John Allison - Chairman Randy Sims - CEO Randy Mayor - Treasurer and CFO Donna Townsell - VP, Corporate Efficiencies Brian Davis - Chief Accounting Officer and Investor Relations Officer Kevin Hester - Chief Lending Officer

Jon Arfstrom - RBC Capital Markets Michael Rose - Raymond James Matt Olney - Stephens Andy Stock – Maryland Capital Brian Martin - FIG Partners Kevin Reynolds – Wunderlich Securities Joe Fenech - Sandler O’Neill

Greetings, ladies and gentlemen. Welcome to the Home BancShares Incorporated Second Quarter 2013 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 three of their Form 10-K filed with the SEC in March 2013. At this time, all participants are in a listen-only mode, and 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 to Home BancShares’ second quarter earnings release and conference call. With me today are the two Randy, Sims and Mayor; Donna Townsell, Brian Davis, and Kevin Hester, and you will be hearing from all of them This is really been a busy quarter for our team. Not only to maintain our strong and expected performance, but along with the announcement of the Liberty transaction which add an additional $2.9 billion worth of assets. Having worked on the Liberty transaction for 10 years, I wouldn't real sure it was going to come to fruition we continue to work on other opportunities, with Florida opportunities in Arkansas I think I told you at the end of last conference call that we were leaving to go top of the seven banks in Florida and we did and we found some really great opportunities there, may be we’ll get back to those at some time. I wasn't sure the Liberty deals was going to close until it happened, it's kind of like of a fading girlfriend that I had years ago, she kind of fade in and fade out, and this one would get hot and then it disappears so I'm just going to kind of cover some of the – okay that's about the good examples I could come up with. No more, -- I am just going to hit few highlights and Randy, Sims and the team will get more specific on the numbers, but we had record ROA this quarter and also record core ROA, the numbers are really pretty nice. Efficiency ratio was extremely strong and we had improvement in our legacy asset quality, actually we had asset quality numbers ticked up a little bit, but that's as a result of Tallahassee and Tampa, the two deals we did and that is to be expected as we walk through there, had a little loan growth showed a little bit. End of period was much stronger than the average, but Kevin will talk about that in some time, they also have a pretty strong pipeline. Interest income remained strong and the margin as you will see remained very strong. And return on tangible common equity was again strong, and earnings of $17 million or $0.31 a share. Liberty, talk a little bit about the Liberty deal. It was a great fit for Home. They have great people, operating in great markets, in great facilities and truly is a game changer deal for Home BancShares. Potentially it’s Home's best deal ever, it depends on some banks, how long it takes to bring it to our standard and did we miss anything on the asset quality side at Liberty, hopefully we didn't. But I told you last quarter that we had more opportunities and we had time and money and again some of those deals are still out there. Maybe Randy Mayor said, Johnny, you waited eight days you brought another one. But that's not really true. I just – we're looking at some opportunities and run some numbers and my job is to focus on those deals that make the more sense for us long term. We didn't banish stock this quarter because we were saving our money for a rainy day and looks like we found a rainy day. It looks like a found a deal, and I think I told you last time we’re going to keep our powder dry and we did do that. And we will use our liquidity to help with this transaction and Brian Davis will talk more about the numbers today on that. On the dividend side, we have fallen – our stock run up a little below a 1.5% kind of semi-target that we have. We are not going to catch that up now, I don’t think, because we need our money for these transactions. It's our intention to pay off $52.5 million of small business lending at Liberty once that transaction closes, and $30 million in cash, so we're kind of sitting on the cash right now. But all and all it's a great quarter, and great opportunity with the Liberty Deal, it kind again it was the game changer deal that I have looked at for some time. I'll turn it over to our CEO, Randy Sims for a better look at the numbers. Randy Sims : Thank you, Johnny. Well, as you said good quarter and a very exciting addition to Home BancShares. Once again this was the most profitable quarter in the history of our company with an ROA of 1.71% that resulted in an increase in earnings of $111,000 or 0.6% above our previously reported earnings. Nine consecutive quarters of record earnings. And as Johnny has already discussed the big news of acquisition of Liberty Bank shares. Upon completion of the transaction, the combined company will have approximately $7.1 billion in total assets, $5.6 billion in deposits, $4.5 billion in loans, a 151 branches, a 186 ATM and 1500 employees across Arkansas, Florida and Southern Alabama. The merger will significantly increase the company's deposit market share making it the second largest bank holding company, headquartered in Arkansas. And there is some more. It is the largest in-state banking transaction in the history of Arkansas and the combination will double the number of Arkansas branches or Centennial Bank from 46 to 92 locations. Centennial strength is Central and North Central Arkansas, while Liberty's presence is Northeast, Northwest and Western Arkansas. So the association of Liberty was Centennial is the perfect fit provide more convenient locations to our Arkansas customers. We are on a fast track to get the transaction completed, close and converted before the end of the year, if it all goes to plan. Yet to be completed is the regulatory and shareholder approval. And then of course there is the back room and IT conversions. However, as you’ve heard us say this before we believe the conversion is essential to the process of improving net income growth. So we’re going to waste no time in trying to get it done. And in the case of Liberty, we are very optimistic the deal will be completed and approved and we've already started the planning process for the conversions. While, this acquisition is the largest in Centennial history, there are some distinct advantages to both institutions. And that the merger is of two similar sized Arkansas based company with comparable cultures and history, with very little overlap of market as Johnny talked about. In fact, both Liberty and Centennial initially met together to discuss best practices and processes during their early years of start up as banking organizations. Both institutions are on the same FISIT system. This will eliminate a great deal of staff training that normally occurs with other conversions. Many other supporting systems and IT architecture are similar. For example, we both used the same third party window for many other ancillary software. Branch operations and processes are very similar and both institutions have instituted many of the same protocols to the use of the same systems. . : Kind of switch and another news. I would like to announce that on July 1st, we opened a new branch in Seagrove, Florida. Right in the middle of the very busy area known as 30A. As you are not familiar with this it is the stretch of beach coastline that starts just outside the Sandestin and runs down through residential condo and retail establishments. This positions us with a real presence in the most active area of the Panhandle. In addition, this past Monday we opened a new branch facility in Destin, moving from a location of strip shopping center to a standalone branch bank right on Highway 98 in a great location. Continue with more organic growth if you recall, I announced last quarter of a new loan production office that was open in the Pensacola, Florida. I stated that we had hired a local team of experienced long time bankers. I am pleased to be able to announce the loan production office located in downtown Pensacola is now a full service branch, and we have been having very good success with new accounts and a healthy loan pipeline in addition to over $8 million in loans already on the books. And Pensacola is expanding with a second branch scheduled to open on July 22nd. We're very pleased with the initial result of our new presence in this town. : Diluted earnings per common share excluding intangible amortization for the second quarter of 2013 was $0.32 compared to $0.28 diluted earnings per common share, again excluding intangible amortization which is split adjusted for the same period in 2012. As stated earlier return on assets ended at 1.71% compared to 1.53% at 6/30/12, our ROA excluding intangible amortization ended at 1.80% as compared to 1.61% for the same quarter in 2012. Core ROA again a record as Johnny said that excludes intangible provision, merger expenses and taxes ended at 2.93%. Our return on average TCE excluding intangible amortization was 16.65% as compared to 16.05% for the same quarter in 2012. Our Arkansas banks continue to produce high performance results and we’re very pleased with the progress from Florida and especially Alabama. In fact, just based upon internal numbers, and internal numbers alone, we’re seeing ROA from Florida in excess of 1.2% and Alabama in excess of 1.60% on a year-to-date basis. At the Centennial Bank level and on an internal analysis, 50% of all assets are in Arkansas, 5% of assets are in Alabama, and 45% of the assets are in Florida. Contributing to these numbers was our ability to continue to control our expenses and improve throughout the year. We ended the quarter with a 45% efficiency ratio or improvement of 124 basis points from the same period of the previous year. We continue to be pleased with our efficiency ratio. In fact, I am going to turn it over to Donna Townsell, our VP for Corporate Efficiency to give us a little more information on it. Donna?

