral dependent loans), for any period presented. Loans partiallycharged-off are placed onnon-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 of6-12 months of timely payment performance.

Table 1713 shows the allowance for loan losses, charge-offs and recoveries ~~for non-covered loans~~ as of and for the three andsix-month periods ended June 30, ~~2016~~2017 and ~~2015.~~2016.

Table ~~17:~~13: Analysis of Allowance for Loan Losses ~~for Non-Covered Loans~~


	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
	(Dollars in thousands)
Balance, beginning of period	$	80,311		$	72,306		$	80,002		$	69,224
Loans charged off
Real estate:
Commercial real estate loans:
Non-farm/non-residential		189			667			1,528			1,849
Construction/land development		119			66			326			153
Agricultural		2			—			127			—
Residential real estate loans:
Residential1-4 family		326			997			2,203			2,276
Multifamily residential		71			—			85			30

Total real estate		707			1,730			4,269			4,308
Consumer		122			77			144			108
Commercial and industrial		134			2,153			779			3,036
Agricultural		—			—			—			—
Other		442			407			919			862

Total loans charged off		1,405			4,367			6,111			8,314

Recoveries of loans previously charged off
Real estate:
Commercial real estate loans:
Non-farm/non-residential		379			190			710			228
Construction/land development		28			14			227			33
Agricultural		—			—			—			—
Residential real estate loans:
Residential1-4 family		114			206			242			674
Multifamily residential		7			7			12			14

Total real estate		528			417			1,191			949
Consumer		33			16			66			36
Commercial and industrial		70			85			252			614
Agricultural		—			—			—			—
Other		214			192			437			463

Total recoveries		845			710			1,946			2,062

Net loans charged off (recovered)		560			3,657			4,165			6,252
Provision for loan losses		387			5,692			4,301			11,369

Balance, June 30	$	80,138		$	74,341		$	80,138		$	74,341

Net charge-offs (recoveries) to average loans receivable		0.03	%		0.21	%		0.11	%		0.18	%
Allowance for loan losses to total loans		1.02			1.06			1.02			1.06
Allowance for loan losses to net charge-offs (recoveries)		3,568			505			954			591

Allocated Allowance for Loan ~~Losses for Non-Covered Loans.~~Losses. We use a risk rating and specific reserve methodology in the calculation and allocation of our allowance for loan ~~losses for non-covered loans.~~losses. 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 June 30, ~~2016~~2017 and the year ended December 31, ~~2015~~2016 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 1814 presents the allocation of allowance for loan losses ~~for non-covered loans~~ as of June 30, ~~2016~~2017 and December 31, ~~2015.~~2016.

Table ~~18:~~14: Allocation of Allowance for Loan Losses ~~for Non-Covered Loans~~


	As of June 30, 2016					As of December 31, 2015					As of June 30, 2017					As of December 31, 2016
	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	$	24,232		41.5	%	$	26,326		45.1	%	$	27,271		43.0	%	$	27,695		42.7	%
Construction/land development		12,301		15.3			10,656		14.4			12,842		16.8			11,522		15.4
Agricultural		514		1.1			468		1.1			572		1.0			493		1.1
Residential real estate loans:
Residential 1-4 family		11,574		17.3			10,147		17.2			15,242		19.3			14,397		18.3
Multifamily residential		1,765		5.7			2,241		6.5			2,473		5.1			2,120		4.6

Total real estate		50,386		80.9			49,838		84.3			58,400		85.2			56,227		82.1
Consumer		463		0.7			544		0.8			377		0.5			398		0.6
Commercial and industrial		13,721		16.2			9,305		12.9			12,828		12.7			12,756		15.2
Agricultural		4,914		1.0			4,463		1.0			2,678		0.9			3,790		1.0
Other		—		1.2			—		1.0			8		0.7			—		1.1
Unallocated		2,330		—			2,486		—			5,847		—			6,831		—

Total	$	71,814		100.0	%	$	66,636		100.0	%
Total allowance for loan losses											$	80,138		100.0	%	$	80,002		100.0	%

~~Allowance for loan losses for covered loans were $2.5 million and $2.6 million at June 30, 2016 and December 31, 2015, respectively.~~

Total charge-offs for covered loans were zero for the three months ended June 30, 2016 and 2015. Total recoveries for covered loans decreased to $1,000 for the three months ended June 30, 2016, compared to $186,000 for the same period in 2015. There was zero and $80,000 provision for loan losses taken on covered loans during the three months ended June 30, 2016 and 2015, respectively.

Total charge-offs for covered loans decreased to $71,000 for the six months ended June 30, 2016, compared to $772,000 for the same period in 2015. Total recoveries for covered loans decreased to $10,000 for the six months ended June 30, 2016, compared to $451,000 for the same period in 2015. There was zero and $998,000 provision for loan losses taken on covered loans during the six months ended June 30, 2016 and 2015, respectively.

~~Table 19 shows the allowance for loan losses, charge-offs and recoveries for covered loans as of and for the three and six-month periods ended June 30, 2016 and 2015.~~

Our securities portfolio is the second largest component of earning assets and provides a significant source of revenue. Securities within the portfolio are classified asheld-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 ~~2.1~~2.6 years as of June 30, ~~2016.~~2017.

As of June 30, ~~2016~~2017 and December 31, ~~2015~~2016, we had ~~$287.7~~$254.2 million and ~~$309.0~~$284.2 million ofheld-to-maturity securities, respectively. Of the ~~$287.7~~$254.2 million ofheld-to-maturity securities ~~$7.0~~as of June 30, 2017, $6.2 million were invested in U.S. Government-sponsored enterprises, ~~$124.0~~$85.1 million were invested in mortgage-backed securities and ~~$156.7~~$162.8 million were invested in state and political ~~subdivisions~~subdivisions. Of the $284.2 million ofheld-to-maturity securities as of ~~June 30, 2016. Of the $309.0 million of held-to-maturity securities, $7.4~~December 31, 2016, $6.6 million were invested in U.S. Government-sponsored enterprises, ~~$134.2~~$107.8 million were invested in mortgage-backed securities and ~~$167.5~~$169.7 million were invested in state and political ~~subdivisions as of December 31, 2015.~~subdivisions.

Securitiesavailable-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 asavailable-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 asavailable-for-sale.Available-for-sale securities were ~~$1.22~~$1.40 billion and ~~$1.21~~$1.07 billion as of June 30, ~~2016~~2017 and December 31, ~~2015,~~2016, respectively.

As of June 30, ~~2016, $641.6~~2017, $763.9 million, or ~~52.5%~~54.5%, of ouravailable-for-sale securities were invested in mortgage-backed securities, compared to ~~$565.3~~$579.5 million, or ~~46.9%~~54.0%, of ouravailable-for-sale securities as of December 31, ~~2015.~~2016. To reduce our income tax burden, ~~$218.1~~$240.9 million, or ~~17.8%~~17.2%, of ouravailable-for-sale securities portfolio as of June 30, ~~2016,~~2017, was primarily invested intax-exempt obligations of state and political subdivisions, compared to ~~$219.1~~$216.5 million, or ~~18.2%~~20.2%, of ouravailable-for-sale securities as of December 31, ~~2015.~~2016. Also, we had approximately ~~$311.8~~$356.7 million, or 25.5%, invested in obligations of U.S. Government-sponsored enterprises as of June 30, ~~2016,~~2017, compared to ~~$368.5~~$236.8 million, or ~~30.5%~~22.1%, of ouravailable-for-sale securities as of December 31, ~~2015.~~2016.

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” in the Condensed Notes to Consolidated Financial Statements for the carrying value and fair value of investment securities.

Our deposits averaged ~~$6.68~~$7.64 billion and ~~$6.59~~$7.43 billion for the three andsix-month periods ended June 30, ~~2016.~~2017. Total deposits as of June 30, ~~2016~~2017 were ~~$6.71~~$7.77 billion. Excluding $443.8 million of deposits acquired through the acquisitions of GHI and BOC, total deposits as of June 30, 2017 were $7.32 billion, for an annualized increase of ~~8.6%~~11.1% from December 31, ~~2015.~~2016. 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. From time to time, when appropriate in order to fund strong loan demand, we accept brokered time deposits, generally in denominations of less than $250,000, from a regional brokerage firm, and other national brokerage networks. Additionally, we participate in the Certificates of Deposit Account Registry Service (“CDARS”), which provides for reciprocal(“two-way”) transactions among banks for the purpose of giving our customers the potential for FDIC insurance of up to $50.0 million. Although classified as brokered deposits for regulatory purposes, funds placed through the CDARS program are our customer relationships that management views as core funding. We also participate in theOne-Way Buy Insured Cash Sweep (“ICS”) service, which provides forone-way buy transactions among banks for the purpose of purchasing cost-effective floating-rate funding without collateralization or stock purchase requirements. Management believes these sources represent a reliable and cost efficient alternative funding source for the Company. However, to the extent that our condition or reputation deteriorates, or to the extent that there are significant changes in market interest rates which we do not elect to match, we may experience an outflow of brokered deposits. In that event we would be required to obtain alternate sources for funding.

