Greetings, ladies and gentlemen. Welcome to the Home Bancshares Incorporated Fourth Quarter 2012 Earnings Call. The purpose of this call is to discuss the information and data provided in the quarterly earnings release issued this morning. The company presenters will begin with prepared remarks, then entertain questions. [Operator Instructions] The company has asked me to remind everyone to refer to their cautionary note regarding forward-looking statements. You will find this note on page 3 of their Form 10-K filed with the SEC in March 2012. [Operator Instructions] This conference is being recorded. [Operator Instructions] It is now my pleasure to turn the call over to our first presenter, Mr. Allison.

Thank you, Amy. Welcome, everyone, to the fourth quarter and year-end conference call for Home Bancshares. The same group is with me today Randy Sims, Randy Mayor, Brian Davis, Kevin Hester and Donna Townsell, our B4 expert has joined us today. The quarter had little noise in it but simply we had a one-time gain that offset some M&A expenses on a onetime loss. It was a great job done by the team for the quarter and for the year. I don’t have a lot of comments today. I'm just going to kind of hit some high points and turn it over to the team and let them report the numbers. But again it was a great year with – I mean we continue to set records through this company and this quarter was no exception with record earnings, record EPS, record margin, record core efficiency ratio and record net interest income. We just continue – they continue to do it. We had a 20% increase in quarterly earnings. Cost of funds continue to decrease. We saw first quarter impact of paying off the Trust Preferred and we'll talk more about Trust Preferred in a little bit. We had continued legacy loan growth. As we said last quarter and the quarter before, we don't know that, that’s going to continue. It's been nice. We had $40-plus million in the third quarter and we had $20-something million -- $26-plus million in this quarter so that was nice. Non-interest expense has been well controlled. The company's doing a great job on the expense side and that resulted in another record quarter. Also for the year, it was record income, record EPS, margin was strong, one of the strongest margins we've had in the while and also a record core efficiency ratio. This team continues to crank those expenses and work on the efficiency ratio. We had about $570 million worth of loan growth this year. About $70 million of that we generated from legacy and about $500 million we bought. But overall it was about a 33% increase in -- 32% I think was what is was, increase in loans, pretty substantial. Had a major drop in funds and again for the year great job on the expense control. Going forward what’s out there to expect. We continue on our goal for Home 250. You can play with the numbers the same as I can play with the numbers when a $0.60 quarter plus the fact we’re going to pay off March 26, 2013, we’ll pay off $20 million to $25 million in additional Trust Preferred. With the acquisitions that we did in Tallahassee and in Tampa there will be marked improvement coming on those operations. There will continue – there'll be some branch closures in Florida. And as you’ll hear from Donna in a little bit, her full scale B4 program is running strong. March and April conversions will result in some FTEs and improve operating expenses. We’ll have a continued focus on acquisitions, on both market transactions as well as FDIC. There’ll probably be several FDIC deals but there may be more market transactions. We’ll continue to focus on those as we have in the past and hope we make the right trade for our shareholders. Net interest income was up 27% for the fourth quarter to $41.3 million. That's the high spot here. Even the month of December was stronger than October, November. You can see the core earnings ramp up. That’s what gets me excited as we go forward into next year with opportunities out there. This resulted in a strong improvement in core income. I think it was 2 or 3 years ago when I saw that happen and we had that bad quarter that we talked about core income revving up, and I see it again right now. So the Florida banks are beginning -- their earnings are beginning to improve nicely. Alabama is doing well and Arkansas, as you well know, was running, I don’t know, way out in the ionosphere so – on the numbers. Anyway that's -- it’s a great year, great quarter and December was better than the quarter. So things look good for going into ‘13. Hope we will pick up another 2 or 3 deals next year and – or excuse me, this year now; pick up 2 or 3 deals this year. And I'm going to turn it over Randy. I didn’t want to steal all the thunder, I just kind of took off, took the numbers. I'll let these guys give you the real numbers. C. Sims: Thanks, Johnny. What a great quarter and a great year. Congratulations to all our employees for a very successful 2012. As Johnny said, the fourth quarter of 2012 was the most profitable quarter in the history of our company. I look back at my notes and as I said in previous calls, we have been able to make that statement for all of the conference calls this year, improvement each and every quarter of the year. This quarter, the company increased its earnings above our previously recorded record earnings by $844,000 for 5.2%. We are very encouraged by this result and there will be more to say on the income numbers. Now there was a lot of activity or noise, as Johnny said, however you want to say it, it all happened in the fourth quarter. First of all, we were able to acquire Heritage Bank with 3 branches in the Tampa area as an FDIC failed bank transaction on November 2. We are very pleased with this addition to our central Florida region. This was a whole bank walk away transaction in which the FDIC retained all non-performing loans in OREO. After the dust settled, we retained $134 million in loans before any discount and $151 in deposits. And as you might recall, last quarter, we announced that we entered into an asset purchase agreement with Premier Bank Holding Company in Tallahassee, as part of a 363 bankruptcy proceeding. I am pleased to announce that as of December 1, 2012 the purchase was complete and the bank is now part of this Centennial family. In this transaction, we retained $167 million before any discount in loans and $237 million in deposits and added 6 branches. We are currently in the process of evaluating those branches and there will savings in the consolidation process. Speaking of which, both of these banks have already started the conversion process to our systems and backroom that will be completed on March 8 for Heritage Bank and April 19 for Premier. As we have said before, we believe that conversion is essential to the process of improving net income growth for these acquisitions. So we immediately began that process. Both of these acquisitions are accretive and we look forward to seeing how well they perform for full quarter in 2013 as well as post conversion as we consolidate the backroom functions. Due to these acquisitions and included in the fourth quarter numbers as Johnny has said was a $5.2 million gain from the Heritage acquisition, along with $5.2 million in merger expenses associated with both Heritage and the Premier mergers. So they kind of offset one another. So a very busy fourth quarter for acquisitions. And I want to add that we are continuing to be active in the hunt for more. We are very busy right now, looking at banks as well as organic growth opportunities for the right strategic addition to our organization. Now let’s get back to income and the key components of these record numbers. First of all, as I said, net income. The fourth quarter net income was $16.9 million or $0.60 diluted earnings per common share, compared to $14.2 million of net income or $0.50 diluted earnings per common share for the same quarter of 2011, an increase of $0.10 per share or 20%. Diluted earnings per common share including intangible amortization for the fourth quarter of 2012 was $0.62 compared to $0.51 diluted earnings per common share, excluding intangible amortization for the same period in 2011. We are really encouraged with these numbers, but when you compare the last 2 years it really puts everything in perspective. Net income for the year 2012 was $63 million, compared to $54.7 million for the year ended 2011. Diluted earnings per share for the year ended 2012 was $2.23 per share, compared to $1.85 per share for 2011, an increase of $0.38 per share or 20.5%. Return on assets or normalized earnings ended at 1.67%, compared to 1.56% at 12/31/11, and our ROA excluding intangible amortization ended at 1.75% as compared to 1.64% at 12/31/11. Core ROA that excludes intangibles provisions, merger expenses and taxes ended at a very strong 2.88%. Our return on average TCE, excluding intangible amortization was 16.4%, as compared to 12/31/11 at 14.57%. As we’ve said throughout the year and emphasized by Johnny, our high performing Arkansas banks continue to produce record numbers and we’re really starting see marked improvement in Florida and the Alabama regions. With the strong Arkansas, it is good to see this happen with the trend of income growth. In fact just based upon internal numbers we are seeing ROAs in both Florida and Alabama in excess of 1% on a year-to-date basis. At the Centennial Bank level and on internal analysis, 54% of all assets are in Arkansas, 6% of assets are in Alabama and 40% of assets are in Florida. Contributing to these great numbers was our ability to continue to control our expenses and improve that throughout the year. We ended the quarter with a 44.4% core efficiency ratio or an improvement of 436 basis points from the same period of the previous year. We continue to be pleased with this. And to tell you a little more about it, I'm very pleased to turn it over to Donna Townsell, our Vice President for Corporate Efficiency and she's going to tell us a little bit about some new programs that we're starting on the revenue side.