Thank you, Randy. As I mentioned last quarter, we had six different internal teams that continue to focus on process improvement and cost saving ideas. They are about 50% finished with their list of 190 action items, and it seems also that the regions have almost created an internal competition to see who can report the best efficiency ratio each month. And that is evident by our quarter end number of 45%. A job well done by all. We will work to complete our open action items while the Liberty transaction gets closed and converted. Once that is complete, we will be then in a place to review opportunity. Liberty is running about 58% efficiency ratio. If we can get into low or sub 50 we are looking at approximately $10.9 million in savings. So while it is too early to define any specific efficiencies regarding Liberty transaction, we're excited about the opportunity and we will be ready to go when the time is right. Last quarter, I also mentioned exploring ideas on revenue generation. We will probably not make any big moves on that front until we convert Liberty. They have some good products and services, and we have some good products and services. So it makes good sense to look at our collective offering and see what improvements we should make as a $7 billion organization. So we will likely hold that initiative for 2014. Randy?

Thanks, Donna. Switching to deposits, we ended the quarter at $3.33 billion compared $3.46 billion as of March 31st, 2013. We continued to eliminate non customer time deposits throughout the system or branches, and we will do the same with our new acquisitions. Time deposits represented 36.8% of total deposits as of the first quarter ended 2012. At the end of this quarter, it was 25.8% and we still have a little work to be done with our Tampa and Tallahassee acquisitions. I will switch again to the most important component of our net income, net interest income, and margin and non-interest expense. And who better then to tell us about that than our CFO, Randy Mayor. After that he will pass it to Brian Davis to give us some information on our capital. So let's go to Randy Mayor.