Table 2015 reflects the classification of the brokered deposits as of June 30, ~~2016~~2017 and December 31, ~~2015.~~2016.


	June 30, 2016		December 31, 2015		June 30, 2017		December 31, 2016
	(In thousands)				(In thousands)
Time Deposits	$	70,028	$	55,149	$	60,022	$	70,028
CDARS		34,338		26,920		21,677		26,389
Insured Cash Sweep and Other Transaction Accounts		226,861		117,185		552,731		406,120

Total Brokered Deposits	$	331,227	$	199,254	$	634,430	$	502,537

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 2116 reflects the classification of the average deposits and the average rate paid on each deposit category, which isare in excess of 10 percent of average total deposits, for the three andsix-month periods ended June 30, ~~2016~~2017 and ~~2015.~~2016.


	Three Months Ended June 30,										Three Months Ended June 30,
	2016					2015					2017					2016
	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	$	1,611,282		—	%	$	1,344,580		—	%	$	1,899,865		—	%	$	1,611,282		—	%
Interest-bearing transaction accounts		3,214,571		0.26			2,732,292		0.22			3,768,958		0.45			3,214,571		0.26
Savings deposits		463,078		0.06			417,198		0.06			523,431		0.09			463,078		0.06
Time deposits:
$100,000 or more		882,896		0.55			808,688		0.53			961,172		0.81			882,896		0.55
Other time deposits		510,127		0.39			610,115		0.44			482,056		0.47			510,127		0.39

Total	$	6,681,955		0.23	%	$	5,912,873		0.22	%	$	7,635,482		0.36	%	$	6,681,955		0.23	%


	Six Months Ended June 30,										Six Months Ended June 30,
	2016					2015					2017					2016
	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	$	1,562,725		—	%	$	1,286,275		—	%	$	1,808,660		—	%	$	1,562,725		—	%
Interest-bearing transaction accounts		3,180,921		0.25			2,685,063		0.22			3,700,448		0.41			3,180,921		0.25
Savings deposits		454,861		0.06			410,420		0.06			515,577		0.08			454,861		0.06
Time deposits:
$100,000 or more		871,893		0.53			736,323		0.60			929,057		0.78			871,893		0.53
Other time deposits		521,414		0.40			641,300		0.42			471,444		0.43			521,414		0.40

Total	$	6,591,814		0.23	%	$	5,759,381		0.23	%	$	7,425,186		0.33	%	$	6,591,814		0.23	%

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 $17.3~~increased $12.5 million, or ~~13.5%~~10.3%, from ~~$128.4~~$121.3 million as of December 31, ~~2015~~2016 to ~~$111.1~~$133.7 million as of June 30, ~~2016.~~2017.

Our FHLB borrowed funds were ~~$1.38~~$1.10 billion and ~~$1.41~~$1.31 billion at June 30, ~~2016~~2017 and December 31, ~~2015,~~2016, respectively. During the second quarter of 2017, approximately $531.0 million of FHLB advances matured. Due to the issuance of the $300 million of subordinated notes during the second quarter of 2017, we made the strategic decision to not renew all of the matured advances. At June 30, ~~2016~~2017, $200.0 million and ~~December 31, 2015, $1.35 billion and $1.41 billion, respectively,~~$899.5 million of the outstanding balance were issued as short-term and long-term ~~advances.~~advances, respectively. At December 31, 2016, $40.0 million and $1.27 billion of the outstanding balance were issued as short-term and long-term advances, respectively. Our remaining FHLB borrowing capacity was ~~$808.4 million~~$1.12 billion and ~~$581.9~~$718.2 million as of June 30, ~~2016~~2017 and December 31, ~~2015,~~2016, respectively. ~~We received additional borrowing capacity during the first quarter of 2016 as a result of our first quarter of 2016 organic loan growth.~~ Maturities of borrowings as of June 30, ~~2016~~2017 include: ~~2016 – $40.8 million;~~ 2017 – ~~$585.5~~$325.4 million; 2018 – ~~$459.3~~$459.1 million; 2019 – $143.1 million; 2020 – $146.4 million; 2021 – zero; after ~~2020~~2021 – ~~$474,000.~~$25.4 million. Expected maturities will differ from contractual maturities because FHLB may have the right to call or ~~we may have~~HBI the right to prepay certain obligations.

Subordinated debentures, which consist of subordinated debt securities and guaranteed payments on trust preferred securities, were ~~$60.8~~$357.8 million as of June 30, ~~2016 and~~2017. As of December 31, ~~2015.~~2016, subordinated debentures consisted only of $60.8 million of guaranteed payments on trust preferred securities.

The trust preferred securities aretax-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.

On April 3, 2017, the Company completed an underwritten public offering of $300 million in aggregate principal amount of its 5.625%Fixed-to-Floating Rate Subordinated Notes due 2027 (the “Notes”). The Notes were issued at 99.997% of par, resulting in net proceeds, after underwriting discounts and issuance costs, of approximately $297.0 million. The Notes are unsecured, subordinated debt obligations of the Company and will mature on April 15, 2027. The Notes qualify as Tier 2 capital for regulatory purposes.

Stockholders’ equity was ~~$1.26~~$1.48 billion at June 30, ~~2016~~2017 compared to ~~$1.20~~$1.33 billion at December 31, ~~2015, an annualized increase of 10.9%.~~2016. The increase in stockholders’ equity is primarily associated with the ~~$62.1~~$77.5 million of common stock issued to the GHI shareholders plus the $71.4 million increase in retained earnings ~~plus~~combined with the ~~$6.8~~$6.0 million of comprehensive income during the first six months offset by the ~~$4.4~~repurchase of $10.3 million of ~~decrease~~our common stock. The annualized improvement in ~~capital surplus as a result~~stockholders’ equity for the first six months of 2017, excluding the ~~$8.8~~$77.5 million ~~repurchase~~ of common stock ~~net of activity related~~issued to ~~stock based compensation during~~ the ~~quarter.~~GHI shareholders, was 10.8%. As of June 30, ~~2016~~2017 and December 31, ~~2015,~~2016, our equity to asset ratio was ~~13.2%~~13.58% and ~~12.9%~~13.53%, respectively. Book value per share was ~~$9.01~~$10.32 as of June 30, ~~2016,~~2017, compared to ~~$8.55 (split adjusted)~~$9.45 as of December 31, ~~2015, a 10.8%~~2016, an 18.6% annualized increase.

Common Stock Cash Dividends. We declared cash dividends on our common stock of ~~$0.0875~~$0.09 per share ~~(split adjusted) and $0.0625 per share (split adjusted)~~ for each of the three-month periods ended June 30, ~~2016~~2017 and ~~2015,~~2016, respectively. The common stock dividend payout ratio for the three months ended June 30, 2017 and 2016 was 25.75% and ~~2015 was~~ 28.23% ~~and 24.92%~~, respectively. The common stock dividend payout ratio for the six months ended June 30, 2017 and 2016 was 26.37% and ~~2015 was~~ 26.87% ~~and 25.98%~~, respectively. For the third quarter of ~~2016,~~2017, the Board of Directors declared a regular ~~$0.09~~$0.11 per share quarterly cash dividend payable ~~August 31, 2016,~~September 6, 2017, to shareholders of record August ~~10, 2016.~~16, 2017.

~~Two-for-One~~ Stock ~~Split.~~Repurchase Program.On ~~April 21, 2016,~~January 20, 2017, our Board of Directors ~~declared a two-for-one stock split paid in~~authorized the ~~form~~repurchase of ~~a 100% stock dividend on June 8, 2016~~up to ~~shareholders~~an additional 5,000,000 shares of ~~record at the close of business on May 18, 2016. The additional shares were distributed by the Company’s transfer agent, Computershare, and the Company’s~~our common stock ~~began trading on a split-adjusted basis on~~under our previously approved stock repurchase program, which brought the ~~NASDAQ Global Select Market on June 9, 2016. The stock split increased the Company’s~~ total ~~shares~~amount of ~~common stock outstanding as of June 8, 2016 from 70,191,253~~authorized shares to ~~140,382,506 shares (split adjusted).~~

~~All previously reported share and per share amounts have been restated~~repurchase to ~~reflect the retroactive effect of the stock split.~~

~~Stock Repurchase Program.~~9,752,000 shares. During the first six months of ~~2016,~~2017, we utilized a portion of ~~our previously approved~~this stock repurchase program. ~~This program authorized the repurchase of 4,752,000 shares (split adjusted) of our common stock.~~ We repurchased a total of ~~461,800~~420,000 shares ~~(split adjusted)~~ with a weighted-average stock price of ~~$19.15~~$24.51 per share ~~(split adjusted)~~ during the ~~first~~second quarter of 2016. The Company repurchased 95,428 shares (split adjusted) at an average price of $18.16 per share (split adjusted) during January 2016, 364,572 shares (split adjusted) at an average price of $19.45 per share (split adjusted) during February 2016, and 1,800 shares (split adjusted) at an average price of $20.00 per share (split adjusted) during March 2016.2017. No shares were repurchased during the ~~second~~first quarter of ~~2016.~~2017. Shares repurchased to date under the program total ~~3,618,256 shares (split adjusted).~~4,087,064 shares. The remaining balance available for repurchase is ~~1,133,744~~5,664,936 shares ~~(split adjusted)~~ at June 30, ~~2016.~~2017.