Thank you, Randy. Things are starting to rock along. As mentioned, we have experienced record core efficiency ratios for the month and the quarter. Our expenses have mainly been centered around acquisitions with our legacy expenses remaining flat. We have engaged FIS to assist us with potential revenue opportunities like they did in 2008 with the expense items. We'll look at profitability in markets throughout our footprint as well as market share. We actually have our first briefing immediately after this call. We also started a deep dive into the structure of our mortgage department to look for improved efficiencies there. Our legacy operating expenses are down from the third quarter, which led to our improved efficiency ratio and I’m really pleased with that. In a nutshell it’s really pretty simple, revenue was up, legacy expenses were down and that equals improved efficiency. We will continue to explore revenue ideas as you can only put so much control on expenses. We are looking forward to some great opportunities in 2013. C. Sims: Thanks Donna. That’s pretty exciting and we look forward to the improvement due to these efforts in 2013. Now let’s switch to the most important component of our net income: net interest income and margin. Net interest income for the fourth quarter increased 16.9% to $41.3 million from $35.3 million during the fourth quarter of 2011. Net interest margin on a fully taxable basis remained strong and improved to 4.86% versus last quarter of 4.65% and compared to 4.73% in the fourth quarter of 2011. And by the way, the effective yield on the fully taxable equivalent basis on non-covered loans was 6.03% and on covered loans was 7.83%. Covered loans are 14% of our total loan portfolio. The company reported non-interest income for the fourth quarter of $16.2 million, as compared to $12.2 million in the fourth quarter of 2011. Switching to deposits, we ended the quarter at $3.48 billion, compared to $2.86 billion as of December 31, 2011. We continue to eliminate noncustomer time deposits throughout system of branches and we will do the same with our new acquisitions. I will now turn this over to our CFO, Randy Mayor. He’s going to give us a little more color on what we just discussed and after that Randy will pass it to Brain Davis to give us more information on our capital numbers. So let's get started with Randy.