Thanks, Randy. As mentioned our ROA remained strong for the quarter improving slightly from 1.70% to 1.71%. Our core efficiency also improved 63 basis points from 46.39% to 45.76%. Net interest income increased slightly in the quarter along with our net interest margin which improved 3 basis points from 5.15% to 5.18%. We did have some additional accretion income, a $493,000 for the quarter due to the closing out of approved loans associated with the Key West Bank acquisitions. The (inaudible) adjusted for this would have been 5.12%. The yield on earnings assets declined 4 basis points from 5.58% to 5.54% while the yield on interest bearing liabilities improved 7 basis point from 0.52% to 0.45%. Yield on our non-covered loans declined from 6.11% to 6.04% while the yield on covered loans increased from 10.3% to 10.78%. Yield on time deposits continue to improve declining 7 basis point from 0.69% to 0.62%. The average balance for non-covered loans increased to approximately $6.5 million for the quarter while ending balances increased almost $30 million. The average in balance recovered loan decreased approximately$28 million for the quarter. Non-interest income improved $780,000 with service charges increasing 379,000 and mortgage lending income improving $247,000. Insurance commissions were down $235,000 which was offset somewhat by $231,000 return on venture capital investment. We also saw gains of $379,000 on the sale of two branches in Tallahassee area and an increase in the gain on sale of OREO of $355,000. In the second quarter, we had $111,000 gain on sales securities. Increasing of FDIC indemnification assets reduced our non-interest income by $291,000 more in Q2 than in Q1 with $394,000 related to the Key West approval mentioned above. Also, if you recall in Q1, we received $326,000 debt that's related to a (inaudible) policy. In the non-interest expense categories we saw salary benefits remained consistent, while occupancy and equipment increased $300,000 which resulted by reduction in data processing expenses of $279,000. Related to the lower processing cost due to the conversion of the Premier Heritage acquisition. Other expenses overall remained consistent despite some changes within the particular categories. Advertising expense was down $573,000 for the quarter and the reduction was offset by increased expenses in several of the other categories associated with the addition of Premier and Heritage. With the two-for-one stock split effective in Q2, we kind of had to retrain ourselves and thinking about EPS, but it also remain consistent at $0.31 per share for the quarter. With that, I'll turn it over Brian. Brian Davis : Thanks, Randy. During the second quarter of 2013, we paid out dividends of $4.2 million and grew retained earnings by $13.4 million. For Q2 of 2013, our Tier 1 capital was $436.5 million, total risk-based capital was $475.4 million and risk related assets were $3.1 billion. As a result, the leverage ratio was 10.78% compared to 10.37% in the previous quarter. Tier 1 capital was 14.04% compared to 13.78% at 3/31 and the total risk base capital was 15.29% compared to 15.04% at 3/31. Additionally, during the second quarter of 2013, we completed our two-for-one stock split as such book value per common share was $9.49 compared to $9.40 at 3/31, tangible book value per common share was $7.78 compared to $7.67 at 3/31 and the TCE ratio was 10.9% compared to 10.5% at 3/31. Randy? Randy Sims : Thanks, Brian. Last on the list today is loans, with both the Premier and Heritage acquisitions, our asset quality metrics moved up a little, but we continued to post very strong numbers, and the good news is the very healthy loan pipeline going into the third quarter. So with that I will turn it over to our Chief Lending Officer, Kevin Hester, who will give you all the details. Kevin?

Thanks, Randy. I appreciate the opportunity to discuss our efforts in the lending area in the second quarter. Our non-covered non-performing asset ratio increased slightly from 1.21% to 1.30% as did our non-covered non-performing loan ratio from 1.12% to 1.33%. These increases were completely due to changes in the two most recent loan portfolios acquired. Most of the issues came from the Heritage acquisitions in Tampa where maturities and changes in servicing philosophy have led to an increase in non- performance. This was not unexpected and has been experienced in most of our failed acquisitions. We are aggressively addressing each situation and we anticipate an improvement in this area over the next couple of quarters. Our allowance for loan losses as a percentage of non-covered loans declined slightly from 1.83% to 1.73%, however if you add a division Premier and Heritage acquisitions discounts to be allowance for loan losses, the combined figure would be 4.99% of non-covered loans at June 30, 2013. Non-covered real estate owned decreased from $18.9 million to $16.0 million in this quarter, the share related to Arkansas properties increased from 65% to 67% on a linked quarter basis. Net charge-offs were 45 basis points in the second quarter, which is very close to our average for the four previous quarters. We were able to generate a net increase in non-covered loans in the second quarter of $30 million, which equate to an annualized growth rate of 5%. This means within the three of the last four quarters, we've been able to generate non-covered loan growth of 5% or more an annualized basis. We are encouraged by this trend and our loan pipeline is as strong today as it was in late 2012. One issue that we continue to face is seeing our loan approval shop to other lenders who do not share our pricing discipline. We're remaining diligent and attempting to achieve loan growth without severely impacting our margin. Secondary mortgage lending is particularly strong in 2013 with close loans at 33% over the same period in 2012 which itself was a record year for our bank. While the recent uptick in rates could tamper that somewhat, the improved coastal markets in Florida are providing a better than average level of purchases. This improves our probability of sustaining strong mortgage results into the latter periods of this interest rate cycle. On the acquisition front, we are beginning to process, the upcoming Liberty transaction, we will be working with the lenders and staff over the next quarter to prepare for the anticipated closing. We're excited about this opportunity to combine our successful lending efforts. With that Randy, I will turn it back over to you.