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 certainoff-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.

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 June 30, ~~2016~~2017 and December 31, ~~2015,~~2016, we met all regulatory capital adequacy requirements to which we were subject.

On April 3, 2017, the Company completed an underwritten public offering of $300 million in aggregate principal amount of its Notes which were issued at 99.997% of par, resulting in net proceeds, after underwriting discounts and issuance costs, of approximately $297.0 million. The Notes are unsecured, subordinated debt obligations of the Company and will mature on April 15, 2027. The Notes qualify as Tier 2 capital for regulatory purposes.

Table 2217 presents our risk-based capital ratios on a consolidated basis as of June 30, ~~2016~~2017 and December 31, ~~2015.~~2016.


	As of June 30, 2017			As of December 31, 2016
	(Dollars in thousands)
Tier 1 capital
Stockholders’ equity	$	1,476,032		$	1,327,490
Goodwill and core deposit intangibles, net		(437,107	)		(388,336	)
Unrealized (gain) loss onavailable-for-sale securities		(6,442	)		(400	)
Deferred tax assets		—			—

Total common equity Tier 1 capital		1,032,483			938,754
Qualifying trust preferred securities		59,000			59,000

Total Tier 1 capital		1,091,483			997,754

Tier 2 capital
Qualifying subordinated notes		297,012			—
Qualifying allowance for loan losses		80,138			80,002

Total Tier 2 capital		377,150			80,002

Total risk-based capital	$	1,468,633		$	1,077,756

Average total assets for leverage ratio	$	10,356,663		$	9,388,812

Risk weighted assets	$	8,754,401		$	8,308,468

Ratios at end of period
Common equity Tier 1 capital		11.79	%		11.30	%
Leverage ratio		10.54			10.63
Tier 1 risk-based capital		12.47			12.01
Total risk-based capital		16.78			12.97
Minimum guidelines – Basel IIIphase-in schedule
Common equity Tier 1 capital		5.75	%		5.125	%
Leverage ratio		4.00			4.000
Tier 1 risk-based capital		7.25			6.625
Total risk-based capital		9.25			8.625
Minimum guidelines – Basel III fullyphased-in
Common equity Tier 1 capital		7.00	%		7.00	%
Leverage ratio		4.00			4.00
Tier 1 risk-based capital		8.50			8.50
Total risk-based capital		10.50			10.50
Well-capitalized guidelines
Common equity Tier 1 capital		6.50	%		6.50	%
Leverage ratio		5.00			5.00
Tier 1 risk-based capital		8.00			8.00
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, must maintain minimum common equity Tier 1 capital, leverage, Tier 1 risk-based capital, and total risk-based capital ratios as set forth in the table. There are no conditions or events since that notification that we believe have changed the bank subsidiary’s category.

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 our significant number of historical acquisitions (especially Liberty), we believe certainnon-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 interest margin and ~~the allowance for loan losses for non-covered loans to total non-covered loans.~~efficiency ratio.

Because of our significant number of historical acquisitions, our net interest margin ~~and the allowance for loan losses for non-covered loans to total non-covered loans were~~was impacted by accretion and amortization of the fair value adjustments recorded in purchase accounting. The accretion and amortization affect certain operating ratios as we accrete loan discounts to interest income and amortize premiums and discounts on time deposits to interest expense.

We had $1.72 billion of purchased non-covered loans, which includes $109.5 million of discount for credit losses on non-covered loans acquired, at June 30, 2016. We have $40.3 million and $69.2 million remaining of non-accretable discount for credit losses on non-covered loans acquired and accretable discount for credit losses on non-covered loans acquired, respectively, as of June 30, 2016. We had $2.10 billion of purchased non-covered loans, which includes $139.5 million of discount for credit losses on non-covered loans acquired, at December 31, 2015. 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 thesenon-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 thesenon-GAAP measures and ratios in assessing our operating results and related trends, and when planning and forecasting future periods. However, thesenon-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 2318 through 2520 below, we have provided a reconciliation of, where applicable, the most comparable GAAP financial measures and ratios to thenon-GAAP financial measures and ratios, or a reconciliation of thenon-GAAP calculation of the financial measure for the periods indicated:


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015			2017			2016			2017			2016
	(Dollars in thousands)												(Dollars in thousands)
Interest income on loans receivable – FTE	$	100,601		$	82,470		$	197,704		$	158,060		$	112,902		$	100,601		$	218,833		$	197,704
Purchase accounting accretion		10,652			10,705			21,014			20,903			8,391			10,652			15,951			20,981

Non-GAAP interest income on loans receivable – FTE	$	89,949		$	71,765		$	176,690		$	137,157		$	104,511		$	89,949		$	202,882		$	176,723

Average loans	$	6,969,727		$	5,507,405		$	6,849,394		$	5,289,205		$	7,829,615		$	6,969,727		$	7,708,264		$	6,849,394
Average purchase accounting loan discounts⁽¹⁾		135,172			168,558			138,932			180,434			104,384			135,172			101,403			138,932

Average loans (non-GAAP)	$	7,104,899		$	5,675,963		$	6,988,326		$	5,469,639		$	7,933,999		$	7,104,899		$	7,809,667		$	6,988,326

Average yield on loans (reported)		5.81	%		6.01	%		5.80	%		6.03	%		5.78	%		5.81	%		5.72	%		5.80	%
Average contractual yield on loans (non-GAAP)		5.09			5.07			5.08			5.06			5.28			5.09			5.24			5.09


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015			2017			2016			2017			2016
	(Dollars in thousands)												(Dollars in thousands)
Interest expense on deposits	$	3,854		$	3,311		$	7,488		$	6,569		$	6,810		$	3,854		$	12,296		$	7,488
Amortization of time deposit (premiums)/discounts, net		365			254			733			398			106			365			194			766

Non-GAAP interest expense on deposits	$	4,219		$	3,565		$	8,221		$	6,967		$	6,916		$	4,219		$	12,490		$	8,254

Average deposits	$	5,070,673		$	4,568,293		$	5,029,089		$	4,473,106		$	5,735,617		$	5,070,673		$	5,616,526		$	5,029,089
Average unamortized CD (premium)/discount, net		(1,098	)		(1,352	)		(1,280	)		(1,039	)		(832	)		(1,098	)		(715	)		(1,280	)

Average deposits (non-GAAP)	$	5,069,575		$	4,566,941		$	5,027,809		$	4,472,067		$	5,734,785		$	5,069,575		$	5,615,811		$	5,027,809

Average cost of deposits (reported)		0.31	%		0.29	%		0.30	%		0.30	%		0.48	%		0.31	%		0.44	%		0.30	%
Average contractual cost of deposits (non-GAAP)		0.33			0.31			0.33			0.31			0.48			0.33			0.45			0.33


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015			2017			2016			2017			2016
	(Dollars in thousands)												(Dollars in thousands)
Net interest income – FTE	$	103,015		$	87,328		$	203,045		$	168,254		$	109,368		$	103,015		$	216,194		$	203,045
Total purchase accounting accretion		11,017			10,959			21,747			21,301			8,497			11,017			16,145			21,747

Non-GAAP net interest income – FTE	$	91,998		$	76,369		$	181,298		$	146,953		$	100,871		$	91,998		$	200,049		$	181,298

Average interest-earning assets	$	8,585,955		$	7,005,404		$	8,471,897		$	6,826,278		$	9,737,949		$	8,585,955		$	9,477,669		$	8,471,897
Average purchase accounting loan discounts⁽¹⁾		135,172			168,558			138,932			180,434			104,384			135,172			101,403			138,932

Average interest-earning assets (non-GAAP)	$	8,721,127		$	7,173,962		$	8,610,829		$	7,006,712		$	9,842,333		$	8,721,127		$	9,579,072		$	8,610,829