Thanks, Randy. As Randy mentioned, return on assets continued to improve to 1.67% for Q4, versus 1.61% in Q3. The net interest margin improved 21 basis points, primarily due to a change in the average earning asset mix and a 10 basis point decline in yield on the liability side. The earning asset yield increased 12 basis points from 5.23 to 5.35 as approximately $95 million of average earning assets moved out of the short term category that was only earning 20 to 25 basis points. The yields on loans declined slightly from 6.35 to 6.31. However, our average total loans increased to $140 million during the quarter. Average covered loans decline $21.2 million for the quarter. Average non-covered or legacy loans increased $41 million for the quarter and average acquired loans primarily from the Primer and Heritage transactions increased to $120.2 million for the quarter. The yield on interest bank liabilities improved 10 basis points from 0.68 to 0.58 for the quarter with a 7 basis point improvement in the time deposit yield. We also continued our efforts to change our deposit mix. Excluding the Heritage and Premier balances, our ending time deposits declined $115 million while ending non-interest bearing deposits increased $14 million. Looking at non-interest income, we recognized a $5.2 million gain, as Randy mentioned on the Heritage transaction and we incurred $5.2 million in merger expenses related to the Heritage and Premier transactions. In addition to our normal merger-related expenses, we had a large core system contract buyout with the Premier transaction. During the quarter, we received a $463,000 special divided from an investment in private equity venture capital firm that is a onetime occurrence. For the quarter, our service charges increased $171,000 while mortgage income was down $90,000. Insurance commissions and the FDIC indemnification accretion were down $144,000 each. Net OREO gains were up $343,000 from last quarter but they were offset somewhat by the gain on sale of SBA loans declining by $206,000. In the non-interest expense area, salaries and benefits increased approximately $700,000 and data processing almost $200,000, primarily due to the acquisitions. As mentioned earlier we incurred $5.2 million in merger expenses. The other expenses were consistent with Q3 amounts and our core efficiency ratio was below 45%. Overall, it was an excellent quarter and year for the operating earnings of the company and we were able to add some earning assets to the balance sheet with the Heritage and Premier acquisitions. Brian?

Thanks, Randy. During the fourth quarter of 2012, we paid 2 quarterly dividends totaling $7.3 million and bought back $7 million of our stock and still increased our capital by $5.5 million as a result of the strong earnings during the fourth quarter of 2012. For Q4 2012, compared to Q3 2012 our leverage ratio was 10.9%, compared to 11.3%. Tier 1 was 13.9%, compared to 15.6% and the total risk-based capital was 15.2%, compared to 16.9%. Additionally, book value per common share was $18.34, compared to $18.10. Tangible book value per common share was $14.86, compared to $15.01 and the TCE ratio was 10.1%, compared to 11.1%. These decreases were expected as a result of the Heritage and Premier acquisitions completed during the fourth quarter of 2012. Randy?

Thanks, Brian. It was also a very successful quarter on the loan side too. Loan growth and our asset quality metrics have been very good throughout the year with some improvement in already strong numbers each quarter end in 2012. But we also now have 2 new acquisitions. So for the numbers and more information on the asset quality, I'm going to turn it over to our Chief Lending Officer, Kevin Hester.