Thanks, Kevin. This is really shaping up to be a great year for Home BancShares. Record income for the ninth consecutive quarter, branches opening and of course the Liberty acquisitions that will take us to over %7 billion in assets. We're very excited about this opportunity of adding a great banking organization to very talented bankers to the Home BancShares' family. And with that I'll turn it back over to our Chairman, Mr. Allison, but before I do I would like to say that the closing on Liberty is going to coincide with our 15th birthday as an organization, and I just want to thank you Mr. Allison for your vision and where you are taking us and wow $7 billion, who would ever think that out of Conway, Arkansas. John Allison : Thank you. We really didn't say, did we Randy?

No, sir, we didn't John Allison : No. We are a little small $300 or $400 million bank in Conway, but in came the opportunities. So congrats to all, so Amy I think we are ready for Q&A. Jon Arfstrom - RBC Capital Markets: Thanks, good afternoon everyone. John Allison : Hi, Jon. Jon Arfstrom - RBC Capital Markets: Okay. Couple of questions but you know you've all touched on Liberty and how excited you are. It has been few weeks since the announcement. I am just wondering how is it going so far? Any fall out, any positive surprises just some more details would help. John Allison : Yes, thanks. Actually in our early stages it is appears to be going very well. We have file and support and Liberty team really stepped up above and beyond, being a private company not familiar with all the requirements of a public company, but we are able to get it filed in two and half weeks, very proud of our team and their team. We will take this with a deliberate process and use the best practices regardless who are the people are or whether it’s Liberty's practice or our practice. No, I think I have said earlier we don't tend to slash and burn, but attrition can’t help us along. Remember, Liberty is really a good bank and it's the largest one we've ever done, so we've kind of take our time as we go through this. And the completion of the mergers continues to depend upon approvals as you all know and while I appreciate the faith of the market we still have to close this deal and then convert it. We are schedule for late December, early December for conversion day and if we miss that due to an FIS blackout due to Christmas and end of the year accounting, that will cost the company millions of dollar because we won't be able to get it done until late of first quarter or early to fourth quarter. So we are pushing hard for that December date, hopefully we can get it done. Actually, I think the stocks have gotten a little ahead of itself, but don't get me wrong, this is a great deal, and I am not throwing water on the burning flame, but sometimes I think you guys have more confidence than we have in our sales, as expected if the investors would lock this deal then we would probably see some upside in the stock, but I didn't really think we have (inaudible) much. I really don't like to getting that far ahead, but we will get it fixed over a period of time and to answer your question is - overall it's really good and I don't think we have had any, Randy Sims any surprises that positive or negative other than the qualities of the people is better than we do, is good just better than we saw.

Yes, sir. I have been to all 49 branches as of yesterday and very surprised with the talent of the people, and very nice branches, in great locations so pretty high on math but initially we are just getting started and we got a lot of dates to make, we've had initial very good success in getting the S-4 as quick as we did but as you said we got to make that December 6 conversion day which means we got to get regulatory approvals, we got to get SEC to sign off on the joint proxy, we’ve got to have shareholder meeting, and if we miss it, it is going to fall over until March because of processors and end of the year and just the timing of it. So we don't want to leave money on the table and we are working as hard we can to get there but in all honesty that could happen. But right now things look great. I hope I balance that. Jon? Jon Arfstrom - RBC Capital Markets: Yes. That's helpful. So plan A is to try to get it work, try to get it done on-time; plan B is we just I guess you are warning us and saying we got to be a little bit cautious with some of our assumptions. John Allison : I think that's true. We want to get it and get it done as quick as we can as Randy Mayor said in his eight days for I brought him another deal to look at so… Jon Arfstrom - RBC Capital Markets: If you like I want to put my kids on time out, you kind of sit in the corner you can't do anything. John Allison : I will fly. They don't let me fly. Jon Arfstrom - RBC Capital Markets: Just Kevin maybe a question for you. Looks like it's commercial in terms of your growth, it's commercial and construction driven, can you may be walk through the characteristics and the geographies of where you are seeing some of that strength?

