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Regulatory Matters
 12 Months Ended
Dec. 31, 2023
Regulatory Matters [Abstract]  
Regulatory Matters Regulatory Matters
The Bank is subject to a legal limitation on dividends that can be paid to the parent company without prior approval of the applicable regulatory agencies. Arkansas bank regulators have specified that the maximum dividend limit state banks may pay to the parent company without prior approval is 75% of the current year earnings plus 75% of the retained net earnings of the preceding year. Since the Bank is also under supervision of the Federal Reserve, it is further limited if the total of all dividends declared in any calendar year by the Bank exceeds the Bank’s net profits to date for that year combined with its retained net profits for the preceding two years. During 2023, the Company requested approximately $328.9 million in regular dividends from its banking subsidiary.
The Company’s banking subsidiary is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s consolidated financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company must meet specific capital guidelines that involve quantitative measures of the Company’s assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. The Company’s capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. Furthermore, the Company’s regulators could require adjustments to regulatory capital not reflected in the consolidated financial statements.
Quantitative measures established by regulation to ensure capital adequacy require the Company to maintain minimum amounts and ratios of total, common equity Tier 1 ("CET1") and Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined) and of Tier 1 capital (as defined) to average assets (as defined). Management believes that, as of December 31, 2023, the Company meets all capital adequacy requirements to which it is subject.
On December 31, 2018, the federal banking agencies issued a joint final rule to revise their regulatory capital rules to permit bank holding companies and banks to phase-in, for regulatory capital purposes, the day-one impact of the new CECL accounting rule on retained earnings over a period of three years. As part of its response to the impact of COVID-19, on March 27, 2020, the federal banking regulatory agencies issued an interim final rule that provided the option to temporarily delay certain effects of CECL on regulatory capital for two years, followed by a three-year transition period. The interim final rule allows bank holding companies and banks to delay for two years 100% of the day-one impact of adopting CECL and 25% of the cumulative change in the reported allowance for credit losses since adopting CECL. The Company elected to adopt the interim final rule, which is reflected in the risk-based capital ratios presented below.
Basel III became effective for the Company and its bank subsidiary on January 1, 2015. Basel III amended the prompt corrective action rules to incorporate a CET1 capital requirement and to raise the capital requirements for certain capital categories. In order to be adequately capitalized for purposes of the prompt corrective action rules, a banking organization is required to have at least a 4.5% CET1 risk-based capital ratio, a 4% Tier 1 leverage ratio, a 6% Tier 1 risk-based capital ratio and an 8% total risk-based capital ratio.
The Federal Reserve Board’s risk-based capital guidelines include the definitions for (1) a well-capitalized institution, (2) an adequately-capitalized institution, and (3) an undercapitalized institution. Under Basel III, the criteria for a well-capitalized institution are now: a 6.5% CET1 risk-based capital ratio, a 5% Tier 1 leverage ratio, an 8% Tier 1 risk-based capital ratio, and a 10% total risk-based capital ratio. As of December 31, 2023, the Bank met the capital standards for a well-capitalized institution. The Company’s CET1 risk-based capital ratio, Tier 1 leverage ratio, Tier 1 risk-based capital ratio, and total risk-based capital ratio were 14.15%, 12.44%, 14.15%, and 17.79%, respectively, as of December 31, 2023.
The Company’s actual capital amounts and ratios along with the Company’s bank subsidiary are presented in the following table.
ActualMinimum Capital Requirement –Basel IIIMinimum To Be Well-Capitalized Under Prompt Corrective Action Provision
AmountRatioAmountRatioAmountRatio
(Dollars in thousands)
As of December 31, 2023
    
Common equity Tier 1 capital ratios:    
Home BancShares$2,609,823 14.15 %$1,290,867 7.00 %N/AN/A
Centennial Bank2,495,303 13.60 1,284,347 7.00 1,192,608 6.50 
Leverage ratios:
Home BancShares$2,609,823 12.44 %$839,271 4.00 %N/AN/A
Centennial Bank2,495,303 11.92 837,350 4.00 1,046,688 5.00 
Tier 1 capital ratios:
Home BancShares$2,609,823 14.15 %$1,567,482 8.50 %N/AN/A
Centennial Bank2,495,303 13.60 1,559,564 8.50 1,467,825 8.00 
Total risk-based capital ratios:
Home BancShares$3,281,136 17.79 %$1,936,301 10.50 %N/AN/A
Centennial Bank2,725,909 14.85 1,927,410 10.50 1,835,629 10.00 
 
As of December 31, 2022
Common equity Tier 1 capital ratios:
Home BancShares$2,399,919 12.91 %$1,300,831 7.00 %N/AN/A
Centennial Bank2,408,756 13.00 1,297,352 7.00 1,204,684 6.50 
Leverage ratios:
Home BancShares$2,399,919 10.86 %$883,664 4.00 %N/AN/A
Centennial Bank2,408,756 10.93 881,464 4.00 1,101,831 5.00 
Tier 1 capital ratios:
Home BancShares$2,399,919 12.91 %$1,579,580 8.50 %N/AN/A
Centennial Bank2,408,756 13.00 1,575,356 8.50 1,482,688 8.00 
Total risk-based capital ratios:
Home BancShares$3,073,455 16.54 %$1,951,246 10.50 %N/AN/A
Centennial Bank2,640,992 14.25 1,946,021 10.50 1,853,354 10.00