Thanks, Randy. As has already been mentioned, the Premier and Heritage acquisitions added some noise to what was otherwise a quiet quarter from an asset quality prospective. Our non-covered, non-performing asset ratio increased slightly from 1.14% to 1.30%, as did our non-covered, non-performing loan ratio from 1.09% to 1.17%. However, the increases were due to the 2 acquisitions. Our allowance for loan losses as a percentage of non-covered loans declined slightly from 2.28% to 1.94%. However, if you added the Vision, Premier and Heritage acquisition discounts to the allowance for loan losses, the combined figure would be 5.26% of non-covered loans at year end. Even though the allowance for loan loss coverage ratio declined from 209% to 166%, it still reflects strong continued coverage of our non-covered, nonperforming loans. Non-covered real estate owned increased from $14.9 million to $20.4 million in the fourth quarter. The increase was a result of the Premier acquisition, which served the increase the Florida share up to 40% of the total. Net charge offs were 61 basis points in the fourth quarter, which is just above our average for the 5 previous quarters. In addition to the $228 million in loans net of discount acquired in the Premier and Heritage transactions, we achieved non-covered loan growth of $27 million in the fourth quarter, which is an annualized growth rate of 5%. The loan pipeline is still solid but we are anticipating a few large payoffs in the first quarter. Our legacy loan growth has been spread across the regions which is encouraging. We continue to see our competitors in all of our markets offering low interest rates for long periods of time, which we believe is not the best long-term strategy. As you can see we ended 2012 on a strong note. We acquired a strong lending team to add to our group in Tallahassee and we entered the Tampa market which is a top 20 MSA and is performing well in the recovery. We are excited about 2013 and believe it will be a very productive year. Thanks, Randy.

Thank you, Kevin. Good report. Well, 2 acquisitions in the fourth quarter, more records broken, our asset quality ratios are at strong levels and all regions showing improvement in net income growth. It really was a great year in 2012. But it is now over. We have new goals and here we go into 2013 and we are looking forward to it. I will now turn it back over to our Chairman, Mr. Allison.

Thank you, Randy. I guess you’ve heard the reports, the reports are good from everyone. The company's hitting on all 8 and I don’t know what else to say. It was an excellent year. I’m very proud of this team, I’m proud the hard work that they’ve done. It’s not easy, it’s not an easy environment and we’re getting it done. So Amy, I think we’re ready for Q&A if you're ready.

[Operator Instructions] And our first question comes from Jon Arfstrom at RBC Capital Markets.

Couple questions for you. Maybe, Kevin, you first, but where are you seeing the most competitive loan pricing in terms of the footprint?

I would say it’s probably in our Central Arkansas market. And it's been that way for several quarters in Arkansas and we're seeing it more Florida now too.

Okay. Just curious where you still believe that Florida is the greatest loan growth opportunity for the company at this point?

I believe it is. I mean there are more things going on down there. You've got the recovery. The recession was deeper, so the recovery's going to seem to be better.

Okay. And then, Johnny, maybe question for you in terms of just the Florida returns. I appreciate you guys sharing that you're at 1% or maybe a little better. What do you think is possible in Florida when you see the franchise mature?

That is a good question, Jon, but this bunch always runs, goal was a minimal 150. I think you can see for the year we ran a 158 and for the quarter we ran a 167. So you can see the quarter getting much stronger than the year was. So I don’t see any reason, we don’t get them to a 150 ROA. Actually Alabama is already there. Alabama got there pretty quick and they're running a 150. Randy Sims stays on top of that pretty close. Randy what are you thinking there? C. Sims: Exactly what you said. I mean we've got to get them to a 150 ROA at least. And we're very pleased with what’s going on in Alabama and a lot of that is because of their efficiencies and being able to really produce a good efficiency ratio. The problem that we're going to have in Florida is we continue to spend a lot of money on the special asset side and as we get closer and closer to cleaning up and getting down to the real customers and getting the FDIC loans out of the way, that’s going to really increase and be a really nice return for us as well as them getting back out on the street and really bringing in new business and new loans. So we got a lot of things going, got a lot of levers that can be pulled in Florida and how fast, how quick I don’t know but it is getting better every month.

It’s nice to be spread geographically in some respects, in some respect it's not. But we're seeing lots of opportunities in Florida that we would have never seen in Arkansas. And as Arkansas kind of just slides by, we’re seeing some stuff come out of Florida that looks pretty good.

Okay. And then Johnny, just another question for you. When your phone rang I was envisioning it’s a seller calling you to make a deal. It’s probably not too far from the truth but…

No, it’s probably not far from the truth, you’re exactly right.

Yes. But just how competitive are the acquisitions? I know a year or 2 ago, complain is the wrong word but you were little bit – you were thinking that people were just too competitive and there was too many people with too much money in Florida market. Has your attitude changed at all? Do you feel like maybe the temperature has changed a little bit and you can strike a little better deals than maybe you thought a year or 2 ago?