The top line is we are looking at just a little bit for the meeting, it's about 50:50 between Arkansas and Florida, you know it's a mixture in Florida, it's money coming out, it's kind of being on the side lines and you’ve got growth in construction going on down there. In Arkansas, moving things around from other places in some cases, but it's a mixture, it is real estate related and it is in both Arkansas and Florida Jon Arfstrom - RBC Capital Markets: Okay, all right, thank you.

Our next question comes from Michael Rose of Raymond James. Michael Rose - Raymond James: Hey, good afternoon guys, how are you? John Allison : Fine, Michael, How are you doing? Michael Rose - Raymond James: Good. Hey, I think this question be right for Randy Mayor. Just want to get a sense on the margins, is it correct that you mentioned there is $493,000 from the close out of pool, if I do the math looks like that add 5 basis points to the margin this quarter. Can we just kind of get an update on the remaining accretion and what the kind of core NIM looks like and what it is quarter-to-quarter versus the reported NIM? And then how do you think the Liberty deal could impact the margin on a go forward basis? Thanks. Randy Mayor : Sure. Yes that was about $500,000 that did add into there and bumped up our yield somewhat. We continue – if you take that out I think we had on non - covered 604 which was down from 611. We continue to see some of the pricing pressures as Kevin says especially in Arkansas when we shifted loans around. So and on the – as far as the deposits side goes we had some good improvement there, but I don't know that we can much farther. I know that Johnny is going in Feb and in there for a long time, but I don't see much more room on the liability side to improve that. Our trust we paid them off and that did help us somewhat this quarter. But I would expect that we continue to have some pressure on the margin as we move forward here just from – we don't have much room on the liability side to improve that in the loan competition rate on the assets. John Allison : And this is Johnny. We are still trying to take one at a time and we are not throwing the credit cards out. So we are fighting that battle, but we fight it every day and there is you would think that with tenure rates jumping the most jumped in, the fact is they jumped in 26 years somebody would recognize the fact we probably going to have higher rates and may be sanity will return to the market particularly in Arkansas. I suspect that's going to happen here before long probably in the next 59 days. But we still we get a lot of pressure and what do you say Randy would have been down five, what do you say?

Yes absolutely and actually been down 3 basis. John Allison : 3 basis points so we have been down. So good question and it is a battle and we are fighting it. Michael Rose - Raymond James: Okay. That's good take away to my follow up. Looks like mortgage income quarter-to-quarter was stronger than I would have anticipated, with that rising rates, can you comment there? And then also may be why insurance income was down quarter-to-quarter as well? Thanks.

From a mortgage standpoint we are especially in the Florida market areas where things are picking back up and you’ve got a lot of construction and a lot of purchase activities still taking place so I think that's probably the better fit of our mortgage group, our mix purchase versus refi has historically been better than the market so I think the more people we are putting down, the Panhandle continuous to be that way. John Allison : That was what I was going to add. We have beefed up our mortgage team especially in the Florida market and I think we are starting to see some of those results from additional hires. Michael Rose - Raymond James: On the insurance question. Typically, the first quarter is a strong quarter for the insurance company with annual renewals coming in. So, that's nothing unusual. John Allison : Same as last year Michael. Michael Rose - Raymond James: Great, thanks for taking my questions.

All right, thank you

Our next question comes from Matt Olney of Stephens. Matt Olney - Stephens: Hey, guys, good afternoon. John Allison : Hi, Matt Matt Olney - Stephens: Hey, on the expense side, can you remind me did the second quarter get a full quarter benefit from those conversions of Heritage and Premier? I can't recall.

Not a full quarter, about two months’ worth or may be not even quite two months’ worth in it but yes of close to two months’ worth, we've closed that up, April 20 is I believe that our conversion date there. Matt Olney - Stephens: And then Randy what about these branch closings that you talked about in the press release. Would those spread throughout the quarter or they weighted on one side of the quarter or the other.

They both closes at the very end of the quarter Matt Olney - Stephens: Okay. And then sort of follow up I guess for Johnny, the ROA around 1.70 is one of the top for all the banks in the country– I know you are very proud keeping a ROA very high, can you talk about the challenge and opportunity of returning that ROA to 1.70 post Liberty, once you get everything combined. John Allison : Well, I think our initial goal is to move Liberty to 1.50 I think the banks being run about 0.86 and you kind of take it in increments and take in steps and it didn't all happen overnight and I might let Donna talk about what are our plans are there. But we have to get our culture in, we have to make the changes, we have to clean up, streamline the balance sheet, there is a lot of things that need to be done. We will payout the SBLF pretty quick and I’ve got about $56 million in the trust preferred that we will start whacking away at. And some pretty half priced better home loan bonds, that some lower but mix is pretty good but they got some high priced better home loans bonds, will start whacking away at and then would us kind of grab the low hanging fruit and start improving it. Do that – you know what the choice is that it's going to take a while; it's not going to be overnight. If the pressure gets off the margin side, which I hope it does and expected to do in the next quarter or two then I believe that this team will – I am not going to be satisfied with the 1.50 as you can imagine or 1.70 coming out of Liberty. We ought to be able to leverage our infrastructure in Arkansas do better than that. But that will take a while, if it took us a while to get to 1% to 1.25 to 1.50 as we took home as they went through their process to getting there, it is going to be, it's going to be tough process to get there. You will see some pretty quick savings coming out of Liberty and then there will be harder to get over a period of time. And I think I guess Donna you’ll organize your teams in there the same as you getting comment on.