Net interest margin (reported)		4.83	%		5.00	%		4.82	%		4.97	%		4.50	%		4.83	%		4.60	%		4.82	%
Net interest margin (non-GAAP)		4.24			4.27			4.23			4.23			4.11			4.24			4.21			4.23

~~Table 26: Allowance for Loan Losses for Non-Covered Loans to Total Non-Covered Loans~~

~~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.~~

We had ~~$397.8~~$442.0 million, ~~$399.4~~$396.3 million, and ~~$342.5~~$397.8 million total goodwill, core deposit intangibles and other intangible assets as of June 30, ~~2016,~~2017, December 31, ~~2015~~2016 and June 30, ~~2015,~~2016, 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 2721 through ~~31,~~24, respectively. ~~All previously reported share and per share amounts have been restated to reflect the retroactive effect of the stock split.~~


	As of June 30, 2016		As of December 31, 2015		As of June 30, 2017		As of December 31, 2016
	(In thousands, except per share data)				(In thousands, except per share data)
Book value per share: A/B	$	9.01	$	8.55	$	10.32	$	9.45
Tangible book value per share: (A-C-D)/B		6.18		5.71		7.23		6.63

(A) Total equity	$	1,264,915	$	1,199,757	$	1,476,032	$	1,327,490
(B) Shares outstanding		140,382		140,241		143,071		140,472
(C) Goodwill	$	377,983	$	377,983	$	420,941	$	377,983
(D) Core deposit and other intangibles		19,835		21,443		21,019		18,311


	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
	(Dollars in thousands)
Return on average assets: A/C		1.86	%		1.83	%		1.86	%		1.81	%
Return on average assets excluding intangible amortization:B/(C-D)		1.96			1.93			1.96			1.91

(A) Net income	$	50,097		$	43,509		$	96,953		$	84,936
Intangible amortizationafter-tax		526			464			1,015			977

(B) Earnings excluding intangible amortization	$	50,623		$	43,973		$	97,968		$	85,913

(C) Average assets	$	10,793,770		$	9,562,624		$	10,498,143		$	9,446,623
(D) Average goodwill, core deposits and other intangible assets		442,380			398,184			429,113			398,581

Table ~~30:~~23: Return on Average Tangible Equity Excluding Intangible Amortization


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015			2017			2016			2017			2016
	(Dollars in thousands)												(Dollars in thousands)
Return on average equity: A/C		14.11	%		12.98	%		13.94	%		12.66	%		13.83	%		14.11	%		13.84	%		13.94	%
Return on average tangible equity excluding intangible amortization: B/(C-D)		21.01			19.68			20.90			19.34			20.09			21.01			20.09			20.90

(A) Net income	$	43,509		$	33,906		$	84,936		$	65,025		$	50,097		$	43,509		$	96,953		$	84,936
(B) Earnings excluding intangible amortization		43,973			34,575			85,913			66,380			50,623			43,973			97,968			85,913
(C) Average equity		1,240,080			1,047,765			1,225,174			1,035,691			1,453,099			1,240,080			1,412,639			1,225,174
(D) Average goodwill, core deposits and other intangible assets		398,184			343,083			398,581			343,653			442,380			398,184			429,113			398,581


	As of June 30, 2016			As of December 31, 2015			As of June 30, 2017			As of December 31, 2016
	(Dollars in thousands)						(Dollars in thousands)
Equity to assets: B/A		13.20	%		12.92	%		13.58	%		13.53	%
Tangible equity to tangible assets: (B-C-D)/(A-C-D)		9.44			9.00			9.91			9.89

(A) Total assets	$	9,582,126		$	9,289,122		$	10,872,228		$	9,808,465
(B) Total equity		1,264,915			1,199,757			1,476,032			1,327,490
(C) Goodwill		377,983			377,983			420,941			377,983
(D) Core deposit and other intangibles		19,835			21,443			21,019			18,311

The efficiency ratio is a standard measure used in the banking industry and is calculated by dividingnon-interest expense less amortization of core deposit intangibles by the sum of net interest income on a tax equivalent basis andnon-interest income. The core efficiency ratio is a meaningfulnon-GAAP measure for management, as it excludesnon-fundamental items and is calculated by dividingnon-interest expense less amortization of core deposit intangibles by the sum of net interest income on a tax equivalent basis andnon-interest income excludingnon-fundamental items such as merger expenses and/or gains and losses. In Table 25 below, we have provided a reconciliation of thenon-GAAP calculation of the financial measure for the periods indicated.

See Note 2321 in 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 ourday-to-day needs. As of June 30, ~~2016,~~2017, our cash and cash equivalents were ~~$185.4~~$460.5 million, or ~~1.9%~~4.2% of total assets, compared to ~~$255.8~~$216.6 million, or ~~2.8%~~2.2% of total assets, as of December 31, ~~2015.~~2016. Ouravailable-for-sale investment securities and federal funds sold were ~~$1.22~~$1.40 billion and $1.07 billion as of June 30, ~~2016~~2017 and December 31, ~~2015.~~2016, respectively.

As of June 30, ~~2016,~~2017, our investment portfolio was comprised of approximately ~~81.3%~~75.3% or ~~$1.23~~$1.25 billion of securities which mature in less than five years. As of June 30, ~~2016~~2017 and December 31, ~~2015, $1.27~~2016, $1.40 billion and ~~$1.25~~$1.07 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 June 30, ~~2016,~~2017, our total deposits were ~~$6.71~~$7.77 billion, or ~~70.1%~~71.4% of total assets, compared to ~~$6.44~~$6.94 billion, or ~~69.3%~~70.8% of total assets, as of December 31, ~~2015.~~2016. We attract our deposits primarily from individuals, business, and municipalities located in our market areas.

In the event that additional short-term liquidity is needed to temporarily satisfy our liquidity needs, we have established and currently maintain lines of credit with the Federal Reserve Bank (“Federal Reserve”) and Bankers’ Bank to provide short-term borrowings in the form of federal funds purchases. In addition, we maintain lines of credit with two other financial institutions.

As of June 30, ~~2016~~2017 and December 31, ~~2015,~~2016, we could have borrowed up to ~~$115.7~~$105.8 million and ~~$115.8~~$104.6 million, respectively, on a secured basis ~~with~~from the Federal Reserve, up to $30.0 million ~~and $30.0 million, respectively, with~~from Bankers’ Bank on an unsecured basis, and up to $30.0 million ~~and $30.0 million, respectively,~~ in the aggregate ~~with~~from other financial institutions on an unsecured basis. The unsecured lines may be terminated by the respective institutions at any time.

The lines of credit we maintain with the FHLB can provide us with both short-term and long-term forms of liquidity on a secured basis. FHLB borrowed funds were ~~$1.38~~$1.10 billion and ~~$1.41~~$1.31 billion at June 30, ~~2016~~2017 and December 31, ~~2015,~~2016, respectively. At June 30, ~~2016~~2017, $200.0 million and ~~December 31, 2015, $1.35 billion and $1.41 billion, respectively~~$899.5 million of the outstanding balance were issued as short-term and long-term ~~advances.~~advances, respectively. At December 31, 2016, $40.0 million and $1.27 billion of the outstanding balance were issued as short-term and long-term advances, respectively. Our FHLB borrowing capacity was ~~$808.4 million~~$1.12 billion and ~~$581.9~~$718.2 million as of June 30, ~~2016~~2017 and December 31, ~~2015,~~2016, 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 there-pricing relationships for each of our products. Many of our assets are floating rate loans, which are assumed tore-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. Ournon-term deposit productsre-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. As of June 30, ~~2016,~~2017, our gap position was asset sensitive with aone-year cumulative repricing gap as a percentage of total earning assets of ~~5.2%~~6.6%.

During this period, the amount of change our asset base realizes in relation to the total change in market interest rates is higher than that of the liability base. As a result, our net interest income will have a positive 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 3226 presents a summary of the repricing schedule of our interest-earning assets and interest-bearing liabilities (gap) as of June 30, ~~2016.~~2017.