Absolutely. Although I haven’t seen, recently we haven’t seen one of those blind pools out there in our way. We're seeing we have lots of opportunity because we have the capital to go and play and I don’t think we can get to, nor can we buy, we don’t have enough capital. Maybe asking you all to help raise some sometime to do all the deals that are out there right now. Primarily market deals that guys are trying to bring to you, there are few FDIC assisted deals but there's lots of market deals, it’s kind of a pick them, Jon. I like our position. We got – we're driving the truck and several want to load on.

Our next question comes from David Bishop at Stifel Nicolaus.

Question for you. In terms of the covered loan portfolio as it continues to run down, is there any way to segregate what sort of portion that is stuff that’s toxic, you don’t want to touch, you definitely want to get out of the bank and -- versus stuff that you might be able to rehabilitate and add to core loan growth over time?

I’ll give that one to Kevin.

Yes, we’re going through that bank-by-bank now. Probably this time next quarter I’ll have a better feel for that. But my gut says it’s probably between 1/3 and 1/2 in most of it and then maybe a little more than 1/2 in some of them.

That you’re looking to retain?

Yes. That would be good enough that you'd want to keep and work with going forward.

We’re doing that in Orlando as you speak and should have some numbers by the end of the month and then once from there we’ll move into the Panhandle of Florida and do the Panhandle of Florida and hopefully in the next 4 or 5 months we will have that answer.

Great. And then just a commentary in terms of the overall loan pipeline heading into the quarter, how that compares to last quarter. I think you mentioned there could be a couple pay downs here in the first quarter, maybe some color on those?

Yes, we've got some pretty good sized deals that have sold to somebody else that are going to pay down in the first quarter. At least we anticipate that happening. Sometimes it happens, sometimes it doesn’t. But overall pipeline has been strong and the Senior Executive Loan Committee has been busy. So we're proving quite a bit of stuff, hope it'll -- but it $80 million a year to stay even. So it takes a lot of money just to hold what you got. But overall we've been pleased. I’m still not calling it, David. I've said the last 2 calls that I don’t know that this is for sure, this loan growth. Looks good, makes you feel good, but I’m not sure we’re out of the woods totally on that yet.

Got you. And is Donna still there?

Yes, Donna is here.

You mentioned real quickly, maybe take and look at the mortgage banking side of the business, maybe any specifics you can share there in terms of what you’re thinking of doing?

Sure. We're just planning to try to standardize and streamline their processes increase efficiencies. Back in 2008, we took several groups and did that and the mortgage department was not one of them. So we're just looking to get us where we can close loans faster and focus on selling and get things more efficient.

Our next question comes from Matt Olney at Stephens.

First question for Randy Mayor on the margin. Once again very impressive to see the margin expand in this kind of environment. How should we be thinking about the margin over the next few quarters? I think you've mentioned that the TruPS pay down but including that what should we be thinking about?

Well, I won’t make the statement that Johnny always says. I’m always going to predict it to go down so that it'll stay flat or improve. Some of the improvement this quarter was from the acquisitions coming in. I think we would have been about a 480 without the acquisitions and we ran a 486. So it’s kind of the same old story. We’re trying to improve the liability yields and hold up the loan yields and so far we've been able to do that and continue to improve to the liability yield. I don’t know how much lower we can go on that side but I wouldn’t look for significant change in either direction to be honest.

And remind me details of that TruPS pay down in terms of timing and amount?

It’s $20 million to $25 million and it’s about little short of 4% and the payoff date is March 26. So we’ve had our goal of Home 250. I’m not predicting the second quarter to be a $0.625 quarter but it could be. Things are kind of lining up. If you saw our December compared to our October, November, December was -- revenue was very strong. I’ve just planned with annualized that while ago and it looked really good. So that’s where the core income is building up.

That's encouraging. And then, Kevin, I think you quantified previously the organic loan growth in the fourth quarter x acquisitions. I didn't catch that. Can you give that to me again?

Yes. It was right at $27 million which would annualize to 5%.

Our next question comes from Kevin Reynolds at Wunderlich Securities

And I wanted to I guess maybe talk about or ask about the charge offs provisioning in the fourth quarter. I think they both ticked up and obviously not a problem. But do you think that we’re at a level where we stay here, now that you’ve seen a little bit of loan growth pick up, will you be adding to reserves or can you still bring that down. And I apologize if I missed it. I’ve been completely distracted today with everything that’s been on the tape.

We didn't. The charge offs that we had, we really hadn’t put much reserve in the last couple years and probably had decided to put a little bit in the fourth quarter. But actually the charge offs were specifically reserved. Kevin had those specifically reserved, nearly 95% of them. So it wasn't any – I mean there's not any deterioration and actually asset quality, legacy asset quality improved for the quarter. So the spike up a little bit there was the acquisitions we picked up. Kevin, you get any color on that?