Well, I can say we got to get it converted first. Then things will go and look at that we have implemented here are staffing model, timing, motion studies, making sure that we did those things efficient as well as processes. We have standardized and centralized about everything we can. So that's where we are watching, continue to look forward. They may have some things and practices that we don't do, so what we want to do is just kind of throw them all on the table, their products, their services and processes against ours and make sure that we can come together as a new organization which is the largest one we've done. So, we do anticipate it to take a little time. John Allison : David Carter is going to be running that arm for the company and he has our culture actually that the real operating guy probably the question should go to Randy Sims, he is the real operating guy, after we signed with Liberty I sent him a text, I said well (inaudible) the car, your turn now.

Well, I think I would just reiterate what I have said earlier. When you add whatever it is $2.8 billion in bank room operations and that amount of assets, there is going to be economy in the scale. But the question as to where -- when that both savings are going to come are unanswered. When will it get closed? When can we get it converted? And until those two things happen, it is hard to say exactly how the savings are going to come and how Liberty is going to get to that 1.5 or greater than the expectation of our chairman. John Allison : You know I guess I’ll run the 220, I mean if we leverage this infrastructure, those numbers get crazy but that's way down the road but anyway. You know we will not going to give up at 1.50 Matt Matt Olney - Stephens: No. I wouldn't think so. Thanks for the commentary guys.

Matt, this is Randy, one clarification. You asked me on those branches, we actually closed the sale at the end of the quarter that they were not operating for most of the quarter if you are looking for additional operation expense improvement there. They were not operating for most of the quarter. Matt Olney - Stephens: Okay, thanks Randy

Our next question comes from Andy Stock with Maryland Capital. Andy Stock – Maryland Capital : Hi, guys John Allison : Hi, Andy Andy Stock – Maryland Capital : You touched on the mix on revised purchase in your mortgage banking operations. Can you give me that mix? John Allison : It has been it was 60:40 revised in '11; it was 50:50 purchases, almost 50:50 mix in '12 Andy Stock – Maryland Capital : Okay. And do you think your yields on your securities would stabilize due to deceleration of the Premier amortization?

On the securities portfolio, yes I think it will stabilize it about zero. I think that's about where we are. They have pretty well stabilized as far as what's going out and what we are replacing it with. But it's a very low yield there on that. We are not having any increase, and we are keeping pretty short as Johnny says some point in time we are going to be right with these rates, I can't tell you exactly when but at some point they will move. So we are still maintaining that philosophy and Liberty also has a pretty big investment portfolio. And to be honest their yields are down there right with ours, so both of them are pretty short and pretty conservative portfolio. Andy Stock – Maryland Capital : Okay, so you don't expect any more compression on those yields?

I don't know. It's hard to get too much lower John Allison : I think we are all way up to 1.70 or something. Andy Stock – Maryland Capital : Okay. And this is not a big – I don't but I notice your dividend income was up about double late quarter. This month driving that's good run rate going forward? Randy Sims : Our venture capital, dividend was $231,000 for the quarter.

We are in a venture capital fund and that comes sporadically. We've had a couple of pay days late and I think one in fourth quarter and one in the second quarter. Unidentified Company Speaker : : (Inaudible) But it sort of one time item. John Allison : Came in the fourth quarter and first quarter, that's been an investment, it is paying off, appears to be a really good investment. Andy Stock – Maryland Capital : Good, that's all I had. Thanks, guys John Allison : Thank you

The next question comes from Brian Zabora at KBW. Brian Zabora - KBW : Hey, good afternoon. John Allison : Good afternoon, Brian. Brian Zabora - KBW: Question on your FDIC covered loan run off, it was little higher this quarter. Is this a good run rate or keep faster than that as you getting further end of the kind of solving the assets problems there?