	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	$	48,762		$	—		$	—		$	—		$	—		$	—		$	—		$	48,762	$	313,447		$	—		$	—		$	—		$	—		$	—		$	—		$	313,447
Federal funds sold		525			—			—			—			—			—			—			525		—			—			—			—			—			—			—			—
Investment securities		212,849			73,487			98,278			127,453			233,613			404,966			358,857			1,509,503		277,467			56,955			68,986			133,766			201,222			348,413			567,783			1,654,592
Loans receivable		1,837,446			455,784			562,654			918,443			1,100,292			1,796,643			350,894			7,022,156		2,200,611			511,891			632,843			988,298			1,250,283			1,944,068			306,481			7,834,475

Total earning assets		2,099,582			529,271			660,932			1,045,896			1,333,905			2,201,609			709,751			8,580,946		2,791,525			568,846			701,829			1,122,064			1,451,505			2,292,481			874,264			9,802,514

Interest-bearing liabilities
Interest-bearing transaction and savings deposits		364,074			302,450			453,675			907,348			564,127			546,505			540,367			3,678,546		715,764			328,604			492,906			985,811			618,720			600,141			593,510			4,335,456
Time deposits		160,226			154,988			186,306			358,346			378,939			147,376			2,749			1,388,930		128,117			188,545			333,836			499,188			199,743			123,793			1,033			1,474,255
Federal funds purchased		—			—			—			—			—			—			—			—
Securities sold under repurchase agreements		111,072			—			—			—			—			—			—			111,072		133,741			—			—			—			—			—			—			133,741
FHLB and other borrowed funds		825,407			5,131			191			348			124,210			425,602			—			1,380,889		600,020			25,041			61			49,081			150,453			274,822			—			1,099,478
Subordinated debentures		60,826			—			—			—			—			—			—			60,826		60,826			—			—			—			—			297,012			—			357,838

Total interest-bearing liabilities		1,521,605			462,569			640,172			1,266,042			1,067,276			1,119,483			543,116			6,620,263		1,638,468			542,190			826,803			1,534,080			968,916			1,295,768			594,543			7,400,768

Interest rate sensitivity gap	$	577,977		$	66,702		$	20,760		$	(220,146	)	$	266,629		$	1,082,126		$	166,635		$	1,960,683	$	1,153,057		$	26,656		$	(124,974	)	$	(412,016	)	$	482,589		$	996,713		$	279,721		$	2,401,746

Cumulative interest rate sensitivity gap	$	577,977		$	644,679		$	665,439		$	445,293		$	711,922		$	1,794,048		$	1,960,683				$	1,153,057		$	1,179,713		$	1,054,739		$	642,723		$	1,125,312		$	2,122,025		$	2,401,746
Cumulative rate sensitive assets to rate sensitive liabilities		138.0	%		132.5	%		125.4	%		111.4	%		114.4	%		129.5	%		129.6	%				170.4	%		154.1	%		135.1	%		114.2	%		120.4	%		131.2	%		132.5	%
Cumulative gap as a % of total earning assets		6.7	%		7.5	%		7.8	%		5.2	%		8.3	%		20.9	%		22.8	%				11.8	%		12.0	%		10.8	%		6.6	%		11.5	%		21.6	%		24.5	%

Based on their evaluation as of the end of the period covered by this Quarterly Report on Form10-Q, the Chief Executive Officer and Chief Financial Officer have concluded that the disclosure controls and procedures (as defined in Rules13a-15(e) and15d-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 June 30, ~~2016,~~2017, 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 the Company or its subsidiaries are a party or of which any of their property is the subject.

~~Except for the risk factors set for below, there~~There were no material changes from the risk factors set forth in Part I, Item 1A, “Risk Factors,” of our Form10-K for the year ended December 31, ~~2015.~~2016. See the discussion of our risk factors in the Form10-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.

~~Not applicable.~~During the three months ended June 30, 2017, the Company utilized a portion of its stock repurchase program last amended and approved by the Board of Directors on January 20, 2017. This program authorized the repurchase of 9,752,000 shares of the Company’s common stock. The following table sets forth information with respect to purchases made by or on behalf of the Company of shares of the Company’s common stock during the periods indicated:



~~2.7~~		Agreement and Plan of Merger among Home Bancshares, Inc., Centennial Bank, Florida Business BancGroup, Inc. and Bay Cities Bank (incorporated by reference to Exhibit 2.1 of Home BancShares’s Current Report on Form 8-K filed on June 22, 2015)

3.1		Restated Articles of Incorporation of Home BancShares, Inc. (incorporated by reference to Exhibit 3.1 of Home BancShares’s registration statement onForm S-1 (FileNo. 333-132427), as amended)

3.2		Amendment to the Restated Articles of Incorporation of Home BancShares, Inc. (incorporated by reference to Exhibit 3.2 of Home BancShares’s registration statement onForm S-1 (FileNo. 333-132427), as amended)

3.3		Second Amendment to the Restated Articles of Incorporation of Home BancShares, Inc. (incorporated by reference to Exhibit 3.3 of Home BancShares’s registration statement onForm S-1 (FileNo. 333-132427), as amended)

3.4		Third Amendment to the Restated Articles of Incorporation of Home BancShares, Inc. (incorporated by reference to Exhibit 3.4 of Home BancShares’s registration statement onForm S-1 (FileNo. 333-132427), as amended)

3.5		Fourth Amendment to the Restated Articles of Incorporation of Home BancShares, Inc. (incorporated by reference to Exhibit 3.1 of Home BancShares’s Quarterly Report on Form10-Q for the quarter ended June 30, 2007, filed on August 8, 2007)

3.6		Fifth Amendment to the Restated Articles of Incorporation of Home BancShares, Inc. (incorporated by reference to Exhibit 4.6 of Home BancShares’s registration statement onForm S-3 (FileNo. 333-157165))

3.7		Certificate of Designations of Fixed Rate Cumulative Perpetual Preferred Stock, Series A, filed with the Secretary of State of the State of Arkansas on January 14, 2009 (incorporated by reference to Exhibit 3.1 of Home BancShares’s Current Report on Form8-K, filed on January 21, 2009)

3.8		Seventh Amendment to the Restated Articles of Incorporation of Home BancShares, Inc. (incorporated by reference to Exhibit 3.1 of Home BancShares’s Current Report on Form8-K, filed on April 19, 2013)

3.9		Eighth Amendment to the Restated Articles of Incorporation of Home BancShares, Inc. (incorporated by reference to Exhibit 3.1 of Home BancShares Current Report on Form8-K filed on April 22, ~~2016~~2016)

3.10		Restated Bylaws of Home BancShares, Inc. (incorporated by reference to Exhibit 3.5 of Home BancShares’s registration statement onForm S-1 (FileNo. 333-132427), as amended)

4.1		Specimen Stock Certificate representing Home BancShares, Inc. Common Stock (incorporated by reference to Exhibit 4.6 of Home BancShares’s registration statement onForm S-1 (FileNo. 333-132427), as amended)

4.2		Instruments defining the rights of security holders including indentures. Home BancShares hereby agrees to furnish to the SEC upon request copies of instruments defining the rights of holders of long-term debt of Home BancShares and its consolidated subsidiaries. No issuance of debt exceeds ten percent of the assets of Home BancShares and its subsidiaries on a consolidated basis.

~~10.1~~		Amended and Restated 2006 Stock Option and Performance Incentive Plan of Home BancShares, Inc. (incorporated by reference to Exhibit 10.1 of Home BancShares’s Current Report on Form 8-K filed on March 30, 2012)

~~10.2~~		Amendment to Amended and Restated 2006 Stock Option and Performance Incentive Plan of Home BancShares, Inc. (incorporated by reference to Exhibit 10.1 of Home BancShares’s Quarterly Report on Form 10-Q for the period ended June 30, 2015, filed on August 6, 2015)

~~10.3~~		Amendment to Amended and Restated 2006 Stock Option and Performance Incentive Plan of Home BancShares, Inc. (incorporated by reference to Exhibit 10.1 of Home BancShares’s Current Report on Form 8-K filed on April 22, 2016)

12.1		Computation of Ratios of Earnings to Fixed Charges*

15		Awareness of Independent Registered Public Accounting Firm*



31.1		CEO Certification PursuantRule 13a-14(a)/15d-14(a)*

31.2		CFO Certification PursuantRule 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*

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.