Well, and as far as charge offs go, you’ll continue to see some as we go forward, that are specifically reserved and that’s a function of working through the litigation and getting to a point where you charge them off. So but again those are specifically reserved. So it’s not deterioration. And as Johnny said, legacy asset quality actually improved, both MPAs and MPLs for the quarter.

Okay. And then I guess a question on a different topic. I know you’ve talked a little about acquisitions. Johnny, last quarter you talked about a game changing acquisition, the possibility of something like that. What’s the outlook for something of that nature in 2013? Do you think that you’re…

We’re going about $3 billion with assets and earnings will go to $3.50 a share.

Well, I mean I get the basic math but do you think that you're more likely to do something in 2013 or less? I mean it seems like there's a lot of reports out there that the economy might be firming, that housing might be firming and that seems to be the kind of news that a struggling community banker needs to hear if they want to convince themselves that they’ve got a long life in this business.

I've been on and off of a game-changer deal a couple of times. To say where I am today, it’s more, I feel better about the possibility of that today than I did 45 days ago, but whether it comes to fruition or not, there's still a deal out there that I think would be extremely beneficial to this company and I don’t see it going anywhere. I see it coming here at some point in time. I just don’t know if I'll live that long but I think we'll get the deal sometime. We just hadn’t got it yet. So I want to give that a 15%, 20% chance of that coming to fruition, Kevin.

Okay. And then I guess one last question on the nature of your quarter. You've got a $0.60 number that you put up out there and strong margin, solid loan growth, credit quality still pretty good and you sound somewhat hesitant to go out there and say hey, Home 250 is something that we’re really going to do, we know we can do by a certain period of time. Anything -- what worries you? What causes you to be a little bit conservative when you talk about that?

That’s just my nature. You take $0.60, you can do the math, you pay off the Trust Preferreds and you see what that does for us and the actual – might as well tell, the actual revenue for the month of December was about $16.5 million as compared to about $14 million revenue for the -- I don’t have my sheet right in front of me but it was about $16.5 million versus $14.7 million. Yes, $16.5 million was the revenue, was the total interest income for December versus November at $14.7 million versus October at $14.2 million. So you can see the ramp up here that’s coming, that's happening as a result of these acquisitions. And when you look at interest expense, it doesn’t -- proportionally doesn't go up anywhere near that. So I think that gives us a pretty good edge going forward if you take that and look at those without any one time deals in there. I think that’s the pretty strong number. So should we get there? Absolutely, we should there. I’m just hesitant to -- we have never, when we tell you something, we do it. So I'm just a little reserved, that’s it. But you can see, you can hear the numbers. You annualize that $16 million and you look at it, it is as strong going into the first quarter and the second quarter it’s awful strong. C. Sims: And I might add just one thing, what’s going to really help us too is if you remember those conversions don’t occur until March and April on those 2 new acquisitions. And once those conversions occur, we get to eliminate back room, we get to eliminate in Tallahassee double branches and so a lot of efficiencies are going to happen, not the first quarter but hopefully the second quarter.

Yes, that's correct. So you've got a double whammy coming for you in the second quarter with revenue up and expenses coming down so.

Okay. So then your hesitancy, is that perhaps just your way of like not setting the bar too high so that Randy and everybody else don’t have to go out there and work a heck of a lot harder?

No. They have to go do it. I got a fork, it’s sharp. They have to go do it or I’ll stick them with it. They just got to go do it. It’s just, I mean it ought to be, I can’t say we’re going to do it this year but we ought to have it in our hands, $0.625, we ought to blow through that this year.

The next question comes from Michael Rose of Raymond James.

I hopped on the call a little bit late but just wanted to, with these acquisitions backed in, just talk about your reserve levels at this point. I think if I look at reserves to total loans you're at about 186 and reserve release has been pretty strong now for a while. How should we think about that going forward and kind of what are your accounts saying around maybe trough levels for the reserve, assuming no more acquisitions?

I’m pretty comfortable with where we are. I think everybody's comfortable with our reserve levels at this point. What you’re seeing in the charge offs has been stuff that has been -- 95% of it specifically is what we call specifics tied to a credit. So we assume that it was coming at some point in time. Some of them heal up and some of them don’t but we like that. I mean I don’t know if you heard, asset quality, legacy quality actually improved for the quarter. The spike in the asset quality came from the 2 acquisitions and we'll deal with those. I think Kevin may -- did you sell some of those loans you're looking at selling?

There will be some.

I think Kevin's going to sell some of that packaged loans out of – package up some and sell those. So it’s overall pretty good. I don’t anticipate sticking money in – having to feed loan loss reserve but our goal was to get it down to about 150 eventually and that’s probably where we’re headed.