I would say it's kind of hard to tell because at this point you are still working through a lot of the stuff that is in the litigation pipeline; it probably is a fair run rate. We are seeing a lot of things happen in several of the markets. So, I would say it's probably pretty fair Brian Zabora - KBW : Okay. You talked about your potential deals. Do you still feel like you are in, penalty box, you are either self-imposed or regulatory imposed for six months or it could be something sooner than that? May be you take a look at something. John Allison : We are getting close. We are certainly self-imposed. We are not regulatory in a box, we are self-imposed at the very late they put us in a box; we don't put ourselves in that box for a while. We will continue to look at deals and I was talking to one of the Florida banks Monday of this week and we will continue to get those deals are still around when we get this one completed, but we probably won't be moving on anything of any size or sometime that we get Liberty under our belt. If we get it converted in December then you can look for us we out to start seeing some improvement out of Liberty and second quarter next year probably some in the first quarter and slightly in the first quarter and start seeing continued improvement in second, third and fourth quarter. And if these deals are still around we will be, I am on continue to work on. Brian Zabora - KBW : Right, thanks for taking my questions.

Our next question comes from Brian Martin at FIG Partners Brian Martin - FIG Partners: Hey guys. John Allison : Hi, Brian. Brian Martin - FIG Partners: One question that's probably more for Randy, just there was an earlier question about the margins just kind of the impact, I just think he talked a little bit about next quarter and second after the year, but as it relates to Liberty. Can you give me some color or just some commentary on what your thoughts are on the margin relative to what Liberty is, into the fold and then secondly just on the conversion, when will you guys know as far as the timing goes if this is likely to get down this year versus last year, and if you can just quantify the impact if you could if it pushes back into next year. Randy Sims : I can quickly answer the one on the conversion. As soon as the SEC signs of on the S-4, we will not. Brian Martin - FIG Partners: Okay and when would you anticipate that? Brian Davis : When they get good and red, we have up to 30 days to review the S-4 and at that point in time because of the size of the transaction we anticipate, there will be some SEC review comments. Whether those are all SEC review comments going turnaround and change the document and get it out in couple of days and we done, that's sort of where I say I don't know. We'll probably will not get a letter from them until the 1st of August so. John Allison : Right, if they don't like our comments back and that process can continue. So that's the real deal. I don't see the regulatory side is holding us up on the December 6 conversion date but it's just getting the shareholder meeting because then we have to ask shareholder notice and it is just getting that approval but I have got faith that it's going to happen because we are starting the planning process on the conversion. Brian Davis : And it's not uncommon, we are not shooting for that as a goal, but it's not uncommon to have five amendments to your S4 I mean. We got our S4 out in two and half weeks and I have seen other ones who took two months. So we took it as a high priority and got that, did out that as fast as we can, hopefully they won't take the full 30 days and hopefully we follow good examples from other S4 that are out there, and we will be able to get it, cleared it with one or may be just two amendments, but until we see that first round of comments we really don't know. Brian Martin - FIG Partners: Okay. And the impact if it does push back into next year? John Allison : Well, I really just don't want to think about because you talk in March for a conversion date, that's the next one and that's going be several several million dollars left on the table, potential savings in back room. We will be running two back rooms and we will be paying the same vendor two prices and go on go on. So I am just trying to put kind of put it out of my mind. Brian Martin - FIG Partners: Okay. And then may the margin question for Randy.

Yes, Brian there are in mid 350s on margin compared to 515 or so. So they are definitely going to bring down the margin initially and we are going to be - we will be working on that to try to improve that. But they have some as Johnny said some funding coming to that has some higher yield on it and they should be able to tweak that somewhat and we will be working as soon as we can with them to try to see what we can tweak here and there. So it is going to be a little bit more of a struggle and again lot of that because of their investment portfolio which in my opinion they have done a good job keeping it conservative and fairly short. Brian Martin - FIG Partners: All right, thanks very much guys. John Allison : Thanks.

Our next question comes from Kevin Reynolds from Wunderlich Securities Kevin Reynolds - Wunderlich Securities : Hi, Johnny. Most of my questions have been answered. But I am jumping in anyway, good quarter. Conceptually, I heard you talk about your stock price and maybe it’s got a little bit up there here in last couple of weeks. It's my question, it is a clearly good deal and you guys have done a great job, down to a getting challenging environment out there. But what is it that and I know you are confident in yourself, you are confident in your people. But what is it that worries you from here? What would you sit back and say gosh these are the things that keep weighing on my mind, and we got to keep our eyes on these items as we go forward over the next few quarters here? And then how do you sort of manage through those kinds of those uncertainties out there. John Allison : I think the asset quality side of it is my biggest concern. I think we were up, we have been little bit more stricter on our credit than I think Liberty has been. Actually, the earnback period would be quicker if we find asset quality the way Kevin's team, and think Kevin you looked at everything below, above, what do you look at two thirds of it?