Arkansas		71-0682831
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

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


		Page No.
Part I:	Financial Information

Item 1:	Financial Statements

	Consolidated Balance Sheets – June 30, ~~2016~~2017 (Unaudited) and December 31, ~~2015~~2016		4

	Consolidated Statements of Income (Unaudited) – Three and six months ended June 30, ~~2016~~2017 and ~~2015~~2016		5

	Consolidated Statements of Comprehensive Income (Unaudited) – Three and six months ended June 30, ~~2016~~2017 and ~~2015~~2016		6

	Consolidated Statements of Stockholders’ Equity (Unaudited) – Six months ended June 30, ~~2016~~2017 and ~~2015~~2016		6

	Consolidated Statements of Cash Flows (Unaudited) – Six months ended June 30, ~~2016~~2017 and ~~2015~~2016		7

	Condensed Notes to Consolidated Financial Statements (Unaudited)		~~8-43~~8-47

	Report of Independent Registered Public Accounting Firm		4448

Item 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations		~~45-86~~49-84

Item 3:	Quantitative and Qualitative Disclosures About Market Risk		~~86-89~~85-87

Item 4:	Controls and Procedures		8987

Part II:	Other Information

Item 1:	Legal Proceedings		8987

Item 1A:	Risk Factors		9088

Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds		9088

Item 3:	Defaults Upon Senior Securities		9088

Item 4:	Mine Safety Disclosures		9088

Item 5:	Other Information		9088

Item 6:	Exhibits		~~90-92~~89-90

Signatures				9391


	Giant Holdings, Inc.
	Acquired from GHI			Fair Value Adjustments			As Recorded by HBI
	(Dollars in thousands)
Assets
Cash and due from banks	$	41,019		$	—		$	41,019
Interest-bearing deposits with other banks		4,057			1			4,058
Investment securities		1,961			(5	)		1,956
Loans receivable		335,886			(6,517	)		329,369
Allowance for loan losses		(4,568	)		4,568			—

Loans receivable, net		331,318			(1,949	)		329,369
Bank premises and equipment, net		2,111			608			2,719
Cash value of life insurance		10,861			—			10,861
Accrued interest receivable		850			—			850
Deferred tax asset		2,286			1,807			4,093
Core deposit intangible		172			3,238			3,410
Other assets		254			(489	)		(235	)

Total assets acquired	$	394,889		$	3,211		$	398,100

Liabilities
Deposits
Demand andnon-interest-bearing	$	75,993		$	—		$	75,993
Savings and interest-bearing transaction accounts		139,459			—			139,459
Time deposits		88,219			324			88,543

Total deposits		303,671			324			303,995
FHLB borrowed funds		26,047			431			26,478
Accrued interest payable and other liabilities		14,552			18			14,570

Total liabilities assumed		344,270			773			345,043

Equity

Total equity assumed		50,619			(50,619	)		—

Total liabilities and equity assumed	$	394,889		$	(49,846	)		345,043

Net assets acquired								53,057
Purchase price								96,015

Goodwill							$	42,958


	The Bank of Commerce
	Acquired from BOC			Fair Value Adjustments			As Recorded by HBI
	(Dollars in thousands)
Assets
Cash and due from banks	$	4,610		$	—		$	4,610
Interest-bearing deposits with other banks		14,360			—			14,360
Investment securities		25,926			(113	)		25,813
Loans receivable		124,289			(5,751	)		118,538
Allowance for loan losses		(2,037	)		2,037			—

Loans receivable, net		122,252			(3,714	)		118,538
Bank premises and equipment, net		1,887			—			1,887
Foreclosed assets held for sale		8,523			(3,165	)		5,358
Accrued interest receivable		481			—			481
Deferred tax asset					4,198			4,198
Core deposit intangible		—			968			968
Other assets		1,880			—			1,880

Total assets acquired	$	179,919		$	(1,826	)	$	178,093

Liabilities
Deposits
Demand andnon-interest-bearing	$	27,245		$	—		$	27,245
Savings and interest-bearing transaction accounts		32,300			—			32,300
Time deposits		79,945			270			80,215

Total deposits		139,490			270			139,760
FHLB borrowed funds		30,000			42			30,042
Accrued interest payable and other liabilities		564			(255	)		309

Total liabilities assumed	$	170,054		$	57			170,111

Net assets acquired								7,982
Purchase price								4,175

Pre-tax gain on acquisition							$	3,807


Period	Number of Shares Purchased		Average Price Paid Per Share Purchased		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number of Shares That May Yet Be Purchased Under the Plans or Programs
April1 through April 30, 2017		20,000	$	25.80		20,000		6,064,936
May 1 through May 31, 2017		246,100		24.81		246,100		5,818,836
June 1 through June 30, 2017		153,900		23.86		153,900		5,664,936

Total		420,000				420,000


	Three Months Ended June 30,						Six Months Ended June 30,
(In thousands, except per share data⁽¹⁾)	2016			2015			2016			2015
	(Unaudited)
Interest income:
Loans	$	100,415		$	82,360		$	197,328		$	157,847
Investment securities
Taxable		5,145			5,130			10,595			10,673
Tax-exempt		2,823			2,774			5,638			5,526
Deposits – other banks		106			44			208			135
Federal funds sold		1			3			5			11

Total interest income		108,490			90,311			213,774			174,192

Interest expense:
Interest on deposits		3,854			3,311			7,488			6,569
Federal funds purchased		1			1			2			2
FHLB and other borrowed funds		3,074			1,053			6,144			2,103
Securities sold under agreements to repurchase		134			163			279			335
Subordinated debentures		386			334			763			663

Total interest expense		7,449			4,862			14,676			9,672

Net interest income		101,041			85,449			199,098			164,520
Provision for loan losses		5,692			5,381			11,369			9,168

Net interest income after provision for loan losses		95,349			80,068			187,729			155,352

Non-interest income:
Service charges on deposit accounts		6,151			6,056			12,080			11,474
Other service charges and fees		7,968			6,499			15,085			12,715
Trust fees		359			1,186			763			1,618
Mortgage lending income		3,481			2,955			6,344			4,887
Insurance commissions		617			640			1,274			1,207
Income from title services		3			36			7			70
Increase in cash value of life insurance		353			295			748			603
Dividends from FHLB, FRB, Bankers’ bank & other		719			419			1,339			834
Gain on acquisitions		—			—			—			1,635
Gain on sale of SBA loans		79			—			79			—
Gain (loss) on sale of branches, equipment and other assets, net		840			21			787			29
Gain (loss) on OREO, net		(941	)		(263	)		(845	)		230
Gain (loss) on securities, net		15			—			25			4
FDIC indemnification accretion/(amortization), net		(410	)		(2,202	)		(772	)		(6,158	)
Other income		2,538			1,385			4,295			2,549

Total non-interest income		21,772			17,027			41,209			31,697

Non-interest expense:
Salaries and employee benefits		25,437			22,056			49,395			41,446
Occupancy and equipment		6,509			6,678			13,180			12,727
Data processing expense		2,766			3,063			5,430			5,482
Other operating expenses		12,875			11,453			25,230			24,308

Total non-interest expense		47,587			43,250			93,235			83,963

Income before income taxes		69,534			53,845			135,703			103,086
Income tax expense		26,025			19,939			50,767			38,061

Net income	$	43,509		$	33,906		$	84,936		$	65,025

Basic earnings per share	$	0.31		$	0.25		$	0.61		$	0.48

Diluted earnings per share	$	0.31		$	0.25		$	0.60		$	0.48


(In thousands, except share data⁽¹⁾)	Common Stock			Capital Surplus			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total
Balance at January 1, 2015	$	676		$	781,328		$	226,279		$	7,009		$	1,015,292
Comprehensive income:
Net income		—			—			65,025			—			65,025
Other comprehensive income (loss)		—			—			—			(1,125	)		(1,125	)
Net issuance of 325,056 shares of common stock from exercise of stock options		1			116			—			—			117
Repurchase of 134,664 shares of common stock		(1	)		(2,014	)		—			—			(2,015	)
Tax benefit from stock options exercised		—			83			—			—			83
Share-based compensation net issuance of 217,168 shares of restricted common stock		1			1,218			—			—			1,219
Cash dividends – Common Stock, $0.125 per share		—			—			(16,895	)		—			(16,895	)

Balances at June 30, 2015 (unaudited)		677			780,731			274,409			5,884			1,061,701
Comprehensive income:
Net income		—			—			73,174			—			73,174
Other comprehensive income (loss)		—			—			—			(1,707	)		(1,707	)
Net issuance of 84,016 shares of common stock from exercise of stock options		1			271			—			—			272
Issuance of 4,159,708 shares of common stock from acquisition of FBBI, net of issuance costs of approximately $60		21			83,753			—			—			83,774
Tax benefit from stock options exercised		—			522			—			—			522
Share-based compensation net issuance of 448,500 shares of restricted common stock		2			2,704			—			—			2,706
Cash dividends – Common Stock, $0.15 per share		—			—			(20,685	)		—			(20,685	)

Balances at December 31, 2015		701			867,981			326,898			4,177			1,199,757
Comprehensive income:
Net income		—			—			84,936			—			84,936
Other comprehensive income (loss)		—			—			—			6,760			6,760
Net issuance of 438,568 shares of common stock from exercise of stock options plus issuance of 10,000 bonus shares of unrestricted common stock		2			1,162			—			—			1,164
Issuance of common stock – 2-for-1 stock split		702			(702	)		—			—			—
Repurchase of 461,800 shares of common stock		(2	)		(8,840	)		—			—			(8,842	)
Tax benefit from stock options exercised		—			1,148			—			—			1,148
Share-based compensation net issuance of 151,406 shares of restricted common stock		1			2,811			—			—			2,812
Cash dividends – Common Stock, $0.1625 per share		—			—			(22,820	)		—			(22,820	)