Okay, that’s helpful. And then just one follow-up with the real estate market showing greater signs of stabilization, particularly in Florida, are you getting more comfortable doing A&D loans like one of your competitor banks that seems to be doing a lot of it?

We would do that, do an A&D loan but no, we're not more comfortable with it. We're just not more comfortable. Somebody that’s been with us a long time, we do some A&D right now with some long-time customers. But new customers doing A&D, we're probably not ready for that yet. I'm not sure where we’re going with this. We've got through the fiscal cliff, now we got this debt crisis out here and I’m not sure where all that's going. So we just almost become pawns of the government here. So I’m just kind of sitting back and waiting to see what comes out of all these discussions on the debt crisis and we don’t cut spending, we're going to raise taxes again. I'm just kind of laying back, I’m just not comfortable yet. It’s not our company though, the company's performing well. It’s the leadership that we're seeing in Washington primarily, both Democrats and Republicans, not just one side.

[Operator Instructions] And our next question comes from the Brian Martin at FIG Partners.

Johnny, can you just talk about, just you talk about the Florida banks and the ROA. I mean what is kind of a realistic goal as far as kind of those are at the 1% type of level, as far as let’s say 2013 or 2014. I mean how quickly did you get to that 150 type of level? I mean it sounds like the expanse cuts are the easiest pickings, if you will, but I guess what’s realistic as far as timing on that?

Well, Brian, we bought the Texas banks years ago when I was with another company. It took me 5 years or us 5 years to get them to a 150 ROA. This bunch is doing a pretty good job. These banks started out with no income and then a 0.2% and a 0.4% and a 0.5% and a 0.7%. We’re at 1% now. Do I expect the Randy Sims team to get them to a 150 ROA in the next 18 months to 2 years? I do. I think that’s really -- I don’t think that’s asking too much out of them. I think they'll get them there. As Donna’s team is working on B4 we’ll eventually get to those banks and go through there. As I've said in the past, there's not enough savings there. Right now we're seeing a little loan growth come out of the Florida market. As Randy Sims says, we’re spending about $2 million a year on special assets. We got a lot of that coming through the pipeline this year, a lot of that litigation that’s been going on out there forever is coming through the pipeline. Those expenses will be, I would assume cut quite a bit in the next period of time. So getting Florida to I think 18 months to max of 2 years is a realistic number to bring that roughly $2 billion worth of assets up to the 150 standards. Randy? Not speaking for him. I’ll let him speak. C. Sims: Well, a lot of it depends upon we continue to buy and then we start over with the new bank and it’s just, you want to make progress each and every month and each and every quarter. I know you guys as investors like to see that progress every quarter. And so far that’s what’s happening, Florida's getting better and better each and every quarter and I don’t see any reason why it won’t continue, but a big key is to get that special asset team down to acceptable levels, and the only way we're going to do that is to get rid of all of these loans and resolve them and get down to the real customers. That’s kind of the pot at the end of the rainbow. But Johnny did say and I agree 100% that next year's a big year, because these things have been in litigation for a long time and it does take a long time in Florida to get it through litigation, but I think we're going to see a lot of things happen this next year.

Okay. And then maybe just a couple questions for Kevin. Kevin, just the specifics on the non-performing’s in the quarter, can you just break out what the legacy non-performings were for the quarter? And maybe just Johnny mentioned something about some loan sales, kind of what the objective is there?

Yes, legacy NPAs dropped about 7 basis points and I think legacy NPLs dropped about 3 basis points. Brian, if you're looking for like the Heritage and the Premier, the non-performing loans for Heritage and Premier were $4.3 million and the NPAs for Heritage and Premier were $6.6 million for a total of $11 million.

Okay. So $11 million total for those 2.

$10.972 million, if you want the exact number.

All right. And then just, Kevin, on the loan sales, I guess what’s the thinking there I guess, or what are your intentions?

Well, these 2 portfolios are not covered. So we don't have the difficulties in dealing with the FDIC on loan sales or note sales. So we will -- where we got it marked, I think we’ve got several million dollars of loans that we can sell and OREO that we can sell in a fairly short amount of time.

Okay. All right. And then just the same question just on the loans and deposits, what was the add from the transactions this quarter versus kind of the legacy trends? And then, maybe just if you talk, Kevin, about the, when you look at 2013, kind of the loan growth, I mean I think Johnny said his expectation is that the greater percentage of loan growth in '13 is Florida versus kind of Arkansas, Alabama. Is that what you're expecting as well? Or I guess is that kind of what you guys had? I just didn’t know if I heard it right.