Yes, two thirds. John Allison : Two third of it, I just have some reservation about the asset quality side. And did we miss $10 million or $20 million if we did and haven't seen any signs of that yet but if we did we are going up in room and there is enough earnings in the deal to fix it, so we will get through that, that's the only thing that keeps me up at night, it is the asset quality. The margins quite a bit less than ours, we are working on that. We just streamline the balance sheet; Donna's team will get in there on the efficiency side. I think we will get it to our standard, our concern– and the good thing about asset quality is that we know the markets that they are in, there are markets they were not in, but familiar Arkansas market. So we can fix it, at this stage it may take six months to fix it, it may take a year and half to fix it, but we will fix it and we will get through it and then we will get the efficiencies of the company. Excuse me, in the meantime working on the efficiencies and when come out the other side of this deal, it will all related to – Randy Sims would you –

I don't know that I am adding things. I would say that the asset quality issue is number one concern. We are going to try to get on that right away. The time line that I’ve already talked about is an immediate focus for us to there when you look at Arkansas and the opportunity that this brings us going adding 49 more branches in basically no over lap it may be the deal that's talked about for a long time. But getting it done and getting in the barn you might say we get to get that done. So, hopefully our next quarterly conference call you will – everything will be laid out and you will know so much more because we will know so much more and but right now the two things, once it is closed asset quality will be our number one focus right now to get it closed. Kevin Reynolds - Wunderlich Securities : All right. Thanks a lot a good quarter John Allison : Thank you.

Our next question comes from Joe Fenech at Sandler O’Neill Joe Fenech - Sandler O’Neill: Good afternoon, guys. Most of my questions were answered but just had one more on the allowance. It's about 175 or so I guess of non-covered, are you comfortable allowing that Johnny the drift down below the 150 or so of credit remains pretty good here. I am talking about just for legacy company or do you have a floor in mind that we won't see you breach no matter what happens of credit. What are your thoughts there? John Allison : Somewhere in the 150 range is fine with me. I think it has been, we have been stated that for years that we let it drift down to the 150 range, and asset quality is really pretty decent right now. So few little sprouts I told you back some time ago when hotels in Florida that we’re probably going to have to clean up somewhere. The Florida real estate I was talking to Kevin the other day, Kevin said, talking about a piece in Orlando that we felt we’d lose millions of dollars, we are going to come out really good and another piece of real estate down there. He said I didn't have a bidder on it, now I have got five bidders on it. So you’re really seeing it turn, you are seeing that change in the real estate prices beginning to strengthen and the values go back up, Kevin just had an auction in Florida and sold about 50 pieces of OREO properties that were covered assets that we couldn't even get a bidder on them (inaudible) forecasted a huge loss and it didn't turn out like that. So it turned out better than we anticipate. So, I think the market with us right now helping pull those prices up. I don't anticipate, we had some one time gain this quarter so it is not that I moved one-time gains into the reserve, but we had some one-time gains and I thought it's a good time to put little cash to our reserve. Joe Fenech - Sandler O’Neill: Got it, thanks guys. John Allison : Thank you.

Our next question comes from Michael Rose of Raymond James Michael Rose - Raymond James: Hey guys, just one quick follow up. Do you have initial estimate for one time charges that you expect to occur related to the merger? Thanks John Allison : I don't know yet. I don't know but it's going to be pretty substantial. I don't guess, we don't have estimate on that yet. It's – Randy Sims : We are still looking through everything, contracts and buyouts and what we can arrange and not arrange. So I can't give you a good number, but it will be sizable John Allison : But I don't think it will be, I think it will be on the low side of deals this size, particularly because of the FIS contract and some of the common vendors and I think it will be on the low side of the one-time charges.

Couple of the big charges that will have Michael are in the S-4 that would include the two fairness opinions and then our broker fee. They are both in there, in the S-4 document you’ll find that we’re are paying the broker $800,000 that's disclosed in there and our fairness opinion will run into 225 and 230 a piece. So those are not real big numbers when you compare them back to the some of the other deals like that you are saying for deal of this size. John Allison : Fair enough, well we are paying – I would appreciate everyone please read in through every page. Michael Rose - Raymond James: Yes. I plan to read out all 272 pages tonight. John Allison : Our lawyers would like that. If we treated them like a bunch of vampires. I had one lawyer come in and work on it at 6 o'clock and he’d stay until he couldn't work much more past 7 and another one would stay in for about 2 o'clock so I don't think they worked on it 24 hours a day, but I know the one will work till 2 and one was there at 6 the next day working on it, so we got 20 hours a day out of our law firm. I am sure the meter was running pretty hot. Michael Rose - Raymond James: Better than me. Thank you for the follow up John Allison : Okay, thank you.

And that does conclude Q&A session. I would like to turn the conference back over to management for any closing remarks. John Allison : Well, thank you for your support. Hope we have more color on the Liberty transaction in 90 days, and maybe we’ll call the shareholders meeting and may be even have approval. So thanks for your support, and we will talk to you in 90 days.

The conference is now concluded. Thank you for attending today's presentation.