Balances at June 30, 2016 (unaudited)	$	1,404		$	863,560		$	389,014		$	10,937		$	1,264,915


	Three Months Ended June 30, 2016
	Construction/ Land Development			Other Commercial Real Estate			Residential Real Estate			Commercial & Industrial			Consumer & Other			Unallocated			Total
	(In thousands)
Allowance for loan losses:
Beginning balance	$	11,581		$	29,355		$	12,799		$	10,001		$	5,508		$	536		$	69,780
Loans charged off		(66	)		(667	)		(997	)		(2,153	)		(484	)		—			(4,367	)
Recoveries of loans previously charged off		14			190			212			85			208			—			709

Net loans recovered (charged off)		(52	)		(477	)		(785	)		(2,068	)		(276	)		—			(3,658	)
Provision for loan losses		772			(4,132	)		1,325			5,788			145			1,794			5,692

Balance, June 30	$	12,301		$	24,746		$	13,339		$	13,721		$	5,377		$	2,330		$	71,814


	Six Months Ended June 30, 2016
	Construction/ Land Development			Other Commercial Real Estate			Residential Real Estate			Commercial & Industrial			Consumer & Other			Unallocated			Total
	(In thousands)
Allowance for loan losses:
Beginning balance	$	10,656		$	26,794		$	12,388		$	9,305		$	5,007		$	2,486		$	66,636
Loans charged off		(107	)		(1,824	)		(2,306	)		(3,036	)		(970	)		—			(8,243	)
Recoveries of loans previously charged off		33			228			678			614			499			—			2,052

Net loans recovered (charged off)		(74	)		(1,596	)		(1,628	)		(2,422	)		(471	)		—			(6,191	)
Provision for loan losses		1,719			(452	)		2,579			6,838			841			(156	)		11,369

Balance, June 30	$	12,301		$	24,746		$	13,339		$	13,721		$	5,377		$	2,330		$	71,814


	As of June 30, 2016
	Construction/ Land Development			Other Commercial Real Estate			Residential Real Estate			Commercial & Industrial			Consumer & Other			Unallocated			Total
	(In thousands)
Allowance for loan losses:
Period end amount allocated to:
Loans individually evaluated for impairment	$	794		$	1,703		$	54		$	3		$	—		$	—		$	2,554
Loans collectively evaluated for impairment		11,504			22,895			13,103			13,715			5,375			2,330			68,922

Loans evaluated for impairment balance, June 30		12,298			24,598			13,157			13,718			5,375			2,330			71,476

Purchased credit impaired loans acquired		3			148			182			3			2			—			338

Balance, June 30	$	12,301		$	24,746		$	13,339		$	13,721		$	5,377		$	2,330		$	71,814

Loans receivable:
Period end amount allocated to:
Loans individually evaluated for impairment	$	21,040		$	130,920		$	28,381		$	23,592		$	1,334		$	—		$	205,267
Loans collectively evaluated for impairment		1,025,234			2,746,678			1,520,307			1,091,652			198,367			—			6,582,238

Loans evaluated for impairment balance, June 30		1,046,274			2,877,598			1,548,688			1,115,244			199,701			—			6,787,505

Purchased credit impaired loans acquired		20,570			84,907			54,048			15,128			2,558			—			177,211

Balance, June 30	$	1,066,844		$	2,962,505		$	1,602,736		$	1,130,372		$	202,259		$	—		$	6,964,716


	Year Ended December 31, 2016
	Construction/ Land Development			Other Commercial Real Estate			Residential Real Estate			Commercial & Industrial			Consumer & Other			Unallocated			Total
	(In thousands)
Allowance for loan losses:
Beginning balance	$	10,782		$	26,798		$	14,818		$	9,324		$	5,016		$	2,486		$	69,224
Loans charged off		(153	)		(1,849	)		(2,306	)		(3,036	)		(970	)		—			(8,314	)
Recoveries of loans previously charged off		33			228			688			614			499			—			2,062

Net loans recovered (charged off)		(120	)		(1,621	)		(1,618	)		(2,422	)		(471	)		—			(6,252	)
Provision for loan losses		1,673			(329	)		2,488			6,852			841			(156	)		11,369

Balance, June 30		12,335			24,848			15,688			13,754			5,386			2,330			74,341
Loans charged off		(229	)		(1,737	)		(3,291	)		(2,742	)		(1,188	)		—			(9,187	)
Recoveries of loans previously charged off		1,092			629			464			4,919			505			—			7,609

Net loans recovered (charged off)		863			(1,108	)		(2,827	)		2,177			(683	)		—			(1,578	)
Provision for loan losses		(1,676	)		4,448			3,656			(3,175	)		(515	)		4,501			7,239

Balance, December 31	$	11,522		$	28,188		$	16,517		$	12,756		$	4,188		$	6,831		$	80,002


	As of December 31, 2016
	Construction/ Land Development			Other Commercial Real Estate			Residential Real Estate			Commercial & Industrial			Consumer & Other			Unallocated			Total
	(In thousands)
Allowance for loan losses:
Period end amount allocated to:
Loans individually evaluated for impairment	$	15		$	1,416		$	103		$	95		$	—		$	—		$	1,629
Loans collectively evaluated for impairment		11,463			25,641			15,796			12,596			4,176			6,831			76,503

Loans evaluated for impairment balance, December 31		11,478			27,057			15,899			12,691			4,176			6,831			78,132

Purchased credit impaired loans		44			1,131			618			65			12			—			1,870

Balance, December 31	$	11,522		$	28,188		$	16,517		$	12,756		$	4,188		$	6,831		$	80,002

Loans receivable:
Period end amount allocated to:
Loans individually evaluated for impairment	$	12,374		$	74,723		$	35,187		$	25,873		$	1,096		$	—		$	149,253
Loans collectively evaluated for impairment		1,105,921			3,080,201			1,608,805			1,085,891			198,064			—			7,078,882

Loans evaluated for impairment balance, December 31		1,118,295			3,154,924			1,643,992			1,111,764			199,160			—			7,228,135

Purchased credit impaired loans		17,548			75,933			53,070			11,449			1,564			—			159,564

Balance, December 31	$	1,135,843		$	3,230,857		$	1,697,062		$	1,123,213		$	200,724		$	—		$	7,387,699


	June 30, 2016				December 31, 2015
	Number of Loans		Recorded Balance		Number of Loans		Recorded Balance
	(Dollars in thousands)
Real estate:
Commercial real estate loans
Non-farm/non-residential		2	$	905		3	$	1,604
Residential real estate loans
Residential 1-4 family		4		589		2		1,812

Total real estate		6		1,494		5		3,416

Commercial and industrial		1		13		—		—

Total		7	$	1,507		5	$	3,416


		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


	As of or for the Three Months Ended June 30,						As of or for the Six Months Ended June 30,
	2016			2015			2016			2015
	(Dollars in thousands, except per share data⁽²⁾)
Total assets	$	9,582,126		$	8,074,382		$	9,582,126		$	8,074,382
Loans receivable not covered by loss share		6,964,716			5,499,028			6,964,716			5,499,028
Loans receivable covered by FDIC loss share		57,440			159,891			57,440			159,891
Allowance for loan losses		74,341			60,258			74,341			60,258
FDIC claims receivable		566			8,992			566			8,992
Total deposits		6,712,948			5,878,036			6,712,948			5,878,036
Total stockholders’ equity		1,264,915			1,061,701			1,264,915			1,061,701
Net income		43,509			33,906			84,936			65,025
Basic earnings per share		0.31			0.25			0.61			0.48
Diluted earnings per share		0.31			0.25			0.60			0.48
Diluted earnings per share excluding intangible amortization⁽¹⁾		0.31			0.25			0.61			0.49
Annualized net interest margin – FTE		4.83	%		5.00	%		4.82	%		4.97	%
Efficiency ratio		37.52			40.39			37.51			40.88
Annualized return on average assets		1.83			1.72			1.81			1.70
Annualized return on average common equity		14.11			12.98			13.94			12.66


Table 1: Key Financial Measures
	As of or for the Three Months Ended June 30,						As of or for the Six Months Ended June 30,
	2017			2016			2017			2016
	(Dollars in thousands, except per share data)
Total assets	$	10,872,228		$	9,582,126		$	10,872,228		$	9,582,126
Loans receivable		7,834,475			7,022,156			7,834,475			7,022,156
Allowance for loan losses		80,138			74,341			80,138			74,341
Total deposits		7,767,388			6,712,948			7,767,388			6,712,948
Total stockholders’ equity		1,476,032			1,264,915			1,476,032			1,264,915
Net income		50,097			43,509			96,953			84,936
Basic earnings per share		0.35			0.31			0.68			0.61
Diluted earnings per share		0.35			0.31			0.68			0.60
Annualized net interest margin – FTE		4.50	%		4.83	%		4.60	%		4.82	%
Efficiency ratio		37.48			37.52			39.12			37.51
Annualized return on average assets		1.86			1.83			1.86			1.81
Annualized return on average common equity		13.83			14.11			13.84			13.94