Well, I think what we’re seeing, we’re seeing opportunities in Florida that, in many cases that we're not seeing in Arkansas, but I mean I think we can have some loan growth in all of our regions. That's what we are seeing in our pipeline, it's spread out throughout the regions. But we are encouraged that we're seeing things happen in Florida.

You asked about the deposits, too. On Premier we added $246 million of deposits and on Heritage we added $220 million of deposits for a total of $466 million. However, some of those deposits have already left us. We did bust the rates on Heritage and so that would naturally cause some of the deposits to leave and we’d want them to leave. And at year end we had $388 million of deposits on those 2 acquisitions left.

Okay. $388 million in the numbers. And then on the loans, Bri, do you have that number what was added from both of them?

Yes, this is what we had on day one and it's about $3 million difference and probably lower. But for Premier, after the credit mark and the rate mark we had $138 million and on Heritage we had $93 million after the rate and credit mark. And we’re not having to allocate really any – we're not allocating any AOL to those because we have about $70 million of mark related to those 2 acquisitions. So the AOL is not going to have to support those 2 acquisitions with that $70 million mark on them.

Right, okay. Perfect And then maybe just the last one for Johnny. It's just kind of from an M&A perspective, Johnny, is there a -- I guess what size deal would you, I guess, be willing to contemplate at this point as far as size, being comfortable with the capital levels are and whatnot? How big a deal could you do if it was available?

Probably $3 billion, little less than $3 billion, somewhere in that range, probably be about the comfort level for the company which would get us to about $7 billion and we'd probably sit there for a while, see how good we are. So I think we could do $3 billion. That'd stretch our capital a little bit, but we're generating lots of capital right now. So if it were a game changer deal, we'd look at something like that.

[Operator Instructions] And our next question comes from the Derek Hewett at KBW.

Circling back to the December revenue of $16.5 million, I think you said; it seems like that would imply an even stronger margin than the 486 figure, kind of as we head into the first quarter result. So I mean do you guys happen to have a December margin handy? C. Sims: That's 490.

490?

December was 490, if I recall. Yes, 490; December was 490.

Okay, great. And just in terms of yields on new loan originations; are you still able to most of the time get Johnny Prime at this point in the cycle or is that…

Well, no, we don't -- we haven't come off of Johnny Prime, but it still takes Randy Sims now to sign-off below Johnny Prime. So we're signing more than we used to sign, but we take every loan one at a time, is it a core relationship, does it mean something to the company, is it a one-timer, is it somebody just passing through town and why did they call on us. And we take every loan one-on-one and that's how we've been able to continue to do that. We'll come off of a Johnny Prime, but we want a relationship with that customer or we're not going to do that. So obviously we've been -- it's worked thus far with what we're doing and we'll continue to do that in the future. We're writing some 5s. The last call I said we hadn't written anything in the high 4s. I think I saw something approved the other day. I wasn't on the call. I think it got approved in the high 4s. But I can't spell 4. So I'm not sure that that's going to fly, because I don't know how to spell it. I can spell 5. Now I learned how to spell 5 recently.

Okay, great. And my last question is kind of at this point in the cycle you guys have done now an FDIC deal without loss share. Is that kind of how you would like to do FDIC deals going forward at this point because you just don't want to have to deal with the government indemnity asset or was that just a kind of a one-off type transaction?

It is kind of nice not to have to deal with it but it seems like that’s the way they want us to go too because in the last couple we've looked at it, it appears that they value the problem assets better than we do. So it seems to work out that our bid looks better without those.

If we can get them to take the problem loans and the pricing is right, then it's a pretty good deal. But outside of that having the guarantee is not out of line and we will still go after that.

I think we've got -- if you see -- I mean, Brian, our marks on these 2 deals are like $70 million marks on these deals. So if just to be as conservative as this bunch is, hopefully those marks are better than that and since we don’t – it's not an FDIC indemnity deal, we could bring some of that to bottom line over a period of time.

At this time we show no further questions. Would you like to make any closing remarks?

I just want to tell everybody thanks for your support. I think 2013 will be an exciting year. I think we'll hit our goals that we lined out for the company. I don’t see any reason why that won't happen and I guess we'll talk to you in 90 days. Anybody else got anything to say, any other comments? Tracy French and Bob Birch have joined us here who run -- Tracy, got any comments on what's going on in Florida?

Well, I was listening to it driving over a while ago. So we need to probably just go to work.

Okay, well, Bob, any comments?

We’re excited to be in the Tampa market. I think that’s going to give us some future opportunities. As commented earlier, it is one of the top markets in country and we’re excited about being there.

That's a great point. Okay, anybody else? Talk to you in 90 days. Thanks.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.