	Additional Adjustment to Yield		Reduction of Indemnification Asset			Increase of FDIC True-up Liability
	(In thousands)
Periods Tested:
Prior to 2015	$	83,278	$	58,535		$	6,764
March 31, 2015		—		—			—
June 30, 2015		—		—			—
September 30, 2015		28,522		—			—
December 31, 2015		—		—			—
March 31, 2016		4,319		—			—
June 30, 2016		2,539		—			—

Total	$	118,658	$	58,535		$	6,764


Table 3: Financial Impact for the Three and Six Months Ended June 30, 2016 and 2015

	Yield Accretion Income		Amortization of Indemnification Asset			FDIC True-up Expense
	(In thousands)
Three Months Ended:
June 30, 2015	$	4,382	$	(2,289	)	$	(281	)
June 30, 2016		5,965		(456	)		—

Pre-tax earnings improvement	$	1,583	$	1,833		$	(281	)

Six Months Ended:
June 30, 2015	$	8,891	$	(6,373	)	$	(562	)
June 30, 2016		11,231		(912	)		—

Pre-tax earnings improvement	$	2,340	$	5,461		$	(562	)


	As of June 30, 2016		As of December 31, 2015
	(In thousands)
Real estate:
Commercial real estate loans:
Non-farm/non-residential	$	2,883,970	$	2,968,147
Construction/land development		1,066,844		943,095
Agricultural		78,535		75,027
Residential real estate loans:
Residential 1-4 family		1,207,756		1,130,714
Multifamily residential		394,980		429,872

Total real estate		5,632,085		5,546,855
Consumer		48,933		52,258
Commercial and industrial		1,130,372		850,357
Agricultural		69,666		67,109
Other		83,660		62,822

Loans receivable not covered by loss share	$	6,964,716	$	6,579,401


	As of		As of
	June 30, 2017		December 31, 2016
	(In thousands)
Real estate:
Commercial real estate loans:
Non-farm/non-residential	$	3,368,663	$	3,153,121
Construction/land development		1,315,309		1,135,843
Agricultural		78,260		77,736
Residential real estate loans:
Residential1-4 family		1,513,888		1,356,136
Multifamily residential		398,781		340,926

Total real estate		6,674,901		6,063,762
Consumer		38,424		41,745
Commercial and industrial		994,827		1,123,213
Agricultural		69,697		74,673
Other		56,626		84,306

Total loans receivable	$	7,834,475	$	7,387,699


	Loans Receivable Not Covered by Loss Share		Loans Receivable Covered by FDIC Loss Share		Total Loans Receivable
	(In thousands)
Real estate:
Commercial real estate loans
Non-farm/non-residential	$	2,883,970	$	192	$	2,884,162
Construction/land development		1,066,844		1,700		1,068,544
Agricultural		78,535		—		78,535
Residential real estate loans
Residential 1-4 family		1,207,756		54,660		1,262,416
Multifamily residential		394,980		372		395,352

Total real estate		5,632,085		56,924		5,689,009
Consumer		48,933		—		48,933
Commercial and industrial		1,130,372		404		1,130,776
Agricultural		69,666		—		69,666
Other		83,660		112		83,772

Total	$	6,964,716	$	57,440	$	7,022,156


	As of June 30, 2016			As of December 31, 2015
	(Dollars in thousands)
Non-accrual non-covered loans	$	36,660		$	36,374
Non-covered loans past due 90 days or more (principal or interest payments)		19,302			23,845

Total non-performing non-covered loans		55,962			60,219

Other non-performing non-covered assets
Non-covered foreclosed assets held for sale, net		17,573			18,526
Other non-performing non-covered assets		—			38

Total other non-performing non-covered assets		17,573			18,564

Total non-performing non-covered assets	$	73,535		$	78,783

Allowance for loan losses for non-covered loans to non-performing non-covered loans		128.33	%		110.66	%
Non-performing non-covered loans to total non-covered loans		0.80			0.92
Non-performing non-covered assets to total non-covered assets		0.77			0.85


	As of June 30, 2016						As of December 31, 2015
	Not Covered by Loss Share		Covered by FDIC Loss Share		Total		Not Covered by Loss Share		Covered by FDIC Loss Share		Total
	(In thousands)
Commercial real estate loans
Non-farm/non-residential	$	10,369	$	—	$	10,369	$	9,787	$	—	$	9,787
Construction/land development		4,494		—		4,494		5,286		—		5,286
Agricultural		—		—		—		—		—		—
Residential real estate loans
Residential 1-4 family		2,568		205		2,773		3,233		614		3,847
Multifamily residential		142		—		142		220		—		220

Total foreclosed assets held for sale	$	17,573	$	205	$	17,778	$	18,526	$	614	$	19,140


	As of June 30, 2016
	Non-Covered Loans			Purchased Non-Covered Loans			Total
	(Dollars in thousands)
Loan balance reported (A)	$	5,366,813		$	1,597,903		$	6,964,716
Loan balance reported plus discount (B)		5,366,813			1,707,388			7,074,201

Allowance for loan losses for non-covered loans (C)		71,814			—			71,814
Discount for credit losses on non-covered loans acquired (D)		—			109,485			109,485

Total allowance for loan losses for non-covered loans plus discount for credit losses on non-covered loans acquired (E)	$	71,814		$	109,485		$	181,299

Allowance for loan losses for non-covered loans to total non-covered loans (C/A)		1.34	%		N/A			1.03	%
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			6.41	%		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			2.56	%


Exhibit No.

2.1		Agreement and Plan of Merger by and among Home ~~Bancshares,~~BancShares, Inc., Centennial Bank, ~~Liberty Bancshares,~~Giant Holdings, Inc., ~~Liberty~~and Landmark Bank, ~~of Arkansas and Acquisition Sub~~N.A., dated ~~June 25, 2013~~November 7, 2016. (incorporated by reference to Exhibit 2.1 of Home BancShares’s Current Report on Form8-K/A filed on ~~June 27, 2013)~~November 10, 2016)

2.2		~~First~~ Amendment to Agreement and Plan of Merger by and among Home ~~Bancshares,~~BancShares, Inc., Centennial Bank, ~~Liberty Bancshares,~~Giant Holdings, Inc., ~~Liberty~~and Landmark Bank, N.A., dated December 7, 2016. (incorporated by reference to Appendix A of Home BancShares’s Registration Statement on FormS-4 (FileNo. 333-214957), as amended)

2.3		Acquisition Agreement By and Between Home BancShares, Inc. and Bank of ~~Arkansas and Acquisition Sub~~Commerce Holdings, Inc., dated ~~July 31, 2013~~December 1, 2016 (incorporated by reference to Exhibit 2.1 of Home BancShares’s Current Report on Form8-K filed on ~~August 2, 2013)~~December 7, 2016)

~~2.3~~ 2.4		Agreement and Plan of Merger by and among Home ~~Bancshares,~~BancShares, Inc., Centennial Bank and ~~Florida Traditions~~Stonegate Bank, dated ~~April 25, 2014 (incorporated by reference to Exhibit 2.1 of Home BancShares’s Current Report onForm 8-K~~ ~~filed on April 28, 2014)~~

~~2.4~~		~~Agreement and Plan of Merger among Home Bancshares, Inc., Centennial Bank, Broward Financial Holdings, Inc., Broward Bank of Commerce and HOMB Acquisition Sub II, Inc. dated July 30, 2014~~March 27, 2017 (incorporated by reference to Exhibit 2.1 of Home BancShares’s Current Report on Form8-K filed on ~~July 31, 2014)~~March 27, 2017)

~~2.5~~		Purchase and Assumption Agreement Between Banco Popular de Puerto Rico and Centennial Bank, dated as of February 18, 2015 (incorporated by reference to Exhibit 2.1 of Home BancShares’s Current Report on~~Form 8-K/A filed~~ ~~on March 4, 2015)~~

~~2.6~~		Purchase and Assumption Agreement all Deposits among Federal Deposit Insurance Corporation, Receiver of Doral Bank. San Juan Puerto Rico, Puerto Rico Federal Deposit Insurance Corporation and Banco Popular de Puerto Rico, dated as of February 27, 2015 (incorporated by reference to Exhibit 10.25 to Banco Popular de Puerto Rico’s Annual Report on Form 10-K for the year ended December 31, 2014, filed by Banco Popular de Puerto Rico on March 2, 2015 (Commission File No. 001-34084))

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